Universal Health Services Inc (UHS)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 13,967,600 | 13,494,200 | 13,093,500 | 13,476,900 | 11,668,200 |
| Total stockholders’ equity | US$ in thousands | 6,149,000 | 5,920,580 | 6,089,660 | 6,317,150 | 5,504,100 |
| Financial leverage ratio | 2.27 | 2.28 | 2.15 | 2.13 | 2.12 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $13,967,600K ÷ $6,149,000K
= 2.27
The financial leverage ratio of Universal Health Services, Inc. has shown a slight fluctuation over the past five years. The ratio stood at 2.12 in 2019 and has gradually increased to 2.27 by the end of 2023. This indicates that the company's reliance on debt relative to its equity has been on the rise over the period under review.
A financial leverage ratio above 1 suggests that the company is using more debt to finance its operations than equity. A ratio above 2, as seen in the case of Universal Health Services, Inc., indicates a significant level of financial leverage. While higher leverage can amplify returns on equity in favorable conditions, it also exposes the company to greater financial risk, particularly during economic downturns or when facing challenges in meeting debt obligations.
Therefore, the trend of increasing financial leverage ratio for Universal Health Services, Inc. suggests a growing reliance on debt financing, which may warrant careful monitoring of the company's ability to manage its debt levels and service its obligations effectively in the long run.
Peer comparison
Dec 31, 2023