UGI Corporation (UGI)

Financial leverage ratio

Sep 30, 2023 Sep 30, 2022 Sep 30, 2021 Sep 30, 2020 Sep 30, 2019
Total assets US$ in thousands 15,401,000 17,575,000 16,723,000 13,985,000 13,347,000
Total stockholders’ equity US$ in thousands 4,386,000 6,066,000 5,522,000 4,128,000 3,817,000
Financial leverage ratio 3.51 2.90 3.03 3.39 3.50

September 30, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $15,401,000K ÷ $4,386,000K
= 3.51

The financial leverage ratio measures the extent to which a company uses debt to finance its operations and assets. A higher financial leverage ratio indicates a higher degree of financial leverage, implying that the company relies more on debt financing.

Looking at UGI Corp.'s financial leverage ratio over the past five years, we can observe some fluctuations. In 2019, the ratio stood at 3.50, indicating a relatively high level of financial leverage. However, in 2020, there was a slight decrease in the ratio to 3.39, suggesting a reduction in the company's reliance on debt for financing.

Subsequently, in 2021, the financial leverage ratio decreased further to 3.03, signaling a continued trend of lower reliance on debt financing. However, the ratio increased in 2022 to 2.90, before rising notably in 2023 to 3.51.

The significant increase in the financial leverage ratio in 2023 may indicate that UGI Corp. has increased its reliance on debt to finance its operations and assets. This could be due to various factors such as strategic acquisitions, capital expansion, or refinancing activities.

It is essential to note that a high financial leverage ratio can magnify the company's financial risk, as it would be more susceptible to interest rate fluctuations and potential financial distress. On the other hand, a lower financial leverage ratio signifies a more conservative approach to financing, reducing the risk of financial instability.

Overall, UGI Corp.'s financial leverage ratio has shown fluctuation over the years, indicating varying levels of reliance on debt financing. As an analyst, it would be important to assess the reasons behind these fluctuations and evaluate the potential implications for the company's financial risk and stability.


Peer comparison

Sep 30, 2023

Company name
Symbol
Financial leverage ratio
UGI Corporation
UGI
3.51
Sempra Energy
SRE
3.04