Southern Company (SO)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 145,180,000 | 139,331,000 | 134,891,000 | 127,534,000 | 122,935,000 |
| Total stockholders’ equity | US$ in thousands | 33,208,000 | 31,444,000 | 30,408,000 | 28,164,000 | 28,263,000 |
| Financial leverage ratio | 4.37 | 4.43 | 4.44 | 4.53 | 4.35 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $145,180,000K ÷ $33,208,000K
= 4.37
The financial leverage ratio of Southern Company has shown a relatively stable trend over the past five years, ranging from 4.35 in December 31, 2020, to 4.37 in December 31, 2024. During this period, the ratio fluctuated within a narrow range, reaching its highest value of 4.53 in December 31, 2021, and its lowest value of 4.37 in December 31, 2024.
The consistent values of the financial leverage ratio indicate that Southern Company has maintained a relatively steady level of financial leverage over the years. A financial leverage ratio of around 4.4 suggests that the company relies more on debt financing compared to equity to fund its operations and investments. This level of leverage may indicate that Southern Company is able to benefit from the tax advantages of debt financing, but it also implies higher financial risk due to the potential for increased interest payments and debt obligations.
Overall, Southern Company's financial leverage ratio has remained stable, suggesting a balanced approach to capital structure management. Further analysis of the company's debt obligations and ability to service its debt would provide additional insights into its financial health and risk profile.
Peer comparison
Dec 31, 2024