NVR Inc (NVR)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 6,601,760 | 5,660,970 | 5,834,480 | 5,777,140 | 3,809,820 |
| Total stockholders’ equity | US$ in thousands | 4,364,720 | 3,506,850 | 3,002,380 | 3,103,070 | 2,341,240 |
| Financial leverage ratio | 1.51 | 1.61 | 1.94 | 1.86 | 1.63 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $6,601,760K ÷ $4,364,720K
= 1.51
The financial leverage ratio of NVR Inc. has shown a fluctuating trend over the past five years. The ratio decreased from 1.63 in 2019 to 1.51 in 2023, indicating a reduced reliance on debt to finance the company's operations and investments. In 2020, the ratio was 1.86, demonstrating a slight increase in leverage compared to the previous year. However, a significant jump in the ratio was observed in 2021 when it reached 1.94, suggesting a higher level of debt usage to support the company's activities.
The decreasing trend in the financial leverage ratio from 2021 to 2023 may signal a shift towards a more conservative capital structure, where the company is relying less on debt financing and focusing on optimizing its capital mix. This could be a strategic decision to reduce financial risk and enhance financial stability. However, it is essential to assess the company's ability to manage its debt obligations effectively while maintaining sustainable growth and profitability.
Overall, the varying levels of the financial leverage ratio in recent years suggest that NVR Inc. has been actively managing its debt levels and capital structure to strike a balance between leveraging financial leverage for growth opportunities and safeguarding against excessive financial risk.
Peer comparison
Dec 31, 2023