NewMarket Corporation (NEU)

Financial leverage ratio

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Total assets	US$ in thousands	2,308,870	2,290,400	2,366,140	2,350,770	2,406,820	2,336,840	2,330,670	2,281,550	2,558,440	2,437,220	2,478,710	2,399,390	1,933,880	1,880,120	1,799,140	1,933,680	1,885,130	1,771,000	1,766,980	1,798,190
Total stockholders’ equity	US$ in thousands	1,077,060	971,943	892,740	821,800	762,407	667,376	721,335	760,090	762,129	772,773	849,210	810,355	759,824	723,526	635,285	639,249	683,098	629,338	589,176	538,196
Financial leverage ratio		2.14	2.36	2.65	2.86	3.16	3.50	3.23	3.00	3.36	3.15	2.92	2.96	2.55	2.60	2.83	3.02	2.76	2.81	3.00	3.34

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,308,870K ÷ $1,077,060K
= 2.14

The financial leverage ratio of NewMarket Corp. has been decreasing over the past few quarters, indicating a trend towards lower leverage levels. The ratio stood at 3.16 in Q4 2022 and has since decreased to 2.14 in Q4 2023. This downward trend suggests that the company is utilizing less debt relative to its equity to finance its operations.

A financial leverage ratio below 1 indicates that the company has more equity than debt in its capital structure, while a ratio above 1 implies a higher reliance on debt. In the case of NewMarket Corp., all the ratios from Q4 2022 to Q4 2023 are above 1, signaling that the company has been moderately leveraging its operations through debt during this period.

Despite the decreasing trend, it is essential to consider the industry norms and the company's specific circumstances when evaluating the financial leverage ratio. A lower financial leverage ratio generally indicates a lower risk of financial distress due to reduced debt burden and interest expense. However, excessively low leverage may also imply missed opportunities for growth and higher cost of capital. Overall, a declining financial leverage ratio for NewMarket Corp. suggests a trend towards a more conservative capital structure.