Name: Financial Leverage

Definition: Financial leverage tells you how much borrowed money the company uses to boost its size and profits. Using leverage can help a business grow faster, but it also increases pressure if sales slow down. Moderate leverage is common and often healthy. Excessive leverage can be dangerous, especially during tough economic times.

Interpretation:
• In '2021', ADD's financial leverage was 1.05, indicating how much debt is used to finance assets. Industry average for Engineering & Construction in '2021' stood at 1.52.
• In '2022', ADD's financial leverage was 1.07, indicating how much debt is used to finance assets. The increase compared to '2021' may signal growing financial pressure. Industry average for Engineering & Construction in '2022' stood at 1.83. Industry average increased by 0.30 compared to previous year.
• In '2023', ADD's financial leverage was 1.14, indicating how much debt is used to finance assets. The increase compared to '2022' may signal growing financial pressure. Industry average for Engineering & Construction in '2023' stood at 2.50. Industry average increased by 0.67 compared to previous year.
• In '2024', ADD's financial leverage was 1.33, indicating how much debt is used to finance assets. The increase compared to '2023' may signal growing financial pressure. Industry average for Engineering & Construction in '2024' stood at 2.39. Industry average declined by 0.11 from previous year.
Overall, ADD's financial leverage has steadily improved over the past 4 years.

Formula: Financial Leverage = Average Total Assets / Average Shareholders' Equity

Good Range: 1 to 3 common; above 3 may indicate high leverage risk.