Terex Corporation (TEX)
Financial leverage ratio
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,615,500 | 3,461,100 | 3,415,200 | 3,281,200 | 3,118,100 | 2,976,500 | 2,993,700 | 2,939,900 | 2,863,500 | 3,067,900 | 3,068,500 | 2,965,500 | 3,031,800 | 2,915,200 | 2,864,300 | 3,114,700 | 3,195,600 | 3,160,700 | 3,603,100 | 3,654,800 |
| Total stockholders’ equity | US$ in thousands | 1,672,300 | 1,496,200 | 1,432,200 | 1,294,600 | 1,181,200 | 1,034,700 | 1,048,900 | 1,114,100 | 1,109,600 | 1,050,700 | 1,033,900 | 946,100 | 921,500 | 852,700 | 800,400 | 786,200 | 932,300 | 866,300 | 860,100 | 781,800 |
| Financial leverage ratio | 2.16 | 2.31 | 2.38 | 2.53 | 2.64 | 2.88 | 2.85 | 2.64 | 2.58 | 2.92 | 2.97 | 3.13 | 3.29 | 3.42 | 3.58 | 3.96 | 3.43 | 3.65 | 4.19 | 4.67 |
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 exhibited a declining trend over the past year, indicating a reduction in the company's reliance on debt to finance its operations. The ratio has decreased from 2.64 in Q4 2022 to 2.16 in Q4 2023. This suggests that Terex Corp. has been managing its debt levels effectively and has been gradually improving its financial stability by lowering its debt levels in relation to its equity.
However, it is important to note that even though the financial leverage ratio has been declining, it still remains above 2. This indicates that Terex Corp. continues to have a significant level of financial leverage, with more assets being financed through debt compared to equity. While some level of leverage can be beneficial for companies to magnify returns, too much leverage can also increase financial risk, especially in times of economic uncertainty.
Overall, the decreasing trend in Terex Corp.'s financial leverage ratio signifies a positive development in the company's capital structure and financial health, as it demonstrates a prudent approach towards managing its debt levels and maintaining a balanced mix of debt and equity financing.