Sonos Inc (SONO)
Financial leverage ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,002,240 | 1,188,390 | 1,138,800 | 816,051 | 761,605 |
| Total stockholders’ equity | US$ in thousands | 518,657 | 560,513 | 569,042 | 297,839 | 280,928 |
| Financial leverage ratio | 1.93 | 2.12 | 2.00 | 2.74 | 2.71 |
September 30, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,002,240K ÷ $518,657K
= 1.93
The financial leverage ratio, also known as the equity multiplier, measures the extent to which a company's operations are financed by equity as opposed to debt. A higher financial leverage ratio indicates a greater reliance on debt to finance assets.
Interpreting the financial leverage ratios for Sonos Inc over the past five years, we can observe the following trends:
1. Sep 30, 2023: Financial leverage ratio of 1.93
2. Oct 1, 2022: Financial leverage ratio of 2.12
3. Oct 2, 2021: Financial leverage ratio of 2.00
4. Oct 3, 2020: Financial leverage ratio of 2.74
5. Sep 28, 2019: Financial leverage ratio of 2.71
The decreasing trend in the financial leverage ratio from 2019 to 2023 indicates a lower reliance on debt to finance the company's assets. This may imply that Sonos Inc has been reducing its debt levels relative to its equity, which could lower the financial risk and the cost of debt financing. A lower financial leverage ratio also suggests a stronger equity position and a reduced probability of financial distress.
Overall, Sonos Inc's decreasing trend in the financial leverage ratio over the past five years reflects a favorable shift towards a more conservative capital structure and a reduced dependency on debt for funding its operations and investments.
Peer comparison
Sep 30, 2023