Trex Company Inc (TREX)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 1,324,300 | 932,885 | 933,705 | 920,321 | 770,492 |
| Total stockholders’ equity | US$ in thousands | 850,142 | 716,671 | 518,349 | 725,034 | 588,531 |
| Financial leverage ratio | 1.56 | 1.30 | 1.80 | 1.27 | 1.31 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,324,300K ÷ $850,142K
= 1.56
The financial leverage ratio measures the extent of a company's reliance on debt to finance its operations and is calculated by dividing the company's total debt by its shareholders' equity.
For Trex Company Inc, the financial leverage ratio has shown some fluctuations over the years. As of December 31, 2020, the ratio stood at 1.31, indicating that the company had a higher level of debt relative to its equity. By December 31, 2021, the ratio had slightly decreased to 1.27, suggesting a slight reduction in the company's reliance on debt.
However, there was a significant increase in the financial leverage ratio by December 31, 2022, reaching 1.80. This substantial increase may raise concerns about the company's increasing dependence on debt financing during that year. The ratio then decreased to 1.30 by December 31, 2023, indicating a reduction in debt relative to equity.
By the end of December 31, 2024, the financial leverage ratio had risen to 1.56, suggesting that the company had slightly increased its debt compared to equity. Overall, the fluctuations in Trex Company Inc's financial leverage ratio indicate varying levels of debt utilization over the years, which may have implications for the company's financial risk and stability.
Peer comparison
Dec 31, 2024