DigitalOcean Holdings Inc (DOCN)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Total assets	US$ in thousands	1,460,970	1,815,630	2,101,000
Total stockholders’ equity	US$ in thousands	-313,698	47,569	578,197
Financial leverage ratio		—	38.17	3.63

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,460,970K ÷ $-313,698K
= —

The financial leverage ratio measures the extent to which a company relies on debt to finance its operations and growth. A higher financial leverage ratio indicates higher financial risk, as the company has a greater proportion of debt in its capital structure.

DigitalOcean Holdings Inc's financial leverage ratio has varied significantly over the past three years. In 2021, the company had a relatively low financial leverage ratio of 3.63, suggesting a conservative approach to debt financing. However, by the end of 2022, the financial leverage ratio had increased substantially to 38.17, indicating a significant increase in the company's reliance on debt.

The absence of a specific financial leverage ratio for 2023 prevents a direct comparison. However, based on the trend observed from 2021 to 2022, it appears that DigitalOcean Holdings Inc experienced a significant shift towards higher leverage in its capital structure.

Investors and stakeholders may view this increase in the financial leverage ratio cautiously, as higher levels of debt can amplify risks during economic downturns or financial distress. It is important for the company to carefully manage its debt levels and ensure that it can service its obligations effectively to maintain financial stability and sustainability.