Reliance Steel & Aluminum Co (RS)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 10,480,300 | 10,329,900 | 9,536,000 | 8,106,800 | 8,131,100 |
| Total stockholders’ equity | US$ in thousands | 7,722,300 | 7,087,400 | 6,086,500 | 5,115,400 | 5,206,600 |
| Financial leverage ratio | 1.36 | 1.46 | 1.57 | 1.58 | 1.56 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $10,480,300K ÷ $7,722,300K
= 1.36
The financial leverage ratio of Reliance Steel & Aluminum Co. has exhibited a decreasing trend over the past five years. The ratio decreased from 1.56 in 2019 to 1.36 in 2023.
A financial leverage ratio of greater than 1 indicates that the company relies more on debt financing than equity financing. Therefore, the decreasing trend in the financial leverage ratio suggests that the company has been reducing its reliance on debt to finance its operations and investments over the years.
The reduction in the financial leverage ratio may be a positive indicator of improved financial stability and lower risk of default for the company. It could also imply that the company is managing its debt levels more effectively and potentially reducing its financial risk exposure.
Overall, the decreasing trend in the financial leverage ratio of Reliance Steel & Aluminum Co. indicates a prudent approach towards managing its capital structure and suggests a potentially healthier financial position compared to previous years.
Peer comparison
Dec 31, 2023