Gentherm Inc (THRM)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	1,234,370	1,239,300	935,343	1,022,840	738,832
Total stockholders’ equity	US$ in thousands	644,722	672,273	653,806	586,331	484,096
Financial leverage ratio		1.91	1.84	1.43	1.74	1.53

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,234,370K ÷ $644,722K
= 1.91

Gentherm Inc's financial leverage ratio has exhibited fluctuating trends over the past five years. The ratio increased to 1.91 in 2023 from 1.84 in 2022, indicating a slightly higher level of financial leverage. This could imply that the company has taken on more debt relative to equity in 2023.

Comparing to 2021 and 2020, where the financial leverage ratio was 1.43 and 1.74 respectively, the ratio in 2023 is higher, suggesting a higher level of financial risk associated with debt utilization. In 2021, the company had a lower financial leverage ratio, reflecting a more conservative capital structure.

However, when looking back to 2019 when the financial leverage ratio was 1.54, the current ratio in 2023 is still higher. It seems that Gentherm Inc has been gradually increasing its financial leverage over the years since 2019.

Overall, a higher financial leverage ratio indicates a greater reliance on debt financing, which can magnify returns but also increase the risk of financial distress. Investors and stakeholders should carefully monitor Gentherm Inc's debt levels and debt management practices to assess the company's financial stability and risk profile.