Watsco Inc (WSO)
Financial leverage ratio
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total assets | US$ in thousands | 3,729,180 | 4,039,070 | 4,103,010 | 3,800,610 | 3,488,210 | 3,584,590 | 3,788,590 | 3,473,890 | 3,085,860 | 3,090,920 | 3,131,680 | 2,692,260 | 2,484,350 | 2,647,680 | 2,636,730 | 2,581,830 | 2,556,160 | 2,693,060 | 2,632,430 | 2,398,940 |
| Total stockholders’ equity | US$ in thousands | 2,229,840 | 2,224,010 | 2,037,650 | 1,928,870 | 1,889,240 | 1,908,780 | 1,834,440 | 1,725,210 | 1,664,950 | 1,644,580 | 1,575,700 | 1,491,410 | 1,486,680 | 1,489,610 | 1,437,040 | 1,404,340 | 1,435,430 | 1,443,110 | 1,355,600 | 1,335,210 |
| Financial leverage ratio | 1.67 | 1.82 | 2.01 | 1.97 | 1.85 | 1.88 | 2.07 | 2.01 | 1.85 | 1.88 | 1.99 | 1.81 | 1.67 | 1.78 | 1.83 | 1.84 | 1.78 | 1.87 | 1.94 | 1.80 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $3,729,180K ÷ $2,229,840K
= 1.67
The financial leverage ratio of Watsco Inc. has been fluctuating over the past eight quarters, ranging from 1.67 to 2.07. A financial leverage ratio above 1 indicates that the company relies more on debt financing than equity financing.
A higher financial leverage ratio may suggest increased financial risk as the company has a higher level of debt that needs to be serviced. In contrast, a lower ratio indicates lesser reliance on debt and potentially lower financial risk.
The company experienced a peak in its financial leverage ratio in Q2 2022 at 2.07, signaling a higher level of debt compared to equity at that point. However, the ratio has been gradually decreasing since then, indicating a possible shift towards a more balanced capital structure.
Overall, the trend in Watsco Inc.'s financial leverage ratio suggests some variability in its capital structure over the quarters, but it is essential to further analyze the reasons behind these fluctuations and their implications for the company's financial health and risk profile.