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', KAR's financial leverage was 4.92, indicating how much debt is used to finance assets. Industry average for Retail-Auto Dealers and Gas Stations in '2021' stood at 3.04.
• In '2022', KAR's financial leverage was 4.15, indicating how much debt is used to finance assets. The decrease since '2021' reflects improving financial health. Industry average for Retail-Auto Dealers and Gas Stations in '2022' stood at 3.23. Industry average increased by 0.19 compared to previous year.
• In '2023', KAR's financial leverage was 3.46, indicating how much debt is used to finance assets. The decrease since '2022' reflects improving financial health. Industry average for Retail-Auto Dealers and Gas Stations in '2023' stood at 3.22. Industry average declined by 0.01 from previous year.
• In '2024', KAR's financial leverage was 3.50, indicating how much debt is used to finance assets. The increase compared to '2023' may signal growing financial pressure. Industry average for Retail-Auto Dealers and Gas Stations in '2024' stood at 3.64. Industry average increased by 0.42 compared to previous year.
Overall, KAR's financial leverage has consistently declined during 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.