Essential Utilities Inc (WTRG)

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 16,841,500 16,432,800 16,101,900 15,818,300 15,719,100 15,279,800 15,046,200 14,877,000 14,658,300 14,236,500 13,934,000 13,821,900 13,705,300 13,399,500 13,028,400 12,929,000 9,361,980 9,340,970 9,180,350 7,080,950
Total stockholders’ equity US$ in thousands 5,896,180 5,922,560 5,614,700 5,515,940 5,377,390 5,343,100 5,342,030 5,255,100 5,184,450 5,127,860 4,836,820 4,810,340 4,683,880 4,635,750 4,635,530 4,613,160 3,880,860 3,862,560 3,824,770 1,992,580
Financial leverage ratio 2.86 2.77 2.87 2.87 2.92 2.86 2.82 2.83 2.83 2.78 2.88 2.87 2.93 2.89 2.81 2.80 2.41 2.42 2.40 3.55

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $16,841,500K ÷ $5,896,180K
= 2.86

The financial leverage ratio of Essential Utilities Inc has exhibited some fluctuation over the past eight quarters. The ratio ranged from a low of 2.77 in Q3 2023 to a high of 2.92 in Q4 2022, with an average of approximately 2.85 over this period.

A financial leverage ratio of above 1 indicates that the company relies more on debt financing than equity. Essential Utilities Inc has consistently maintained a financial leverage ratio above 2, indicating a higher level of debt utilization in its capital structure.

The stability of the financial leverage ratio around the 2.85 mark suggests that the company has been able to maintain a relatively consistent level of debt relative to equity in its capital structure. However, the slight fluctuations observed may indicate changes in the company's debt management or capital allocation strategies.

Overall, a financial leverage ratio of around 2.85 indicates that Essential Utilities Inc has been operating with a moderate level of financial leverage, balancing the benefits of debt financing with the associated risks. It is essential for the company to continue monitoring and managing its leverage ratio to ensure its financial stability and sustainability over the long term.