Sensata Technologies Holding NV (ST)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 7,680,990 | 8,756,220 | 8,613,770 | 7,844,200 | 6,834,520 |
| Total stockholders’ equity | US$ in thousands | 2,996,280 | 3,110,810 | 3,094,730 | 2,705,490 | 2,573,760 |
| Financial leverage ratio | 2.56 | 2.81 | 2.78 | 2.90 | 2.66 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $7,680,990K ÷ $2,996,280K
= 2.56
The financial leverage ratio of Sensata Technologies Holding Plc has displayed fluctuations over the past five years. The ratio indicates the company's level of financial leverage or the extent to which it relies on debt financing. A higher financial leverage ratio suggests a higher proportion of debt in the company's capital structure.
In the year ending December 31, 2023, the financial leverage ratio decreased to 2.56 from 2.81 in 2022, indicating a reduction in the company’s reliance on debt. This may imply either a decrease in the company's outstanding debt or an increase in equity.
Comparing the 2023 ratio to the previous years, it is lower than the ratios recorded in 2021 (2.78), 2020 (2.90), and 2019 (2.66), suggesting a trend of decreasing leverage over the years.
A decreasing trend in the financial leverage ratio can be seen as a positive sign as it indicates a lower level of financial risk due to reduced dependency on debt. However, it is essential to consider the overall capital structure and the company's ability to meet its financial obligations in the long term.
Peer comparison
Dec 31, 2023