Simply Good Foods Co (SMPL)

Financial leverage ratio

		Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020	Aug 31, 2019
Total assets	US$ in thousands	2,097,080	2,094,250	2,052,220	2,008,440	1,141,650
Total stockholders’ equity	US$ in thousands	1,571,100	1,438,660	1,188,800	1,139,330	712,868
Financial leverage ratio		1.33	1.46	1.73	1.76	1.60

August 26, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,097,080K ÷ $1,571,100K
= 1.33

The financial leverage ratio measures the extent to which a company utilizes debt to finance its assets. A higher financial leverage ratio indicates higher financial risk as the company has more debt relative to its equity.

Looking at the trend of Simply Good Foods Co's financial leverage ratio over the past five years, a notable decrease is observed from 1.76 in 2020 to 1.33 in 2023. This indicates that the company has reduced its reliance on debt financing and has strengthened its financial position by increasing its equity relative to debt.

The decrease in the financial leverage ratio suggests that Simply Good Foods Co has improved its ability to meet financial obligations and is less reliant on borrowed funds. This may indicate a more conservative approach to capital structure and potentially lower financial risk, as the company may be less vulnerable to fluctuations in interest rates and potential debt repayment challenges.

Overall, the declining trend in the financial leverage ratio reflects positive financial management and a stronger balance sheet position for Simply Good Foods Co. This trend indicates a healthier and more sustainable financing structure, which could enhance investor confidence and long-term stability for the company.