Tetra Tech Inc (TTEK)
Financial leverage ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,820,480 | 2,622,780 | 2,576,560 | 2,378,560 | 2,147,410 |
| Total stockholders’ equity | US$ in thousands | 1,403,430 | 1,183,090 | 1,234,240 | 1,037,320 | 989,286 |
| Financial leverage ratio | 2.72 | 2.22 | 2.09 | 2.29 | 2.17 |
September 30, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,820,480K ÷ $1,403,430K
= 2.72
The financial leverage ratio of Tetra Tech Inc has fluctuated over the past five years, ranging from 2.09 in 2021 to 2.72 in 2023. The ratio indicates that for every dollar of equity in the company, there are approximately 2.09 to 2.72 dollars of debt financing.
The increase in the financial leverage ratio from 2021 to 2023 suggests that the company has been utilizing more debt to finance its operations and investments, potentially increasing its financial risk. On the other hand, the decrease from 2023 to 2022 followed by an increase from 2022 to 2023 could indicate fluctuations in the company's debt levels and equity base during those periods.
Overall, a higher financial leverage ratio can amplify returns on equity when the company is profitable, but it also increases the risk of financial distress if earnings decline. It is essential for investors and stakeholders to closely monitor these fluctuations in the financial leverage ratio to assess the company's financial health and risk profile.
Peer comparison
Sep 30, 2023