LCI Industries (LCII)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	2,959,320	3,246,910	3,288,090	2,298,030	1,862,600
Total stockholders’ equity	US$ in thousands	1,355,040	1,381,010	1,092,880	908,326	800,672
Financial leverage ratio		2.18	2.35	3.01	2.53	2.33

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,959,320K ÷ $1,355,040K
= 2.18

The financial leverage ratio of LCI Industries has exhibited some fluctuations over the past five years, ranging from 2.18 to 3.01. A higher financial leverage ratio indicates that a company relies more on debt financing, while a lower ratio suggests a greater reliance on equity financing.

In 2021, the ratio spiked to 3.01, indicating a significant increase in the company's debt relative to its equity. This may imply higher financial risk, as increased debt can lead to higher interest payments and potential difficulties in meeting financial obligations.

The ratio slightly decreased in 2022 to 2.35 but remained above the level seen in the preceding years. This moderation could indicate a strategic effort to reduce debt levels or increase equity financing.

By 2023, the ratio further dropped to 2.18, suggesting a potential improvement in the company's financial structure by decreasing its reliance on debt financing and increasing its equity base. This could enhance the company's financial stability and reduce the risks associated with high debt levels.

Overall, the fluctuation in LCI Industries' financial leverage ratio implies a dynamic approach to capital structure management, where the company adapts its financing mix to optimize its financial stability and risk profile.