Tyson Foods Inc (TSN)
Financial leverage ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 36,251,000 | 36,821,000 | 36,309,000 | 34,456,000 | 32,918,000 |
| Total stockholders’ equity | US$ in thousands | 18,133,000 | 19,702,000 | 17,723,000 | 15,254,000 | 14,082,000 |
| Financial leverage ratio | 2.00 | 1.87 | 2.05 | 2.26 | 2.34 |
September 30, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $36,251,000K ÷ $18,133,000K
= 2.00
The financial leverage ratio, also known as the equity multiplier, measures the extent to which a company relies on debt to finance its assets. A higher financial leverage ratio indicates a greater reliance on debt financing, which can magnify both returns and risks for the company and its shareholders.
Analyzing the trend of Tyson Foods, Inc.'s financial leverage ratio over the past five years reveals a fluctuating pattern:
1. Sep 30, 2023: 2.00
2. Oct 1, 2022: 1.87
3. Oct 2, 2021: 2.05
4. Oct 3, 2020: 2.26
5. Sep 28, 2019: 2.35
The financial leverage ratio has varied between 1.87 and 2.35 over this period, indicating fluctuating levels of debt utilization to finance the company's assets.
A higher financial leverage ratio, as seen in 2019 and 2020, suggests that Tyson Foods relied more on debt financing during those years. This could have been driven by strategic decisions to take advantage of low-interest rates or access to favorable borrowing terms. However, it's important to note that higher leverage also increases the risk associated with debt repayments and interest expenses.
Conversely, the lower financial leverage ratio in 2022 suggests that the company used less debt to finance its assets during that period. This could indicate a shift towards a more conservative capital structure, possibly driven by a desire to reduce risk and enhance financial stability.
Overall, the fluctuating trend in Tyson Foods, Inc.'s financial leverage ratio implies that the company has been actively managing its capital structure, possibly adjusting its debt levels in response to changing market conditions, financial performance, or strategic priorities.
It's important to note that while debt can be used to amplify returns, it also exposes the company to higher financial risk, particularly in times of economic downturn or rising interest rates. Therefore, investors and stakeholders should consider the implications of the company's leverage levels in conjunction with other financial metrics and market conditions when evaluating Tyson Foods' financial health and risk profile.
Peer comparison
Sep 30, 2023