Lincoln Electric Holdings Inc (LECO)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,520,140 | 3,377,300 | 3,180,550 | 2,592,310 | 2,314,450 |
| Total stockholders’ equity | US$ in thousands | 1,327,430 | 1,308,850 | 1,034,040 | 863,909 | 790,250 |
| Financial leverage ratio | 2.65 | 2.58 | 3.08 | 3.00 | 2.93 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,520,140K ÷ $1,327,430K
= 2.65
The financial leverage ratio of Lincoln Electric Holdings Inc has shown a gradual increase from 2.93 in 2020 to 3.08 in 2022, indicating an upward trend in leverage over this period. However, there was a slight decrease to 2.58 in 2023, followed by a slight increase to 2.65 in 2024, suggesting some fluctuation in the company's leverage position.
A financial leverage ratio above 1 indicates that the company relies more on debt financing than equity financing. In Lincoln Electric's case, the ratios consistently above 2 suggest that the company has a relatively high level of debt in its capital structure compared to equity. This could signify potential risks associated with higher debt levels, such as increased interest payments and financial obligations.
It is crucial for stakeholders to monitor the company's financial leverage closely to ensure that the debt levels are sustainable and that the company can effectively manage its financial obligations. The fluctuations in the financial leverage ratio over the years highlight the importance of conducting a comprehensive analysis of the company's overall financial health and risk management strategies.
Peer comparison
Dec 31, 2024