Duolingo Inc (DUOL)
Financial leverage ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Total assets | US$ in thousands | 953,957 | 747,347 | 661,311 |
| Total stockholders’ equity | US$ in thousands | 655,501 | 542,078 | 513,056 |
| Financial leverage ratio | 1.46 | 1.38 | 1.29 |
December 31, 2023 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $953,957K ÷ $655,501K
= 1.46
The financial leverage ratio of Duolingo Inc has been increasing over the past three years, reflecting a rising trend in the company's reliance on debt to finance its operations and activities. The ratio stood at 1.29 in 2021, increased to 1.38 in 2022, and further rose to 1.46 in 2023. This indicates that for every dollar of equity, the company has $1.46 of debt in 2023.
The increase in the financial leverage ratio suggests that Duolingo has been leveraging more debt to support its growth and expansion strategies. While higher leverage can amplify returns for shareholders in favorable economic conditions, it also exposes the company to increased financial risk, especially in times of economic downturn or rising interest rates.
It would be prudent for Duolingo to carefully manage its debt levels and ensure that the increased leverage is sustainable and supports long-term growth objectives without jeopardizing financial stability. Monitoring the financial leverage ratio and its trend over time is crucial for investors and stakeholders to assess the company's risk profile and financial health.
Peer comparison
Dec 31, 2023