Pegasystems Inc (PEGA)
Financial leverage ratio
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Total assets | US$ in thousands | 1,768,270 | 1,510,740 | 1,357,670 | 1,593,530 | 1,604,260 |
Total stockholders’ equity | US$ in thousands | 585,480 | 353,838 | 130,843 | 416,088 | 542,172 |
Financial leverage ratio | 3.02 | 4.27 | 10.38 | 3.83 | 2.96 |
December 31, 2024 calculation
Financial leverage ratio = Total assets ÷ Total stockholders’ equity
= $1,768,270K ÷ $585,480K
= 3.02
The financial leverage ratio of Pegasystems Inc. experienced notable fluctuations over the period from December 31, 2020, to December 31, 2024. At the end of 2020, the ratio stood at 2.96, indicating a moderate level of leverage wherein the company's assets were financed through a combination of debt and equity. This ratio increased significantly by December 31, 2021, reaching 3.83, suggesting an uptick in debt relative to equity or an accumulation of liabilities, thereby amplifying the company's financial risk.
By the end of 2022, the ratio surged dramatically to 10.38, signifying a substantial escalation in leverage. Such an increase could imply aggressive borrowing or a significant increase in debt relative to equity, which elevates the company's financial risk profile and reliance on leverage to finance its operations or growth initiatives. This heightened leverage level may also reflect increased financial vulnerability, especially if the company's earnings do not proportionally improve to satisfy debt obligations.
Subsequently, the ratio declined to 4.27 at the close of 2023, indicating a reduction in leverage, potentially due to debt repayment, equity infusion, or asset revaluation. This decrease suggests an effort to deleverage the company's balance sheet, thereby potentially enhancing financial stability and reducing risk exposure.
By the end of 2024, the ratio further decreased to 3.02, approaching the earlier levels observed in 2020. This trend indicates a continued reduction in leverage, reflecting a strategic shift towards a more balanced capital structure, with less reliance on debt relative to equity. Overall, the fluctuations in Pegasystems Inc.'s financial leverage ratio over this period highlight significant changes in its capital structure, with periods of high leverage corresponding to increased financial risk, followed by phases of deleveraging aimed at stabilizing its financial position.
Peer comparison
Dec 31, 2024