Regal Beloit Corporation (RRX)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 15,431,400 | 10,268,900 | 10,367,400 | 4,589,000 | 4,430,700 |
| Total stockholders’ equity | US$ in thousands | 6,344,300 | 6,388,200 | 6,370,000 | 2,544,400 | 2,351,100 |
| Financial leverage ratio | 2.43 | 1.61 | 1.63 | 1.80 | 1.88 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $15,431,400K ÷ $6,344,300K
= 2.43
The financial leverage ratio of Regal Rexnord Corp has been fluctuating over the past five years, ranging from a low of 1.61 to a high of 2.43. A higher financial leverage ratio typically indicates that the company has a higher level of debt relative to its equity, which can suggest higher financial risk due to increased interest payments and potential difficulties in meeting debt obligations during economic downturns.
The significant increase in the financial leverage ratio from 1.61 in 2022 to 2.43 in 2023 may signal that Regal Rexnord Corp has taken on additional debt to finance its operations or growth initiatives. This could potentially lead to increased financial risk and reduced financial flexibility.
Conversely, the decreasing trend in the financial leverage ratio from 1.88 in 2019 to 1.61 in 2022 indicates a reduction in the level of debt relative to equity over this period. This may suggest a more conservative financial strategy, with lower reliance on debt financing and potentially lower financial risk for the company.
Overall, it is important for investors and stakeholders to closely monitor the financial leverage ratio of Regal Rexnord Corp to assess the company's capital structure and financial health, considering the potential implications of changes in leverage on its profitability and risk profile.
Peer comparison
Dec 31, 2023