Magnolia Oil & Gas Corp (MGY)

Financial leverage ratio

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Total assets	US$ in thousands	2,756,220	2,652,490	2,566,720	2,576,050	2,572,580	2,300,640	2,086,790	1,794,610	1,746,740	1,585,780	1,498,340	1,455,850	1,453,420	1,434,280	1,413,080	1,490,830	3,466,410	3,533,130	3,531,130	3,437,970
Total stockholders’ equity	US$ in thousands	1,691,650	1,664,150	1,634,470	1,599,340	1,576,030	1,271,010	1,098,250	897,564	816,733	694,612	623,532	609,789	548,136	532,608	527,019	543,166	1,776,020	1,769,750	1,739,560	1,685,190
Financial leverage ratio		1.63	1.59	1.57	1.61	1.63	1.81	1.90	2.00	2.14	2.28	2.40	2.39	2.65	2.69	2.68	2.74	1.95	2.00	2.03	2.04

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,756,220K ÷ $1,691,650K
= 1.63

The financial leverage ratio of Magnolia Oil & Gas Corp has shown fluctuations over the past five years, indicating changes in the company's debt levels relative to its equity. The ratio was relatively stable around 1.6 in 2023, before experiencing a peak in the second quarter of 2022 at 2.40. This suggests that the company significantly increased its leverage during that period.

Subsequently, there was a decreasing trend in the financial leverage ratio, reaching 1.57 in the second quarter of 2023. However, the ratio slightly increased to 1.61 in the first quarter of 2023. Overall, the ratio has demonstrated volatility, with peaks in 2022 and fluctuations in the subsequent periods.

A financial leverage ratio above 1 indicates that the company is utilizing more debt than equity to finance its operations and growth. While high leverage can amplify returns in good times, it also increases financial risk, especially during economic downturns or periods of high interest rates. Magnolia Oil & Gas Corp should carefully manage its leverage to maintain a healthy balance between debt and equity in its capital structure.