Freshpet Inc (FRPT)

Financial leverage ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Total assets	US$ in thousands	1,574,880	1,464,420	1,125,380	784,410	434,388
Total stockholders’ equity	US$ in thousands	1,055,360	953,454	1,031,570	719,754	394,169
Financial leverage ratio		1.49	1.54	1.09	1.09	1.10

December 31, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,574,880K ÷ $1,055,360K
= 1.49

The financial leverage ratio of Freshpet Inc. has demonstrated notable variation over the observed period from December 31, 2020, to December 31, 2024. Specifically, the ratio remained relatively stable at approximately 1.10 in 2020 and 2021, with values of 1.10 and 1.09 respectively, indicating a consistent and moderate level of financial leverage during this period. This stability suggests that the company maintained a balanced approach to leveraging debt relative to its equity, reflecting prudent financial management and a stable capital structure.

However, a marked increase is observed in the financial leverage ratio between December 31, 2022, and December 31, 2023. The ratio rises significantly from 1.09 to 1.54, indicating a substantial increase in the company's use of debt financing relative to equity. This escalation could be attributed to strategic initiatives such as increased borrowing to fund expansion, acquisitions, or operational investments intended to enhance growth prospects.

Following this peak, the ratio slightly decreases to 1.49 at the end of 2024, suggesting a marginal reduction in leverage, potentially due to debt repayment, improved equity position, or a combination of both. Overall, the trend reflects an escalation in financial leverage during the period, with the ratio peaking around 2023 before slightly moderating in 2024. The increased leverage in recent years warrants attention from stakeholders to assess the corresponding impact on the company's risk profile, cost of capital, and capacity to sustain higher debt levels in the context of its operational performance and cash flow generation.