Cato (The)(Cato) 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 CATO 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 '2022', CATO's financial leverage was 2.49, indicating how much debt is used to finance assets. Industry average for Clothing/Shoe/Accessory Stores in '2022' stood at 2.73.
• In '2023', CATO's financial leverage was 2.47, indicating how much debt is used to finance assets. The decrease since '2022' reflects improving financial health. Industry average for Clothing/Shoe/Accessory Stores in '2023' stood at 2.76. Industry average increased by 0.02 compared to previous year.
• In '2024', CATO's financial leverage was 2.48, indicating how much debt is used to finance assets. The increase compared to '2023' may signal growing financial pressure. Industry average for Clothing/Shoe/Accessory Stores in '2024' stood at 2.51. Industry average declined by 0.25 from previous year.
• In '2025', CATO's financial leverage was 2.65, indicating how much debt is used to finance assets. The increase compared to '2024' may signal growing financial pressure. Industry average for Clothing/Shoe/Accessory Stores in '2025' stood at 2.67. Industry average increased by 0.16 compared to previous year.
Overall, CATO'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.