Tennant Company (TNC)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,113,400 | 1,085,100 | 1,061,700 | 1,082,600 | 1,062,900 |
| Total stockholders’ equity | US$ in thousands | 577,000 | 470,800 | 433,800 | 404,800 | 359,900 |
| Financial leverage ratio | 1.93 | 2.30 | 2.45 | 2.67 | 2.95 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,113,400K ÷ $577,000K
= 1.93
The financial leverage ratio for Tennant Co. has been trending downwards over the past five years, from 2.95 in 2019 to 1.93 in 2023. This indicates that the company has been decreasing its reliance on debt to finance its operations and investments over this period.
A financial leverage ratio of 1.93 in 2023 implies that the company has $1.93 in total assets for every dollar of shareholders' equity, which suggests that Tennant Co. is using more equity financing relative to debt financing. This can be seen as a positive sign as it lowers the company's financial risk and decreases the potential financial distress associated with high levels of debt.
Overall, the decreasing trend in the financial leverage ratio indicates that Tennant Co. has been managing its capital structure effectively by reducing its dependency on debt financing and improving its financial flexibility.
Peer comparison
Dec 31, 2023