NVIDIA Corporation (NVDA)

Financial leverage ratio

		Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Jan 26, 2020
Total assets	US$ in thousands	65,728,000	41,182,000	44,187,000	28,791,000	17,315,000
Total stockholders’ equity	US$ in thousands	42,978,000	22,101,000	26,612,000	16,893,000	12,204,000
Financial leverage ratio		1.53	1.86	1.66	1.70	1.42

January 28, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $65,728,000K ÷ $42,978,000K
= 1.53

The financial leverage ratio of NVIDIA Corp has fluctuated over the past five years, ranging from 1.42 to 1.86. The ratio measures the company's use of debt to finance its operations and assets. A higher ratio indicates a higher level of debt relative to equity, suggesting increased financial risk but potentially higher returns. On the other hand, a lower ratio signifies lower financial risk but may also limit potential returns.

In this case, the trend shows that NVIDIA Corp has experienced varying levels of leverage over the years. The decrease in the ratio from 1.86 in 2023 to 1.53 in 2024 indicates a reduction in the proportion of debt used to finance the company's assets. This may reflect a strategic shift towards a more conservative capital structure, potentially reducing financial risk. Conversely, the increase in the ratio from 1.42 in 2020 to 1.66 in 2022 and 1.70 in 2021 suggests a higher reliance on debt during those years.

Overall, it is important for investors and stakeholders to closely monitor NVIDIA Corp's financial leverage ratio to assess its capital structure and risk profile, as changes in the ratio can impact the company's financial health and performance.