Laboratory Corporation of America Holdings (LH)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 18,379,000 | 16,725,100 | 20,155,100 | 20,385,400 | 20,071,700 |
| Total stockholders’ equity | US$ in thousands | 8,052,200 | 7,875,000 | 10,096,600 | 10,273,400 | 9,436,600 |
| Financial leverage ratio | 2.28 | 2.12 | 2.00 | 1.98 | 2.13 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $18,379,000K ÷ $8,052,200K
= 2.28
The financial leverage ratio for Laboratory Corporation of America Holdings has shown fluctuation over the last five years. Starting at 2.13 in December 31, 2020, the ratio decreased to 1.98 by December 31, 2021, indicating a reduction in the company's reliance on debt to finance its operations. However, in the subsequent years, the ratio slightly increased to 2.00 in 2022, 2.12 in 2023, and peaked at 2.28 by December 31, 2024.
A financial leverage ratio above 1 suggests that the company is relying more on debt than equity to finance its assets. The upward trend from 2021 onwards could indicate a strategic decision to leverage more debt to support growth or investment opportunities. However, a higher leverage ratio also implies higher financial risk, as the company may face challenges in meeting debt obligations, especially during economic downturns or unexpected events.
Overall, a financial leverage ratio of around 2 indicates that Laboratory Corporation of America Holdings has a moderate level of debt relative to its equity, and investors should closely monitor any further changes in this ratio to assess the company's financial stability and risk profile.
Peer comparison
Dec 31, 2024