Sonoco Products Company (SON)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 7,191,960 | 7,052,940 | 5,073,240 | 5,277,260 | 5,126,290 |
| Total stockholders’ equity | US$ in thousands | 2,424,340 | 2,065,810 | 1,837,440 | 1,899,600 | 1,802,680 |
| Financial leverage ratio | 2.97 | 3.41 | 2.76 | 2.78 | 2.84 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $7,191,960K ÷ $2,424,340K
= 2.97
The financial leverage ratio of Sonoco Products Co. has fluctuated over the past five years, ranging from 2.76 to 3.41. The ratio measures the extent to which the company is utilizing debt to finance its operations and investments. A higher financial leverage ratio indicates a greater reliance on debt financing, which can amplify returns but also increase financial risk.
In 2022, the ratio peaked at 3.41, suggesting a heightened level of debt relative to equity in the company's capital structure. This may have been a strategic decision to take advantage of lower interest rates or invest in growth opportunities. However, the subsequent decrease in the ratio to 2.97 in 2023 indicates a reduction in the proportion of debt used, which could be a result of debt repayment or a shift towards equity financing.
Overall, the trend in Sonoco Products Co.'s financial leverage ratio shows some variability, but it is crucial for stakeholders to monitor these changes to assess the company's risk profile and financial stability.
Peer comparison
Dec 31, 2023