Arrowhead Pharmaceuticals Inc (ARWR)

Financial leverage ratio

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Total assets	US$ in thousands	626,286	765,552	795,856	891,308	891,489	691,939	751,782	703,575	638,539	710,148	734,927	756,795	499,251	522,504	555,728	561,076	587,602	349,845	336,828	333,940
Total stockholders’ equity	US$ in thousands	160,407	271,343	364,830	446,772	377,039	398,520	453,927	452,266	372,560	408,822	436,890	445,549	454,472	461,779	493,140	494,119	500,084	244,591	226,225	201,195
Financial leverage ratio		3.90	2.82	2.18	1.99	2.36	1.74	1.66	1.56	1.71	1.74	1.68	1.70	1.10	1.13	1.13	1.14	1.18	1.43	1.49	1.66

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $626,286K ÷ $160,407K
= 3.90

Arrowhead Pharmaceuticals Inc.'s financial leverage ratio has been trending upward over the past eight quarters, reflecting an increasing level of financial leverage. The ratio has seen a significant increase from 1.56 in Q2 2022 to 3.90 in Q1 2024. This indicates that the company's reliance on debt to finance its operations and growth has been on the rise.

The upward trend in the financial leverage ratio suggests that Arrowhead Pharmaceuticals Inc. has been taking on more debt relative to its equity, which could potentially amplify returns during periods of growth but also increase financial risk. A higher financial leverage ratio indicates a higher level of debt financing compared to equity, which can lead to higher interest payments and lower financial flexibility.

While a certain level of financial leverage can be beneficial in optimizing capital structure and lowering the cost of capital, it is important for Arrowhead Pharmaceuticals Inc. to carefully manage its debt levels to avoid financial distress during economic downturns or adverse business conditions. Monitoring the financial leverage ratio over time can provide insights into the company's capital structure decisions and overall financial risk profile.