Meritage Corporation (MTH)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 6,353,130 | 5,772,100 | 4,807,530 | 3,864,400 | 3,398,250 |
| Total stockholders’ equity | US$ in thousands | 4,611,900 | 3,949,610 | 3,044,390 | 2,347,870 | 1,973,990 |
| Financial leverage ratio | 1.38 | 1.46 | 1.58 | 1.65 | 1.72 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $6,353,130K ÷ $4,611,900K
= 1.38
The financial leverage ratio of Meritage Homes Corp. has been decreasing over the past five years, indicating a trend towards lower financial leverage. This ratio measures the company's level of debt relative to its equity, with a higher ratio indicating higher financial leverage and potential higher financial risk.
The decreasing trend in the financial leverage ratio suggests that the company has been reducing its reliance on debt to finance its operations and investments. This may be a positive sign as lower financial leverage can reduce the risk of financial distress, especially during economic downturns when cash flow may be reduced.
Overall, the decreasing financial leverage ratio indicates that Meritage Homes Corp. has been taking steps to improve its financial stability and reduce potential risks associated with high levels of debt. However, it is important to consider that a certain level of leverage is necessary for growth and profitability, so the company should maintain a balance between debt and equity to support its operations effectively.
Peer comparison
Dec 31, 2023