Pool Corporation (POOL)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,428,070 | 3,565,440 | 3,230,130 | 1,739,670 | 1,483,270 |
| Total stockholders’ equity | US$ in thousands | 1,312,790 | 1,235,190 | 1,071,390 | 639,470 | 410,180 |
| Financial leverage ratio | 2.61 | 2.89 | 3.01 | 2.72 | 3.62 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,428,070K ÷ $1,312,790K
= 2.61
The financial leverage ratio measures the extent to which a company relies on debt financing rather than equity to fund its operations and growth. A higher financial leverage ratio indicates a higher proportion of debt in the company's capital structure.
Pool Corporation's financial leverage ratio has fluctuated over the past five years. In 2023, the ratio stands at 2.61, showing a decrease compared to the previous year. This suggests that the company has reduced its reliance on debt to finance its operations.
In 2022, the financial leverage ratio was 2.89, showing an increase from the prior year. This indicates a higher level of debt in the company's capital structure compared to 2021.
In 2021, the financial leverage ratio was 3.01, reaching the highest level in the past five years. This suggests that Pool Corporation had a higher dependence on debt financing in that year.
In 2020, the financial leverage ratio was 2.72, indicating a lower level of debt compared to 2021 but still higher than the current ratio in 2023.
In 2019, the financial leverage ratio was at its highest at 3.62, signifying significant reliance on debt for funding operations and growth.
Overall, Pool Corporation's financial leverage ratio has shown variability over the past five years, with the company's capital structure shifting in terms of its reliance on debt financing. It is important to consider the reasons behind these fluctuations and assess the company's ability to manage its debt levels effectively to ensure financial stability and sustainability.