Oracle Corporation (ORCL)

Financial leverage ratio

		May 31, 2024	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020
Total assets	US$ in thousands	140,976,000	134,384,000	109,297,000	131,107,000	115,438,000
Total stockholders’ equity	US$ in thousands	8,704,000	1,073,000	-6,220,000	5,238,000	12,074,000
Financial leverage ratio		16.20	125.24	—	25.03	9.56

May 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $140,976,000K ÷ $8,704,000K
= 16.20

The financial leverage ratio measures the extent to which a company is utilizing debt to finance its operations and growth. The higher the ratio, the more the company relies on debt financing. Looking at the financial leverage ratio of Oracle Corporation over the past five years, we can see significant fluctuations.

In May 2020, the financial leverage ratio stood at 9.56, indicating that Oracle had a moderate level of debt relative to its equity. This ratio increased sharply to 25.03 in May 2021, suggesting a significant increase in debt usage compared to the previous year. The financial leverage ratio further spiked to 125.24 in May 2023, indicating a substantial shift towards debt financing, potentially raising concerns about the company's financial risk and solvency.

However, in May 2024, the financial leverage ratio decreased to 16.20, signaling a reduction in the company's reliance on debt and a move towards a more balanced capital structure. It is essential to note that the absence of a value for the financial leverage ratio in 2022 makes it challenging to analyze the trend accurately.

Overall, the fluctuating trend in Oracle Corporation's financial leverage ratio reflects varying levels of debt utilization over the years, indicating potential shifts in the company's financing strategy and risk profile. Further analysis of the company's debt management policies and financial performance would be necessary to understand the implications of these fluctuations better.