Vestis Corporation (VSTS)
Financial leverage ratio
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,932,390 | 3,157,120 | 3,133,010 | 3,108,380 | — |
| Total stockholders’ equity | US$ in thousands | 903,051 | 877,360 | 2,335,810 | 2,331,980 | — |
| Financial leverage ratio | 3.25 | 3.60 | 1.34 | 1.33 | — |
September 30, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,932,390K ÷ $903,051K
= 3.25
The financial leverage ratio of Vestis Corporation has shown a declining trend over the past three fiscal years. As of September 30, 2024, the financial leverage ratio stands at 3.25, indicating that the company is utilizing more debt in its capital structure compared to previous years. This suggests that Vestis Corporation has increased its reliance on debt financing to support its operations and growth initiatives.
A high financial leverage ratio can indicate increased financial risk as the company may have higher debt obligations to meet, which could impact its financial stability and ability to generate returns for shareholders. It is important for Vestis Corporation to carefully manage its debt levels and ensure that it maintains a healthy balance between debt and equity financing to support sustainable growth and profitability.
Looking back at the previous years, the financial leverage ratio was notably higher in 2023 at 3.60, reflecting a potentially more aggressive debt strategy at that time. In 2022 and 2021, the financial leverage ratios were relatively lower at 1.34 and 1.33 respectively, suggesting a more conservative approach to debt utilization during those periods.
Overall, while the current financial leverage ratio of 3.25 for Vestis Corporation indicates an increased reliance on debt financing, it is important for the company to assess and manage its debt levels prudently to maintain a healthy financial position and mitigate potential risks associated with high levels of leverage.
Peer comparison
Sep 30, 2024