Watsco Inc (WSO)
Financial leverage ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 4,479,520 | 3,729,180 | 3,488,210 | 3,085,860 | 2,496,920 |
| Total stockholders’ equity | US$ in thousands | 2,656,990 | 2,229,840 | 1,889,240 | 1,664,950 | 1,486,680 |
| Financial leverage ratio | 1.69 | 1.67 | 1.85 | 1.85 | 1.68 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $4,479,520K ÷ $2,656,990K
= 1.69
The financial leverage ratio of Watsco Inc has shown some fluctuation over the past five years. It increased from 1.68 as of December 31, 2020, to 1.85 as of December 31, 2021, and remained at the same level in 2022. Subsequently, it decreased slightly to 1.67 by December 31, 2023, and then increased again to 1.69 as of December 31, 2024.
Overall, the financial leverage ratio indicates the company's level of debt relative to its equity. A higher ratio suggests that Watsco Inc relies more on debt financing, which can magnify returns but also increase financial risk. On the other hand, a lower ratio signifies a more conservative capital structure. The variations in Watsco Inc's financial leverage ratio over the years may reflect changes in the company's debt management strategies and financial performance. It would be prudent for stakeholders to closely monitor these trends to assess the company's ability to meet its financial obligations and sustain long-term growth.