Southern Company (SO)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 139,331,000 | 134,891,000 | 127,534,000 | 122,935,000 | 118,700,000 |
| Total stockholders’ equity | US$ in thousands | 31,444,000 | 30,408,000 | 27,874,000 | 27,972,000 | 27,505,000 |
| Financial leverage ratio | 4.43 | 4.44 | 4.58 | 4.39 | 4.32 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $139,331,000K ÷ $31,444,000K
= 4.43
The financial leverage ratio of Southern Company has been relatively stable over the past five years, ranging from 4.27 in 2019 to 4.53 in 2021. The ratio measures the proportion of the company's total assets that are financed by debt as opposed to equity. A higher financial leverage ratio indicates a higher proportion of debt in the company's capital structure.
Southern Company's financial leverage ratio has remained above 4 in recent years, indicating that the company relies significantly on debt to finance its operations and investments. This level of leverage suggests that the company may have a higher risk profile due to the potential for higher interest payments and debt obligations.
It is important for investors and analysts to closely monitor Southern Company's financial leverage ratio over time to assess the company's ability to manage its debt levels effectively and maintain financial stability. Additionally, a high financial leverage ratio may impact the company's credit rating and ability to secure favorable financing terms in the future.
Peer comparison
Dec 31, 2023