GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Distribution » Toromont Industries Ltd (OTCPK:TMTNF) » Definitions » Degree of Financial Leverage

Toromont Industries (Toromont Industries) Degree of Financial Leverage : 1.05 (As of Dec. 2023)


View and export this data going back to . Start your Free Trial

What is Toromont Industries Degree of Financial Leverage?

Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in Earnings Before Interest and Taxes (EBIT). Toromont Industries's Degree of Financial Leverage for the quarter that ended in Dec. 2023 was 1.05. The higher Degree of Financial Leverage, the more volatile earnings will be.

The industry rank for Toromont Industries's Degree of Financial Leverage or its related term are showing as below:

TMTNF's Degree of Financial Leverage is ranked better than
51.03% of 145 companies
in the Industrial Distribution industry
Industry Median: 1.06 vs TMTNF: 1.05

Toromont Industries Degree of Financial Leverage Historical Data

The historical data trend for Toromont Industries's Degree of Financial Leverage can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Toromont Industries Degree of Financial Leverage Chart

Toromont Industries Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Degree of Financial Leverage
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.18 1.19 1.09 1.14 1.05

Toromont Industries Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
Degree of Financial Leverage Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.14 1.13 1.16 1.10 1.05

Competitive Comparison of Toromont Industries's Degree of Financial Leverage

For the Industrial Distribution subindustry, Toromont Industries's Degree of Financial Leverage, along with its competitors' market caps and Degree of Financial Leverage data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Toromont Industries's Degree of Financial Leverage Distribution in the Industrial Distribution Industry

For the Industrial Distribution industry and Industrials sector, Toromont Industries's Degree of Financial Leverage distribution charts can be found below:

* The bar in red indicates where Toromont Industries's Degree of Financial Leverage falls into.



Toromont Industries Degree of Financial Leverage Calculation

Toromont Industries's Degree of Financial Leverage for the quarter that ended in Dec. 2023 is calculated as:

Degree of Financial Leverage=% Change in Earnings per Share (Diluted)**/% Change in EBIT
=( 4.808 (Dec. 2023) / 4.026 (Dec. 2022) - 1 )/( 559.191 (Dec. 2023) / 471.708 (Dec. 2022) - 1 )
=0.1942/0.1855
=1.05***

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

** TTM data of EPS and EBIT was used to calculate Degree of Financial Leverage.
*** Please be aware that the Degree of Financial Leverage calculations are based on company-level data using the primary share class. The calculated data provided is for demonstration purposes and may slightly differ from the results displayed in the title due to potential variations caused by currency exchange rate differences throughout the year.


Toromont Industries  (OTCPK:TMTNF) Degree of Financial Leverage Explanation

Degree of Financial Leverage (DFL) is a leverage ratio that measures the sensitivity of a company’s Earnings per Share (EPS) to fluctuations in its operating income, also referred to as Earnings Before Interest and Taxes (EBIT), resulting from adjustments in its capital structure. DFL is an essential tool for companies to assess the appropriate level of debt or financial leverage in their capital structure. When EBIT remains relatively stable, it results in stable earnings and earnings per share. In such cases, the company may consider taking on substantial debt. However, for companies operating in industries with significant fluctuations in EBIT, it is advisable to keep debt at a manageable level.

The higher Degree of Financial Leverage, the more volatile earnings will be. Because interest is a fixed expense, leverage can amplify earnings and EPS. This is beneficial when EBIT is growing, but it can become problematic in tough economic conditions when EBIT is under pressure.

Be Aware

The use of financial leverage varies across different industries and business sectors, and the application of Degree of Financial Leverage (DFL) should be adjusted accordingly.


Toromont Industries Degree of Financial Leverage Related Terms

Thank you for viewing the detailed overview of Toromont Industries's Degree of Financial Leverage provided by GuruFocus.com. Please click on the following links to see related term pages.


Toromont Industries (Toromont Industries) Business Description

Traded in Other Exchanges
Address
3131 Highway 7 West, P.O. Box 5511, Concord, ON, CAN, L4K 1B7
Toromont Industries Ltd is a Canadian industrial company. The company operates two business segments: Equipment Group and CIMCO. The larger segment by revenue, Equipment Group includes a Caterpillar dealership and rental operation of construction equipment. CIMCO offers solutions for the design, engineering, fabrication, and installation of industrial and recreational refrigeration systems. The company operates majorly in Canada and derives a smaller portion of sales from the United States of America.

Toromont Industries (Toromont Industries) Headlines

From GuruFocus

Toromont: The Advantages of Boring and Predictable

By Praveen Chawla 01-05-2023

Leith Wheeler Investment Funds 3rd Quarter Review

By Holly LaFon Holly LaFon 11-15-2017

Toromont Announces 2019 Results and Quarterly Dividend

By GlobeNewswire GlobeNewswire 02-11-2020

Mawer Investment Management 3rd Quarter Newsletter

By Holly LaFon Holly LaFon 11-02-2018

Toromont Announces 2018 Results and Quarterly Dividend

By GlobeNewswire GlobeNewswire 02-14-2019

Toromont Announces New Director Nominees

By GlobeNewswire GlobeNewswire 02-15-2019