Simulations Plus Inc (SLP)

Financial leverage ratio

		Aug 31, 2024	May 31, 2024	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
Total assets	US$ in thousands	196,639	192,691	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
Total stockholders’ equity	US$ in thousands	182,431	180,859	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
Financial leverage ratio		1.08	1.07	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

August 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $196,639K ÷ $182,431K
= 1.08

The financial leverage ratio of Simulations Plus Inc has fluctuated over the past few years, ranging from a low of 0.77 to a high of 1.22. This ratio indicates the proportion of the company's total assets that are financed by debt as opposed to equity. Generally, a higher financial leverage ratio suggests higher financial risk due to increased reliance on debt financing.

Specifically, the company's financial leverage ratio has been relatively stable around the 1.08 to 1.10 range in recent periods, which indicates that the company has been maintaining a moderate level of debt in its capital structure. This implies a balanced approach to financing operations, leveraging debt to some extent to fuel growth while also maintaining a reasonable level of equity to support financial stability.

It is important for investors and stakeholders to closely monitor changes in the financial leverage ratio over time, as significant shifts could signal changes in the company's risk profile and financial health. Additionally, analyzing this ratio in conjunction with other financial metrics can provide a more comprehensive understanding of the company's overall financial strength and stability.