Novanta Inc (NOVT)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,226,060 | 1,241,210 | 1,227,880 | 865,179 | 869,736 |
| Total stockholders’ equity | US$ in thousands | 673,460 | 577,586 | 521,291 | 476,809 | 417,172 |
| Financial leverage ratio | 1.82 | 2.15 | 2.36 | 1.81 | 2.08 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,226,060K ÷ $673,460K
= 1.82
The financial leverage ratio of Novanta Inc has exhibited variability over the past five years. In 2023, the financial leverage ratio stood at 1.82, indicating that the company's reliance on debt to finance its operations decreased compared to the previous year. This reduction suggests a lower level of financial risk associated with debt obligations.
In 2022, the financial leverage ratio was 2.15, showing an increase from the prior year. This rise in leverage indicates that the company utilized more debt in its capital structure, potentially to fund growth or strategic initiatives. Although higher leverage can amplify returns, it also escalates the financial risk due to increased interest payments and debt obligations.
The financial leverage ratio peaked at 2.36 in 2021, reflecting a significant reliance on debt financing. This heightened leverage suggests that Novanta Inc may have aggressively pursued expansion opportunities or acquisitions during that period, which could lead to higher financial risks in the form of debt repayment obligations.
In 2020, the financial leverage ratio was 1.81, indicating a decrease from the previous year. This reduction in leverage suggests a more conservative approach to capital structure, potentially aimed at reducing financial risk and enhancing financial stability.
Finally, in 2019, the financial leverage ratio stood at 2.08, displaying a higher reliance on debt compared to 2020 but lower than the peak in 2021. This level of leverage indicates a moderate level of debt usage, which can provide the company with flexibility in capital allocation while managing financial risks associated with debt.
Overall, the trend in Novanta Inc's financial leverage ratio indicates varying levels of debt utilization over the years, reflecting the company's strategic decisions regarding capital structure and risk management. Investors and stakeholders should closely monitor changes in the financial leverage ratio to assess the company's financial health and risk profile.
Peer comparison
Dec 31, 2023