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.