MSC Industrial Direct Company Inc (MSM)
Financial leverage ratio
| Sep 2, 2023 | Sep 3, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,544,130 | 2,729,410 | 2,462,120 | 2,382,430 | 2,311,240 |
| Total stockholders’ equity | US$ in thousands | 1,479,160 | 1,350,430 | 1,150,870 | 1,314,940 | 1,478,550 |
| Financial leverage ratio | 1.72 | 2.02 | 2.14 | 1.81 | 1.56 |
September 2, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,544,130K ÷ $1,479,160K
= 1.72
The financial leverage ratio measures the extent to which a company is using debt to finance its operations. A high financial leverage ratio indicates that a company has a significant amount of debt relative to its equity, which can potentially increase the company's financial risk.
Looking at the financial leverage ratio of MSC Industrial Direct Co., Inc. over the past five years, we observe fluctuations in the ratio. In September 2023, the financial leverage ratio stood at 1.72, representing a decrease from the previous year. This suggests that the company reduced its reliance on debt financing compared to the prior year.
In September 2022, the financial leverage ratio increased to 2.02, signaling a higher level of debt usage compared to the previous year. This may indicate a shift in the company's capital structure towards greater debt financing.
The financial leverage ratio further increased in August 2021 to 2.14, reaching the highest level in the past five years. This rise indicates a significant increase in the company's reliance on debt to fund its operations and growth initiatives.
By August 2020, the financial leverage ratio decreased to 1.81, showing a reduction in the company's debt relative to equity compared to the previous year. This suggests a deleveraging or a shift towards using more equity in the company's capital structure.
In August 2019, the financial leverage ratio was at 1.56, indicating a moderate level of debt usage compared to the equity. This was the lowest financial leverage ratio in the five-year period, potentially reflecting a conservative approach to debt utilization at that time.
In summary, the financial leverage ratio of MSC Industrial Direct Co., Inc. has varied over the past five years, indicating changes in the company's capital structure and debt management. It is essential for investors and stakeholders to monitor these fluctuations to understand the company's risk profile and financial strategy.
Peer comparison
Sep 2, 2023