Walgreens Boots Alliance Inc (WBA)
Financial leverage ratio
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 96,628,000 | 90,124,000 | 81,285,000 | 87,174,000 | 67,598,000 |
| Total stockholders’ equity | US$ in thousands | 20,020,000 | 25,275,000 | 23,419,000 | 20,637,000 | 23,512,000 |
| Financial leverage ratio | 4.83 | 3.57 | 3.47 | 4.22 | 2.88 |
August 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $96,628,000K ÷ $20,020,000K
= 4.83
The financial leverage ratio, also known as the debt-to-equity ratio, measures the extent to which a company relies on debt to finance its operations. A higher ratio indicates higher financial leverage and potentially greater financial risk.
Walgreens Boots Alliance Inc's financial leverage ratio has shown fluctuations over the past five years. In 2023, the ratio increased to 4.83 from 3.57 in 2022, indicating a significant increase in financial leverage and reliance on debt. This suggests that the company's debt levels have increased substantially relative to its equity, reflecting a higher degree of financial risk.
The company's financial leverage ratio was also relatively high in 2020 at 4.22, indicating elevated financial leverage during that period. In contrast, the ratio was lower in 2021 and 2019 at 3.47 and 2.88, respectively, suggesting a relatively lower reliance on debt compared to equity in those years.
The upward trend in the financial leverage ratio from 2019 to 2023 raises concerns about the company's increasing reliance on debt to support its operations and investment activities. Investors and creditors should closely monitor the company's ability to manage and service its growing debt burden, as higher financial leverage can amplify the impact of adverse financial conditions on the company's financial performance and solvency.
Peer comparison
Aug 31, 2023