Arrowhead Pharmaceuticals Inc (ARWR)

Financial leverage ratio

		Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019
Total assets	US$ in thousands	765,552	691,939	710,148	522,504	349,845
Total stockholders’ equity	US$ in thousands	271,343	398,520	408,822	461,779	244,591
Financial leverage ratio		2.82	1.74	1.74	1.13	1.43

September 30, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $765,552K ÷ $271,343K
= 2.82

The financial leverage ratio measures the extent to which a company relies on debt to finance its assets. A higher financial leverage ratio indicates that a company is using more debt to fund its operations and investments.

Looking at Arrowhead Pharmaceuticals Inc.'s financial leverage ratio over the past five years, there has been a notable increase from 1.43 in 2019 to 2.82 in 2023. This indicates a significant rise in the company's reliance on debt as a source of financing.

A high financial leverage ratio can magnify the company's returns on equity when operating income exceeds the cost of debt, but it also increases the risk of financial distress if the company is unable to meet its debt obligations. Therefore, investors and creditors may view a high financial leverage ratio with caution, considering the associated financial risk.

The trend of increasing financial leverage ratio for Arrowhead Pharmaceuticals Inc. suggests a growing reliance on debt for its operations and investments. It would be important for stakeholders to closely monitor the company's ability to manage its debt levels and generate sufficient income to cover its financial obligations.