SM Energy Co (SM)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 8,576,650 | 6,379,980 | 5,716,040 | 5,233,980 | 4,976,430 |
| Total stockholders’ equity | US$ in thousands | 4,237,260 | 3,615,850 | 3,085,460 | 2,063,130 | 2,016,160 |
| Financial leverage ratio | 2.02 | 1.76 | 1.85 | 2.54 | 2.47 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $8,576,650K ÷ $4,237,260K
= 2.02
The financial leverage ratio of SM Energy Co has shown fluctuations over the past five years, ranging from a high of 2.54 in December 31, 2021, to a low of 1.76 in December 31, 2023. This ratio measures the extent to which the company relies on debt to finance its operations and investments. A higher ratio indicates a higher level of debt relative to equity, potentially increasing financial risk. Conversely, a lower ratio signifies a stronger equity position and lower financial risk.
The decrease in the financial leverage ratio from 2021 to 2023 suggests a reduction in the company's reliance on debt financing, potentially indicating a more conservative approach to capital structure. However, the ratio increased slightly in 2024 to 2.02, which may imply a renewed focus on debt financing or increased leverage for strategic purposes. It is crucial for stakeholders to monitor the financial leverage ratio to assess the company's capital structure and risk profile.
Peer comparison
Dec 31, 2024