Teradyne Inc (TER)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	3,486,820	3,501,250	3,809,420	3,652,350	2,787,010
Total stockholders’ equity	US$ in thousands	2,525,900	2,451,290	2,562,440	2,207,020	1,480,160
Financial leverage ratio		1.38	1.43	1.49	1.65	1.88

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,486,820K ÷ $2,525,900K
= 1.38

The financial leverage ratio measures the extent to which a company relies on debt to finance its operations. A higher ratio indicates a higher level of financial leverage, implying a greater reliance on debt financing.

In the case of Teradyne, Inc., the financial leverage ratio has been decreasing over the past five years, declining from 1.88 in 2019 to 1.38 in 2023. This trend suggests that the company has been reducing its reliance on debt to fund its operations.

A decreasing financial leverage ratio can be seen as a positive sign as it indicates that the company is becoming less risky in terms of its debt levels. However, it is essential to consider whether this reduction in leverage is a deliberate strategic shift by the company or a result of other factors such as increased profitability or changes in capital structure.

Overall, based on the trend in Teradyne's financial leverage ratio, the company appears to be moving towards a more conservative financial position with lower reliance on debt financing, which could enhance its financial stability and flexibility in the long run.