Arrowhead Pharmaceuticals Inc (ARWR)
Solvency ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.82 | 1.74 | 1.74 | 1.13 | 1.43 |
Based on the solvency ratios of Arrowhead Pharmaceuticals Inc. for the past five years, several insights can be gleaned.
Firstly, the debt-to-assets, debt-to-capital, and debt-to-equity ratios have consistently shown a value of 0.00 for all five years. This indicates that the company has had no debt in relation to its assets, capital, or equity during this period. This is a positive indication of the company's solvency and financial stability, as lower debt levels reduce the risk of financial distress and bankruptcy.
Secondly, the financial leverage ratio has shown some variability over the years, with a notable increase in 2023 compared to previous years. The financial leverage ratio measures the extent to which the company is using debt to finance its assets. The increase in the financial leverage ratio from 1.43 in 2019 to 2.82 in 2023 suggests a substantial increase in the company's reliance on debt to finance its operations and investments. While an increase in leverage can potentially amplify returns on equity, it also poses a higher risk, especially if the company's earnings do not adequately cover its interest obligations.
In summary, Arrowhead Pharmaceuticals Inc. has consistently maintained a debt-free solvency structure over the past five years, as indicated by the 0.00 values for the debt-based ratios. However, the notable increase in the financial leverage ratio in 2023 signals a potential shift in the company's solvency strategy towards increased reliance on debt financing. This change should be carefully monitored to assess its impact on the company's financial risk and long-term sustainability.
Coverage ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -10.05 | — | — | -0.01 | 0.01 |
It appears that the interest coverage ratio for Arrowhead Pharmaceuticals Inc. in Sep 30, 2023, is reported as -67.72. The interest coverage ratio is a measure of a company's ability to meet its interest obligations on outstanding debt. A negative interest coverage ratio indicates that the company's operating income is insufficient to cover its interest expenses, which can raise concerns about its financial stability. It implies that the company may be at risk of defaulting on its interest payments.
The absence of data for the interest coverage ratio in the previous years (Sep 30, 2022, Sep 30, 2021, Sep 30, 2020, Sep 30, 2019) makes it impossible to perform a trend analysis to assess the trajectory of Arrowhead Pharmaceuticals Inc.'s ability to cover its interest expenses over time.
A negative interest coverage ratio can be a red flag for potential investors and creditors, indicating a higher risk associated with the company's debt repayment capability. It suggests that the company may need to use its cash reserves or raise additional funds to meet its interest obligations, which could impact its financial flexibility and long-term viability.
Investors and stakeholders should closely monitor Arrowhead Pharmaceuticals Inc.'s financial performance and management's plans to address the negative interest coverage ratio to gauge the company's ability to navigate its financial challenges and improve its leverage position.