Solventum Corp. (SOLV)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 14,457,000 | 14,377,000 | 13,594,000 | 14,075,000 | — |
| Total stockholders’ equity | US$ in thousands | 2,959,000 | 3,409,000 | 11,742,000 | 12,059,000 | — |
| Financial leverage ratio | 4.89 | 4.22 | 1.16 | 1.17 | — |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $14,457,000K ÷ $2,959,000K
= 4.89
The financial leverage ratio of Solventum Corp. provides insights into the company's level of debt relative to its equity over a period of time. The ratio has shown fluctuations, starting from an unreported value in December 2020 to 1.17 in December 2021, remaining stable at 1.16 in December 2022. However, there was a significant increase to 4.22 in December 2023 and a further rise to 4.89 by December 2024.
The sudden spike in the financial leverage ratio in 2023 and 2024 indicates a substantial increase in the company's reliance on debt to finance its operations compared to equity. Such a high ratio suggests that a larger portion of Solventum Corp.'s assets is funded by debt, potentially posing higher financial risks due to the increased interest and principal repayment obligations.
These trends may raise concerns among investors and creditors about the company's ability to service its debt obligations in the long run. It is crucial for Solventum Corp. to carefully manage its debt levels and financial structure to ensure sustainable growth and financial stability in the future.
Peer comparison
Dec 31, 2024