Sotera Health Co (SHC)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,071,650 | 3,130,420 | 3,117,700 | 2,789,500 | 2,761,280 |
| Total stockholders’ equity | US$ in thousands | 404,911 | 443,734 | 350,238 | 586,096 | 454,574 |
| Financial leverage ratio | 7.59 | 7.05 | 8.90 | 4.76 | 6.07 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,071,650K ÷ $404,911K
= 7.59
The financial leverage ratio measures the extent to which a company is using debt to finance its operations and growth. A higher financial leverage ratio indicates that a company relies more on debt, which can increase financial risk but also potentially lead to higher returns.
In the case of Sotera Health Co, the financial leverage ratio has fluctuated over the past five years. It was 6.07 as of December 31, 2020, showing a moderate level of leverage. The ratio decreased to 4.76 by the end of 2021, indicating a reduction in reliance on debt. However, there was a significant increase in leverage with a ratio of 8.90 as of December 31, 2022, suggesting a substantial increase in debt financing.
In the subsequent years, the financial leverage ratio for Sotera Health Co remained relatively stable. It decreased to 7.05 by the end of 2023 but then increased slightly to 7.59 by December 31, 2024. Overall, the average ratio of around 6.87 over the five-year period indicates a moderate to high level of financial leverage for the company.
Investors and creditors should closely monitor Sotera Health Co's financial leverage ratio to assess its ability to meet its debt obligations and manage financial risk effectively. A high ratio may imply higher interest expenses and greater vulnerability to economic downturns, while a low ratio could indicate underutilization of debt for potential growth opportunities.
Peer comparison
Dec 31, 2024