Lear Corporation (LEA)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	14,695,500	13,763,000	13,352,400	13,198,600	12,680,700
Total stockholders’ equity	US$ in thousands	4,918,800	4,678,800	4,643,400	4,467,300	4,349,700
Financial leverage ratio		2.99	2.94	2.88	2.95	2.92

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $14,695,500K ÷ $4,918,800K
= 2.99

The financial leverage ratio of Lear Corp. has exhibited a slightly increasing trend over the past five years, reaching 2.99 at the end of 2023. This indicates that the company's level of financial leverage has been gradually rising. The ratio demonstrates how much of the company's assets are financed by debt compared to equity.

A financial leverage ratio of 2.99 implies that for every dollar of equity, Lear Corp. has approximately $2.99 of debt. This suggests that the company relies more on debt to finance its assets rather than equity, which can magnify both returns and risks.

It is important to note that while a higher financial leverage ratio can potentially lead to higher returns on equity through leverage, it also exposes the company to greater financial risk, especially in economic downturns or periods of high-interest rates.

Overall, the increasing trend in Lear Corp.'s financial leverage ratio signals a growing reliance on debt financing to support its operations and investments. This indicates that the company's financial structure may be shifting towards a more debt-heavy composition, which could impact its financial flexibility and risk profile.