McCormick & Company Incorporated (MKC)
Financial leverage ratio
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 12,862,300 | 13,124,900 | 12,905,800 | 12,089,700 | 10,362,100 |
| Total stockholders’ equity | US$ in thousands | 5,060,700 | 4,680,500 | 4,411,000 | 3,926,100 | 3,444,200 |
| Financial leverage ratio | 2.54 | 2.80 | 2.93 | 3.08 | 3.01 |
November 30, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $12,862,300K ÷ $5,060,700K
= 2.54
The financial leverage ratio for McCormick & Co., Inc. has exhibited a declining trend over the past five years. The ratio decreased from 3.01 in 2019 to 2.54 in 2023. This indicates that the company has been using less financial leverage in its capital structure over the years. A lower financial leverage ratio suggests that the company is relying less on debt financing and has a higher proportion of equity in its capital structure, which may reduce the risk of financial distress. However, it is essential to assess the impact of this decreasing trend on the company's ability to generate returns for its shareholders and its overall solvency.