Etsy Inc (ETSY)

Financial leverage ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total assets	US$ in thousands	2,685,400	2,634,960	3,831,810	2,404,490	1,542,350
Total stockholders’ equity	US$ in thousands	-543,715	-547,274	628,619	742,424	406,634
Financial leverage ratio		—	—	6.10	3.24	3.79

December 31, 2023 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $2,685,400K ÷ $-543,715K
= —

The financial leverage ratio indicates the proportion of a company's assets that are funded by debt rather than equity. A higher financial leverage ratio suggests that the company relies more on debt financing, which can magnify returns but also increase financial risk.

Etsy Inc's financial leverage ratio has shown significant fluctuations over the past five years. In 2019, the ratio was 3.79, indicating that the company had moderate leverage in its capital structure. In 2020, there was a slight increase to 3.24, suggesting a reduction in reliance on debt financing. However, by 2021, the financial leverage ratio surged to 6.10, signaling a substantial increase in debt relative to equity in financing the company's assets. Unfortunately, without the data for 2023 and 2022, it is challenging to assess the trend in recent years.

The sudden increase in the financial leverage ratio in 2021 could be a cause for concern as it may indicate a higher risk exposure to debt obligations. Investors and stakeholders should closely monitor how Etsy Inc manages its debt levels and assess whether the company's financial position is sustainable and adequately supported by its operating cash flows.