Murphy Oil Corporation (MUR)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	9,766,700	10,309,000	10,304,900	10,620,900	11,718,500
Total stockholders’ equity	US$ in thousands	5,362,790	4,994,770	4,157,310	4,214,340	5,467,460
Financial leverage ratio		1.82	2.06	2.48	2.52	2.14

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $9,766,700K ÷ $5,362,790K
= 1.82

The financial leverage ratio of Murphy Oil Corp. has shown a fluctuating trend over the past five years. The ratio decreased from 2.52 in 2020 to 1.82 in 2023. This downward trend indicates a reduction in the company's reliance on debt to finance its operations and growth. A lower financial leverage ratio suggests that Murphy Oil Corp. has been able to strengthen its financial position by reducing its debt levels relative to its equity. This could be a positive signal to investors and creditors as it may indicate improved financial stability and risk management. It also implies that the company may have more financial flexibility and lower interest expenses, which can contribute to overall profitability and sustainability. However, it is important to note that a too low leverage ratio may also indicate underutilization of debt, potentially missing out on the benefits of leverage to enhance returns for shareholders. Therefore, it will be crucial for Murphy Oil Corp. to strike a balance between debt and equity financing to optimize its capital structure and financial performance.