Winnebago Industries Inc (WGO)
Financial leverage ratio
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 2,432,400 | 2,416,700 | 2,062,570 | 1,713,700 | 1,104,230 |
| Total stockholders’ equity | US$ in thousands | 1,368,100 | 1,263,000 | 1,056,900 | 827,500 | 632,212 |
| Financial leverage ratio | 1.78 | 1.91 | 1.95 | 2.07 | 1.75 |
August 26, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,432,400K ÷ $1,368,100K
= 1.78
The financial leverage ratio measures the extent to which a company relies on debt financing rather than equity to support its assets. From the provided data, we can see that Winnebago Industries, Inc.'s financial leverage ratio has fluctuated over the past five years, indicating changes in the company's capital structure and financial risk.
The financial leverage ratio has decreased from 2.07 in 2020 to 1.78 in 2023. This suggests that Winnebago Industries has reduced its reliance on debt financing compared to equity over the past three years. A declining financial leverage ratio may indicate a lower level of financial risk, as the company is less dependent on borrowed funds to finance its operations and investments.
In 2021, the financial leverage ratio was 1.95, indicating a moderate level of leverage. This suggests that Winnebago Industries' capital structure was balanced between debt and equity at that time. However, the subsequent decrease in the ratio indicates a shift towards a more equity-oriented capital structure.
The relatively low financial leverage ratio of 1.78 in 2023 indicates a conservative approach to financing, possibly reflecting a stronger emphasis on equity financing and a reduced level of financial risk. This could be a positive sign, as it suggests that Winnebago Industries has managed to strengthen its balance sheet and reduce its reliance on debt, potentially enhancing its financial stability and flexibility.
Overall, the decreasing trend in Winnebago Industries' financial leverage ratio suggests a prudent capital structure management strategy, reflecting a shift towards a more balanced mix of debt and equity financing. However, it's important to note that a lower financial leverage ratio may also indicate a more conservative approach to leveraging opportunities for growth and expansion. Therefore, while a lower ratio indicates reduced financial risk, it may also point to potentially missed opportunities for leveraging debt to boost returns for shareholders.
Peer comparison
Aug 26, 2023