Allison Transmission(Alsn) Financials: Financial Leverage Compared To Industry Average, Plus Other Key Ratios
Solvency Trend (Last 5 Years)
Solvency - financial leverage
This chart shows the historical trend of financial leverage for ALSN compared to its industry average over the recent years.
Ratio Definition and Interpretation
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', ALSN's financial leverage was 7.03, indicating how much debt is used to finance assets. Industry average for Auto Parts:O.E.M. in '2021' stood at 2.38.
• In '2022', ALSN's financial leverage was 6.05, indicating how much debt is used to finance assets. The decrease since '2021' reflects improving financial health. Industry average for Auto Parts:O.E.M. in '2022' stood at 2.47. Industry average increased by 0.09 compared to previous year.
• In '2023', ALSN's financial leverage was 4.60, indicating how much debt is used to finance assets. The decrease since '2022' reflects improving financial health. Industry average for Auto Parts:O.E.M. in '2023' stood at 2.29. Industry average declined by 0.18 from previous year.
• In '2024', ALSN's financial leverage was 3.59, indicating how much debt is used to finance assets. The decrease since '2023' reflects improving financial health. Industry average for Auto Parts:O.E.M. in '2024' stood at 2.29. Industry average increased by 0.01 compared to previous year.
Overall, ALSN's financial leverage has been volatile but showed a downward trend 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.