Trane Technologies plc (TT)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 20,146,700 | 19,391,900 | 18,081,600 | 18,059,800 | 18,156,700 |
| Total stockholders’ equity | US$ in thousands | 7,457,400 | 6,995,200 | 6,088,600 | 6,255,900 | 6,407,700 |
| Financial leverage ratio | 2.70 | 2.77 | 2.97 | 2.89 | 2.83 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $20,146,700K ÷ $7,457,400K
= 2.70
Trane Technologies plc's financial leverage ratio has demonstrated an upward trend over the period from December 31, 2020, to December 31, 2024. The ratio increased from 2.83 in 2020 to 2.89 in 2021, further rising to 2.97 in 2022, before experiencing a slight decline to 2.77 in 2023. Subsequently, the ratio decreased to 2.70 by the end of 2024.
The financial leverage ratio indicates the proportion of a company's debt to its equity, reflecting the extent to which the company relies on debt financing. Trane Technologies plc's increasing trend in the financial leverage ratio suggests a growing reliance on debt to finance its operations and growth initiatives during the analyzed period.
However, the recent decline in the ratio in 2024 may indicate a potential shift towards a more balanced capital structure or improved financial stability. It is essential for stakeholders to monitor changes in the financial leverage ratio to assess the company's risk exposure, financial health, and ability to meet its debt obligations.