Arrowhead Pharmaceuticals Inc (ARWR)

Financial leverage ratio

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Total assets	US$ in thousands	1,139,800	765,552	691,939	710,148	522,504
Total stockholders’ equity	US$ in thousands	185,444	271,343	398,520	408,822	461,779
Financial leverage ratio		6.15	2.82	1.74	1.74	1.13

September 30, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,139,800K ÷ $185,444K
= 6.15

The financial leverage ratio measures the extent to which a company relies on debt financing as opposed to equity. Arrowhead Pharmaceuticals Inc's financial leverage ratio has shown a significant increase over the years, from 1.13 in 2020 to 6.15 in 2024. This indicates a substantial escalation in the company's reliance on debt to finance its operations and investments.

A high financial leverage ratio can amplify returns on equity in good times, but it also increases the risk of financial distress, especially when economic conditions deteriorate. It is crucial for stakeholders to monitor this ratio closely, as a high leverage ratio can indicate increased financial risk and reduced financial flexibility. Arrowhead Pharmaceuticals Inc may need to carefully manage its debt levels and ensure sound financial management practices to mitigate potential risks associated with high leverage.