Ovintiv Inc (OVV)
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 19,987,000 | 19,900,000 | 19,519,000 | 15,123,000 | 15,056,000 | 14,374,000 | 14,923,000 | 14,900,000 | 14,055,000 | 13,636,000 | 13,767,000 | 14,534,000 | 14,469,000 | 15,157,000 | 16,795,000 | 21,505,000 | 21,487,000 |
| Total stockholders’ equity | US$ in thousands | 10,370,000 | 9,552,000 | 9,316,000 | 7,894,000 | 7,689,000 | 6,550,000 | 5,821,000 | 4,684,000 | 5,074,000 | 3,797,000 | 3,934,000 | 4,134,000 | 3,837,000 | 4,352,000 | 5,873,000 | 10,191,000 | 9,930,000 |
| Financial leverage ratio | 1.93 | 2.08 | 2.10 | 1.92 | 1.96 | 2.19 | 2.56 | 3.18 | 2.77 | 3.59 | 3.50 | 3.52 | 3.77 | 3.48 | 2.86 | 2.11 | 2.16 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $19,987,000K ÷ $10,370,000K
= 1.93
The financial leverage ratio of Ovintiv Inc has fluctuated over the past eight quarters, ranging from a low of 1.92 in Q1 2023 to a high of 3.18 in Q1 2022. The ratio measures the company's reliance on debt financing to fund its operations and investments.
In general, a higher financial leverage ratio indicates greater financial risk, as the company has more debt relative to its equity. It suggests that Ovintiv is using more debt to finance its activities, which may lead to increased interest payments and potential financial instability during economic downturns.
The trend of increasing leverage ratios observed from Q1 2022 to Q2 2022, peaking at 3.18, may raise concerns regarding Ovintiv's financial risk and ability to manage its debt levels. However, the subsequent decline in the ratio from Q2 2022 to Q1 2023 suggests a move towards a more balanced capital structure.
Overall, it is important for Ovintiv to strike a balance between debt and equity financing to ensure sustainable growth and financial stability in the long term. Monitoring and managing the financial leverage ratio will be crucial for the company to mitigate risks associated with excessive debt levels.
Peer comparison
Dec 31, 2023