Shake Shack Inc (SHAK)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,605,860 | 1,511,950 | 1,457,570 | 1,145,350 | 968,268 |
| Total stockholders’ equity | US$ in thousands | 443,417 | 412,204 | 409,537 | 407,321 | 298,817 |
| Financial leverage ratio | 3.62 | 3.67 | 3.56 | 2.81 | 3.24 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,605,860K ÷ $443,417K
= 3.62
The financial leverage ratio for Shake Shack Inc has shown fluctuating trends over the past five years. The ratio increased from 2.81 in 2020 to 3.67 in 2022, suggesting a higher level of financial leverage. However, it slightly decreased to 3.62 in 2023, indicating a slight improvement in the company's debt-to-equity mix.
Comparing the latest ratio to historical data, we observe that the ratio in 2023 is higher than in 2021 and 2019, but lower than in 2022. This implies that Shake Shack Inc has been relying more on debt financing in recent years, but has taken some measures to reduce its financial leverage in 2023.
Overall, a financial leverage ratio of 3.62 in 2023 indicates that the company has $3.62 in debt for every $1 of equity. It suggests that Shake Shack Inc's capital structure is predominantly debt-funded, which could pose risks in terms of increased interest payments and financial stability. Management should continue to monitor and manage the company's leverage ratio effectively to maintain a healthy financial position.
Peer comparison
Dec 31, 2023