SanDisk Corp (SNDK)
Financial leverage ratio
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 9,230,760 | 10,290,000 | 10,488,700 | 10,339,100 | 10,174,600 |
| Total stockholders’ equity | US$ in thousands | 5,738,920 | 6,528,060 | 6,967,870 | 7,263,900 | 7,064,360 |
| Financial leverage ratio | 1.61 | 1.58 | 1.51 | 1.42 | 1.44 |
December 31, 2015 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $9,230,760K ÷ $5,738,920K
= 1.61
The financial leverage ratio measures the extent to which a company relies on debt to finance its operations. For SanDisk Corp, the trend in the financial leverage ratio from 2011 to 2015 shows an increase, indicating a higher level of debt relative to equity over the period. This indicates that the company has been increasingly using debt as a source of financing compared to equity. A financial leverage ratio above 1 signifies that the company has more debt than equity in its capital structure. In SanDisk's case, the ratio has been consistently above 1, indicating a higher dependence on debt to fund its operations and growth. Investors and creditors may view a rising trend in the financial leverage ratio as a sign of increased financial risk due to higher debt obligations. It is important for the company to carefully manage its debt levels to ensure financial stability and sustainable growth.
Peer comparison
Dec 31, 2015