Lithia Motors Inc (LAD)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 23,127,900 | 19,632,500 | 15,006,600 | 11,146,900 | 7,902,100 |
| Total stockholders’ equity | US$ in thousands | 6,655,500 | 6,213,900 | 5,206,200 | 4,626,400 | 2,661,500 |
| Financial leverage ratio | 3.48 | 3.16 | 2.88 | 2.41 | 2.97 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $23,127,900K ÷ $6,655,500K
= 3.48
Financial leverage ratio is a key metric used to evaluate a company's use of debt to finance its operations. For Lithia Motors Inc, the financial leverage ratio has shown some fluctuations over the years. Starting at 2.97 in 2020, the ratio decreased to 2.41 in 2021, indicating a decrease in the company's reliance on debt. However, in 2022, the ratio increased to 2.88, suggesting a slight uptick in debt usage. The trend continued in 2023, with a ratio of 3.16, showing a further increase in leverage. By the end of 2024, the financial leverage ratio reached 3.48, indicating a significant rise in the company's debt relative to its equity.
Overall, it is important for stakeholders to monitor Lithia Motors' financial leverage ratio closely, as higher leverage can increase financial risk and volatility, especially in economic downturns. The increasing trend in the ratio over the years suggests a growing reliance on debt financing, which may warrant further analysis to assess the company's ability to manage its debt obligations effectively and sustainably in the long term.
Peer comparison
Dec 31, 2024