Simulations Plus Inc (SLP)

Financial leverage ratio

		Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019	May 31, 2019
Total assets	US$ in thousands	193,973	185,778	186,101	179,134	173,201	190,461	188,382	186,223	185,044	180,994	179,978	179,083	175,769	170,470	168,422	35,885	49,200	47,763	45,197	45,502
Total stockholders’ equity	US$ in thousands	177,038	172,341	170,029	169,390	164,593	180,122	178,248	177,559	172,576	168,456	165,782	165,398	161,497	158,031	156,035	46,587	40,862	39,187	37,681	36,168
Financial leverage ratio		1.10	1.08	1.09	1.06	1.05	1.06	1.06	1.05	1.07	1.07	1.09	1.08	1.09	1.08	1.08	0.77	1.20	1.22	1.20	1.26

February 29, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $193,973K ÷ $177,038K
= 1.10

The financial leverage ratio of Simulations Plus Inc has varied over the recent quarters with fluctuations between 0.77 and 1.26. This ratio indicates how the company is utilizing debt to finance its operations and growth. A financial leverage ratio of 1 implies that the company's total assets are equal to its total equity plus total debt.

The trend shows that the company has been moderately leveraged over the periods, with the most recent ratio standing at 1.10 as of February 29, 2024. This suggests that for every $1 of equity, the company has $1.10 of total assets, indicating a slightly higher reliance on debt financing.

It is essential to monitor the financial leverage ratio over time to assess the company's ability to meet its debt obligations and manage financial risk effectively. A stable or decreasing trend in this ratio may indicate improved financial health, while a significant increase could signal potential financial distress and increased risk for stakeholders.