Wolfspeed Inc (WOLF)

Financial leverage ratio

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Total assets	US$ in thousands	7,984,600	6,586,700	3,917,500	3,446,800	3,231,000
Total stockholders’ equity	US$ in thousands	882,100	1,621,900	2,439,300	2,116,500	2,083,100
Financial leverage ratio		9.05	4.06	1.61	1.63	1.55

June 30, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $7,984,600K ÷ $882,100K
= 9.05

The financial leverage ratio of Wolfspeed Inc has shown a significant increase over the past five years, starting at 1.55 in June 2020 and reaching 9.05 in June 2024. This indicates a substantial rise in the company's reliance on debt financing to support its operations and growth opportunities.

The increasing trend in the financial leverage ratio suggests that Wolfspeed has been taking on more debt in relation to its equity in recent years. While higher leverage can amplify returns on equity when profits are growing, it also increases the financial risk due to higher interest payments and potential difficulties in meeting debt obligations.

An important aspect to consider is the potential impact of such high leverage on the company's financial stability and flexibility. A high financial leverage ratio can make the company more vulnerable to economic downturns, interest rate changes, and other financial risks.

It is crucial for Wolfspeed Inc to carefully manage its debt levels and ensure that it maintains a balance between debt and equity financing to support sustainable growth and mitigate excessive financial risk. Regular monitoring and evaluation of the financial leverage ratio will be essential for the company to make informed decisions regarding its capital structure and overall financial health.