Neogen Corporation (NEOG)
Financial leverage ratio
| May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | May 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 4,554,430 | 992,929 | 920,192 | 797,182 | 695,740 |
| Total stockholders’ equity | US$ in thousands | 3,134,220 | 887,374 | 840,377 | 725,177 | 637,899 |
| Financial leverage ratio | 1.45 | 1.12 | 1.09 | 1.10 | 1.09 |
May 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $4,554,430K ÷ $3,134,220K
= 1.45
The financial leverage ratio of Neogen Corp has shown a gradual increase over the past five years, reaching 1.45 in May 31, 2023, up from 1.09 in May 31, 2019. This indicates that the company has been relying more on debt financing compared to equity. While a higher financial leverage ratio can amplify returns on investment when the company is performing well, it also increases the risk of financial distress if the company’s earnings do not meet expectations. It would be important to assess the company's ability to service its debt and manage financial risk effectively.
Peer comparison
May 31, 2023