Paylocity Holdng (PCTY)

Financial leverage ratio

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Total assets	US$ in thousands	4,245,460	3,695,680	4,809,010	2,414,880	1,985,650
Total stockholders’ equity	US$ in thousands	1,033,060	842,863	613,463	476,930	392,908
Financial leverage ratio		4.11	4.38	7.84	5.06	5.05

June 30, 2024 calculation

Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $4,245,460K ÷ $1,033,060K
= 4.11

The financial leverage ratio of Paylocity Holdng has exhibited fluctuations over the past five years, ranging from 4.11 to 7.84. A higher financial leverage ratio indicates a higher level of debt in relation to equity, suggesting that the company relies more on borrowed funds to finance its operations and growth.

In 2022, the financial leverage ratio spiked significantly to 7.84, showcasing a substantial increase in debt compared to equity. This could indicate a period of aggressive borrowing or a decline in equity relative to debt during that specific year.

Subsequently, in 2023, the financial leverage ratio decreased to 4.38, signaling a potential reduction in the company's reliance on debt financing or an increase in equity compared to debt. However, the ratio remained relatively high compared to the earlier years.

By 2024, the financial leverage ratio further decreased to 4.11, reflecting a potential ongoing trend of reducing debt levels or increasing equity within the company's capital structure. This decreasing trend suggests a potential improvement in the company's financial risk profile and a move towards a more balanced capital structure.

Overall, the fluctuations in Paylocity Holdng's financial leverage ratio over the analyzed period highlight the varying levels of debt and equity financing used by the company and underscore the importance of monitoring leverage levels to assess risk and financial stability.