Pinnacle West Capital Corp (PNW)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 26,102,800 | 24,661,200 | 22,723,400 | 22,003,200 | 20,020,400 |
| Total stockholders’ equity | US$ in thousands | 6,754,310 | 6,177,660 | 6,048,650 | 5,906,200 | 5,633,500 |
| Financial leverage ratio | 3.86 | 3.99 | 3.76 | 3.73 | 3.55 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $26,102,800K ÷ $6,754,310K
= 3.86
The financial leverage ratio of Pinnacle West Capital Corp has shown a gradual increase over the past five years. It was 3.55 at the end of December 31, 2020, and has steadily increased to 3.86 by the end of December 31, 2024. This indicates that the company's reliance on debt to finance its operations and growth has been on the rise.
While an increasing financial leverage ratio can amplify returns on equity when business is booming, it also exposes the company to higher financial risk during economic downturns or adverse market conditions. Investors and creditors may closely monitor this ratio to assess the company's ability to meet its debt obligations and manage its financial health effectively.
Pinnacle West Capital Corp should continue to monitor and manage its financial leverage ratio to ensure a healthy balance between debt and equity financing, which is crucial for sustainable growth and long-term financial stability.
Peer comparison
Dec 31, 2024