Sonic Automotive Inc (SAH)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	5,364,600	4,978,300	4,975,100	3,746,000	4,071,040
Total stockholders’ equity	US$ in thousands	891,900	895,200	1,076,400	814,800	944,800
Financial leverage ratio		6.01	5.56	4.62	4.60	4.31

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $5,364,600K ÷ $891,900K
= 6.01

The financial leverage ratio of Sonic Automotive, Inc. has shown an increasing trend over the past five years, indicating a rising level of financial leverage. In particular, the ratio has increased from 4.31 in 2019 to 6.01 in 2023. This suggests that the company has been relying more on debt to finance its operations and growth in recent years. A higher financial leverage ratio can magnify returns on equity when times are good but also increases the risk of financial distress if economic conditions deteriorate. It is important for investors and stakeholders to closely monitor Sonic Automotive's ability to manage its increasing leverage and ensure sustainable financial health.