Landstar System Inc (LSTR)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	1,801,850	1,931,880	2,045,460	1,653,800	1,427,710
Total stockholders’ equity	US$ in thousands	983,923	887,221	862,010	691,835	721,469
Financial leverage ratio		1.83	2.18	2.37	2.39	1.98

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,801,850K ÷ $983,923K
= 1.83

The financial leverage ratio of Landstar System Inc has shown a fluctuating trend over the past five years. The ratio decreased from 1.98 in 2019 to 1.83 in 2023. This implies that the company's reliance on debt to finance its operations has decreased over this period. However, it is noted that there was an increase in the ratio in 2020 and 2021, reaching a peak of 2.39 in 2020 and then slightly decreasing to 2.37 in 2021 before the downward trend in 2022 and 2023.

A financial leverage ratio below 1 indicates that the company is mainly using equity to finance its operations, while a ratio above 1 suggests a higher reliance on debt. Therefore, Landstar System Inc's decreasing trend in the financial leverage ratio suggests a shift towards a more conservative debt financing strategy which may indicate lower financial risk in its capital structure. It would be prudent for the company to continue monitoring and managing its debt levels effectively to maintain a healthy financial leverage ratio in the future.