United Parcel Service Inc (UPS)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 70,857,000 | 71,124,000 | 69,405,000 | 62,408,000 | 57,857,000 |
| Total stockholders’ equity | US$ in thousands | 17,306,000 | 19,786,000 | 14,253,000 | 657,000 | 3,267,000 |
| Financial leverage ratio | 4.09 | 3.59 | 4.87 | 94.99 | 17.71 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $70,857,000K ÷ $17,306,000K
= 4.09
The financial leverage ratio of United Parcel Service, Inc. has shown significant fluctuations over the past five years.
In 2023, the financial leverage ratio increased to 4.09 from 3.59 in 2022, indicating that the company increased its reliance on debt to finance its operations and investments compared to the previous year. This rise in leverage could potentially amplify returns to shareholders, but it also increases financial risk as the company has more debt obligations to fulfill.
The ratio had a sharp decrease in 2022 compared to 2021 when it was at 4.87, suggesting a reduction in leverage and a move towards a more conservative capital structure. However, the ratio for 2021 was relatively high, indicating a relatively high level of debt compared to equity.
The year 2020 stands out with a financial leverage ratio of 94.99, which indicates an exceptional increase in financial risk due to a significant proportion of debt in the capital structure. This may have been influenced by specific events or strategic decisions the company made during that year.
In 2019, the financial leverage ratio was 17.71, reflecting a high level of leverage compared to the previous few years but significantly lower than in 2020.
Overall, fluctuations in the financial leverage ratio of United Parcel Service, Inc. suggest varying levels of debt usage and financial risk management strategies over the past five years. Investors and stakeholders should closely monitor these changes in leverage to understand the company's financial health and risk profile.