Terex Corporation (TEX)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,615,500 | 3,118,100 | 2,863,500 | 3,031,800 | 3,195,600 |
| Total stockholders’ equity | US$ in thousands | 1,672,300 | 1,181,200 | 1,109,600 | 921,500 | 932,300 |
| Financial leverage ratio | 2.16 | 2.64 | 2.58 | 3.29 | 3.43 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,615,500K ÷ $1,672,300K
= 2.16
The financial leverage ratio of Terex Corp. has shown a decreasing trend over the past five years, indicating an improvement in the company's ability to meet its financial obligations using debt financing.
The ratio decreased from 3.43 in 2019 to 2.16 in 2023, reflecting a significant reduction in the company's reliance on debt to finance its operations. This trend suggests that Terex Corp. has been able to enhance its financial stability and reduce the risks associated with high levels of debt.
Although the financial leverage ratio fluctuated slightly between 2020 and 2022, the overall decreasing trend indicates that Terex Corp. has been effectively managing its debt levels and working towards a more sustainable capital structure.
A lower financial leverage ratio generally signifies a lower risk of default and greater financial flexibility for the company. Terex Corp.'s improving trend in this ratio suggests a positive direction in the company's financial health and risk management strategies.