Patrick Industries Inc (PATK)

Financial leverage ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Total assets	US$ in thousands	3,020,950	2,562,450	2,782,470	2,650,730	1,753,440
Total stockholders’ equity	US$ in thousands	1,128,370	1,045,340	955,169	767,557	559,441
Financial leverage ratio		2.68	2.45	2.91	3.45	3.13

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,020,950K ÷ $1,128,370K
= 2.68

Based on the provided data, the financial leverage ratio of Patrick Industries Inc has fluctuated over the five-year period from 2020 to 2024.

In 2020, the financial leverage ratio was 3.13, indicating that the company had $3.13 of debt for every $1 of equity. This suggests higher financial risk as a significant portion of the company's assets were financed through debt.

By the end of 2021, the financial leverage ratio increased to 3.45, reflecting a further increase in the company's reliance on debt financing. This could potentially lead to higher interest expenses and financial vulnerability in case of economic downturns.

In contrast, the financial leverage ratio decreased to 2.91 by the end of 2022, and further dropped to 2.45 by the end of 2023. These decreases indicate a reduction in the company's debt-to-equity ratio, implying a more conservative capital structure and lower financial risk.

However, by the end of 2024, the financial leverage ratio slightly increased to 2.68. While this ratio is lower compared to the initial years, it suggests a slight uptick in the company's reliance on debt financing.

Overall, the trend in Patrick Industries Inc's financial leverage ratio shows fluctuations, with periods of increasing and decreasing leverage. It is essential for the company to carefully manage its debt levels to maintain a healthy balance between debt and equity financing to ensure financial stability and sustainable growth.