Solventum Corp. (SOLV)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|
| Total assets | US$ in thousands | 14,377,000 | 13,594,000 | 14,075,000 | — |
| Total stockholders’ equity | US$ in thousands | 3,409,000 | 11,742,000 | 12,059,000 | — |
| Financial leverage ratio | 4.22 | 1.16 | 1.17 | — |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $14,377,000K ÷ $3,409,000K
= 4.22
Solventum Corp.'s financial leverage ratio has experienced significant fluctuations over the past three years. As of December 31, 2023, the ratio stands at 4.22, reflecting a substantial increase compared to the previous year's figure of 1.16. This sharp rise suggests a higher level of financial leverage in the company's capital structure, indicating a potentially greater reliance on debt financing.
In contrast, both the 2022 and 2021 financial leverage ratios were relatively stable at 1.16 and 1.17, respectively. The sudden spike in 2023 could be indicative of recent debt issuance or restructuring activities that have amplified the company's leverage position.
It is crucial for Solventum Corp. to carefully manage its financial leverage, as excessive reliance on debt can increase the company's financial risk and interest payment obligations. Investors and creditors may closely monitor these ratios to assess the company's ability to meet its debt obligations and sustain its financial health in the long term. Further analysis of the company's debt levels, interest coverage, and overall financial performance would provide a more comprehensive understanding of Solventum Corp.'s financial leverage dynamics.
Peer comparison
Dec 31, 2023