Semtech Corporation (SMTC)

Financial leverage ratio

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Total assets	US$ in thousands	1,373,740	2,038,130	2,118,600	2,500,020	2,569,630	1,466,850	1,199,830	1,115,920	1,130,910	1,121,300	1,100,000	1,069,620	1,082,100	1,047,970	1,054,030	1,023,350	1,052,430	1,039,140	1,056,310	1,053,410
Total stockholders’ equity	US$ in thousands	-307,434	334,261	366,835	733,028	755,852	792,412	798,858	734,983	737,584	718,194	708,417	704,277	698,743	676,391	677,493	661,474	676,954	688,721	689,540	695,226
Financial leverage ratio		—	6.10	5.78	3.41	3.40	1.85	1.50	1.52	1.53	1.56	1.55	1.52	1.55	1.55	1.56	1.55	1.55	1.51	1.53	1.52

January 28, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,373,740K ÷ $-307,434K
= —

The financial leverage ratio of Semtech Corporation has shown fluctuation over the past several periods, ranging from 1.50 to 6.10. The ratio provides insight into the company's capital structure and indicates the level of debt financing compared to equity.

Between Jul 2019 and Oct 2022, the financial leverage ratio steadily increased, indicating a higher reliance on debt to finance the company's operations. This could suggest a strategy to leverage borrowed funds for growth opportunities or capital expenditures during this period.

However, in the recent periods from Jan 2023 to Jan 2024, the ratio decreased significantly, suggesting a decrease in the company's debt relative to equity. This reduction in financial leverage could indicate a shift towards a more conservative capital structure, potentially aiming to lower financial risk and improve financial stability.

It is important to note that while a higher financial leverage ratio can magnify returns on equity, it also increases financial risk as higher debt levels require greater interest payments and can lead to financial distress in challenging economic conditions. Conversely, a lower financial leverage ratio signifies a more conservative approach with less debt exposure but may limit potential returns.

Overall, the analysis of Semtech Corporation's financial leverage ratio highlights the company's changing approach to capital structure management and the balance between debt and equity financing over the periods under review.