Etsy Inc. (NASDAQ:ETSY)

The financial leverage increased steadily from 1.53 in 2017 to 6.1 in 2021, indicating a rising use of debt relative to equity funding over the analyzed period. This trend is supported by the growing debt to equity ratio, which escalated from 0.18 in 2017 to 3.8 in 2021, and similarly when including operating lease liabilities, from 0.18 to 3.87. Such increases suggest a significant shift toward higher leverage, with the most pronounced jump appearing between 2020 and 2021.

Examining debt relative to the total capital structure, debt to capital ratios rose from 0.15 in 2017 to 0.79 in 2021, both excluding and including operating lease liabilities. This upward trajectory is mirrored by the debt to assets ratios, which climbed from 0.12 to 0.62 (or 0.64 including lease liabilities) over the same timeframe. These patterns confirm a growing reliance on debt financing across the company's asset base and capital composition.

Examining the company's ability to service its debt, interest coverage ratios displayed a notable improvement, moving from 3.9 in 2017 to an impressive 48.71 in 2021. This suggests a substantially enhanced capacity to meet interest obligations, perhaps due to rising earnings before interest and taxes or reduced interest expenses in proportion to earnings. Fixed charge coverage ratios follow a similar positive trend, increasing from 3.12 to 30.11, indicating improved ability to cover fixed financial charges including leases and interest payments.

Overall, the data reveals a marked increase in leverage measures over the five-year period, balanced by a significant strengthening in the coverage ratios. This dynamic suggests that while the entity has increased its debt usage considerably, it simultaneously improved its financial capacity to service this debt, reflecting enhanced operational profitability or more favorable financing conditions.

Debt to Equity

Steady increase from 0.18 in 2017 to 3.8 in 2021, indicating higher leverage.

Including operating lease liabilities shows a similar trend, slightly higher ratios.

Debt to Capital

Increased from 0.15 to 0.79, reflecting greater leverage in the capital structure.

Minimal difference when including operating lease liabilities.

Debt to Assets

Rose from 0.12 in 2017 to 0.62 in 2021, showing more asset financing through debt.

Including operating lease liabilities slightly increases the ratio.

Financial Leverage

Increased significantly, from 1.53 to 6.1, highlighting growing reliance on debt.

Interest Coverage

Significantly improved, rising from 3.9 to 48.71, reflecting enhanced ability to meet interest expenses.

Fixed Charge Coverage

Improved substantially from 3.12 to 30.11, indicating better coverage of fixed financial obligations.

Total Debt

The total debt showed a consistent and significant increase over the five-year period. Starting from approximately $69.96 million at the end of 2017, it rose sharply to about $342.46 million in 2018 and nearly doubled to $847.01 million in 2019. The upward trend continued in 2020 reaching $1.12 billion, and then more than doubled again in 2021 to approximately $2.39 billion. This indicates a marked increase in leverage or financing through debt over the timeframe.

Stockholders’ Equity

Stockholders’ equity exhibited a relatively modest change compared to total debt. It increased slightly from roughly $396.89 million in 2017 to around $400.90 million in 2018, and further to about $406.63 million in 2019. A substantial increase occurred in 2020, with equity climbing to approximately $742.42 million, before decreasing to $628.62 million in 2021. This fluctuation suggests variability in retained earnings, shareholder contributions, or valuation adjustments during the period.

Debt to Equity Ratio

The debt to equity ratio reflects the changes in total debt and equity, showing a general upward trajectory punctuated by fluctuations. It began at a low ratio of 0.18 in 2017, indicating a conservative financial structure. The ratio increased sharply to 0.85 in 2018 and more than doubled to 2.08 in 2019, signifying growing reliance on debt relative to equity. Although it decreased to 1.5 in 2020, the ratio climbed again to a high of 3.8 in 2021, highlighting significant leverage and potential risk in the capital structure during the most recent year.

Total Debt (including operating lease liability)

The total debt increased significantly over the analyzed period. Starting from a relatively low level of $69.9 million at the end of 2017, the debt grew sharply to $342.5 million in 2018, and then experienced further substantial increases in subsequent years, reaching $873.5 million in 2019, $1.14 billion in 2020, and peaking at approximately $2.44 billion by the end of 2021. This indicates a strong upward borrowing trend or growth in liabilities tied to leases and other debt instruments.

Stockholders’ Equity

Stockholders’ equity showed mild growth from 2017 through 2019, moving from roughly $396.9 million to $406.6 million. In 2020, there was a notable increase to $742.4 million, suggesting a period of improved retained earnings, capital infusion, or share issuance. However, this was followed by a decrease in 2021 to $628.6 million, indicating possible equity reduction due to losses, dividends, or share repurchases.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio exhibited considerable volatility and an overall increasing trend. Initially low in 2017 at 0.18, it surged to 0.85 in 2018 and doubled again to 2.15 in 2019. Although it declined somewhat to 1.53 in 2020, it then escalated sharply to 3.87 in 2021. This rising ratio reflects an increasing reliance on debt relative to equity, indicating elevated financial leverage and potentially higher financial risk.

Total Debt

The total debt displays a consistent upward trend over the five-year period. Starting from US$69,962 thousand in 2017, it increased sharply each year, reaching US$2,388,119 thousand in 2021. The most notable growth occurred between 2020 and 2021, where debt more than doubled, indicating a significant increase in leverage or borrowing activity during this period.

Total Capital

Total capital also shows a steady increase from US$466,856 thousand in 2017 to US$3,016,738 thousand in 2021. This growth suggests an expansion in the company's overall capital base. Despite fluctuations in the debt component, capital accumulation accelerated notably between 2019 and 2021.

Debt to Capital Ratio

The debt to capital ratio exhibits variability with an overall increasing tendency, implying a growing reliance on debt within the capital structure. The ratio started at a low 0.15 in 2017, surged to 0.68 by 2019, slightly decreased to 0.60 in 2020, then increased again to a peak of 0.79 in 2021. This pattern suggests an increasing proportion of debt financing relative to total capital, particularly in the last year, indicating higher financial leverage and potentially increased financial risk.

Summary Analysis

Overall, the data reflects a growing capital structure with increasing levels of debt contributing to the company's financing. The total capital has expanded significantly, yet the faster growth rate of debt compared to total capital especially in the latest year is reflected in the rising debt to capital ratio. This trend indicates an increasing dependence on debt financing, which may have implications for the company's risk profile and cost of capital going forward.

Total Debt (including operating lease liability)

The total debt shows a consistent upward trend over the analyzed periods. Starting at $69,962 thousand in 2017, the debt increased significantly each year, reaching $2,435,883 thousand by the end of 2021. This represents a substantial increase in leverage obligations over five years, with particularly notable spikes between 2017 to 2018 and 2020 to 2021.

Total Capital (including operating lease liability)

Total capital also exhibits strong growth throughout the period. It rose from $466,856 thousand at the end of 2017 to $3,064,502 thousand by the end of 2021. The increase is steady each year, indicating an expanding capital base, with the most significant increments observed between 2019 and 2021.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio reflects the proportion of total capital financed by debt. Starting at a low 0.15 in 2017, the ratio increased sharply to 0.46 in 2018 and continued rising to 0.68 by 2019. After a slight decline to 0.61 in 2020, the ratio climbed again to a high of 0.79 in 2021, indicating an increasing reliance on debt within the capital structure. This pattern suggests a growing financial leverage risk, especially in the last recorded year.

Overall Analysis

Over the five-year period, the data reveals that the company significantly increased both its total capital and total debt, with debt rising at a faster rate, particularly in the later years. This is reflected in the increasing debt to capital ratio, which indicates a shift toward greater leverage. While capital growth signals expansion or investment, the rising debt proportion suggests a growing dependency on external financing sources, potentially raising concerns regarding financial risk and interest obligations. The slight dip in the debt to capital ratio in 2020 could indicate a temporary improvement in capital structure before the continual increase in 2021.

Total Debt

The total debt shows a significant upward trend over the five-year period. Starting at approximately $69.96 million at the end of 2017, it increased sharply to $342.46 million in 2018. The growth continued consistently, reaching $847.01 million in 2019 and $1.12 billion in 2020, before more than doubling to $2.39 billion by the end of 2021. This indicates an aggressive increase in borrowing or liabilities over the period analyzed.

Total Assets

Total assets also display a marked growth over the years. The assets nearly doubled from $605.58 million at the end of 2017 to $901.85 million in 2018. This growth accelerated further, with assets reaching $1.54 billion in 2019, $2.40 billion in 2020, and eventually $3.83 billion in 2021. The steady rise in assets suggests expansion or investment in resources and operational scale over time.

Debt to Assets Ratio

The debt to assets ratio demonstrates fluctuating trends within an overall increasing pattern. Beginning at a low ratio of 0.12 in 2017, indicating relatively low leverage, the ratio surged to 0.38 in 2018 and then peaked at 0.55 in 2019. A slight decline to 0.46 occurred in 2020, followed by a notable increase to 0.62 in 2021. This progression reflects increased leverage, where debt is growing at a faster pace relative to assets, especially toward the last year, indicating an elevated financial risk profile.

Summary

Over the five years, the company experienced substantial growth in both total debt and total assets. While asset growth is positive, the rising debt levels and increasing debt to assets ratio suggest a strategy reliant on increased leverage. The fluctuating but generally upward trend in this ratio merits attention, as the company's financial risk may be increasing due to higher debt obligations relative to asset base. Monitoring the balance between debt expansion and asset growth will be critical for assessing the sustainability of this growth trajectory.

Total Debt (Including Operating Lease Liability)

The total debt shows a significant and consistent increase over the five-year period. Starting at $69.96 million in 2017, the debt surged to $342.46 million in 2018, representing almost a fivefold rise. This upward trajectory continued with the total debt reaching approximately $873.47 million in 2019, $1.14 billion in 2020, and culminating in $2.44 billion by the end of 2021. This pattern indicates a substantial increase in the company's leverage and borrowing activities, possibly to support expansion or operations.

Total Assets

Total assets also demonstrate a strong upward trend, increasing steadily each year. Beginning with $605.58 million in 2017, assets grew to $901.85 million in 2018, with growth accelerating thereafter to $1.54 billion in 2019, $2.40 billion in 2020, and reaching $3.83 billion in 2021. This consistent asset growth suggests investments in fixed assets, acquisitions, or cash and equivalents, reflecting expansion and enhanced capacity.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio increased from 0.12 in 2017 to a peak of 0.57 in 2019, indicating that debt grew faster than assets during the initial years. In 2020, the ratio decreased to 0.47, suggesting a relatively faster increase in assets compared to debt for that year. However, by 2021, the ratio increased again to 0.64, the highest in the five-year period, highlighting that debt levels rose at a higher rate than assets most recently. This pattern may indicate increased financial leverage and potential risk associated with debt servicing.

Overall Analysis

Over the observed period, there is a clear pattern of substantial growth in both debt and assets, with debt increasing at a somewhat faster pace, as reflected by the rising debt to assets ratio. This suggests a strategic choice to finance growth or operations increasingly through debt. The fluctuations in the debt to assets ratio, particularly the dip in 2020, may reflect changing financing strategies or external conditions affecting asset acquisition and debt management. The overall financial posture indicates an aggressive growth strategy with rising leverage, which should be monitored for sustainability and risk exposure.

Total assets

Total assets showed a consistent and substantial increase over the five-year period. Starting at approximately $606 million in 2017, assets rose to about $3.83 billion by the end of 2021. This indicates significant growth, with total assets more than sextupling within the timeframe. The year-over-year increments were notably larger after 2018, suggesting accelerated expansion, especially between 2019 and 2021.

Stockholders’ equity

Stockholders' equity experienced moderate growth from 2017 through 2020, increasing from nearly $397 million to $742 million. However, in 2021, equity declined to approximately $629 million, reversing some of the previous gains. The growth trend until 2020 points to retained earnings or capital infusions, while the drop in 2021 may imply distributions, losses, or other adjustments affecting equity negatively.

Financial leverage (ratio)

Financial leverage displayed notable fluctuations. Beginning at 1.53 in 2017, the ratio increased sharply to 3.79 by 2019, indicating an increasing reliance on debt or liabilities relative to equity. It then decreased slightly to 3.24 in 2020 before rising steeply to 6.1 in 2021, the highest level in the observed period. The rising leverage ratio reflects growing financial risk and greater use of borrowed funds to finance assets, particularly marked in the final year.

Overall analysis

The company demonstrated strong asset growth throughout the period, signifying expansion or increased investment. Stockholders’ equity grew until 2020 but declined in 2021, which alongside the sharp increase in financial leverage that same year, suggests an increased dependency on debt financing. The combination of rising assets and high leverage, coupled with decreased equity in 2021, points to a shift toward more aggressive financial structuring, potentially increasing risk exposure.

The financial data reveals a significant growth trajectory in earnings before interest and tax (EBIT) over the five-year period. EBIT increased steadily from approximately 43.4 million USD in 2017 to over 481.5 million USD in 2021, with a particularly notable surge between 2019 and 2020. This indicates strong operational performance and enhanced profitability capabilities during these years.

Interest expense shows a fluctuating trend. It rose from about 11.1 million USD in 2017 to a peak of 42.0 million USD in 2020, after which it notably decreased to approximately 9.9 million USD by 2021. The spike in 2020 could be related to increased borrowing or higher cost of debt financing during that year, whereas the sharp decline in 2021 suggests improved interest cost management or debt reduction.

The interest coverage ratio, which measures the ability to pay interest expenses from EBIT, reflects significant improvement over time. Starting at a ratio of 3.9 in 2017, it declined modestly to 3.48 in 2018 but then recovered and increased sharply to 9.7 in 2020, culminating in an exceptionally high ratio of 48.71 in 2021. This substantial increase indicates a much stronger capability to cover interest obligations, likely benefiting from both the growth in EBIT and reduced interest expense in the latest year.

EBIT Trend

Consistently increasing from 43.4 million USD to 481.5 million USD, with rapid growth between 2019 and 2020.

Interest Expense

Fluctuated with an upward peak in 2020 followed by a significant reduction in 2021.

Interest Coverage Ratio

Improved markedly over the period, reaching a very strong level in 2021, reflecting greater operational earnings relative to interest costs.

Overall, the data suggest enhanced operational profitability, proactive financial management, and improved financial health with respect to debt servicing capability during the period analyzed.

Earnings before fixed charges and tax

The earnings before fixed charges and tax show a consistent and significant upward trend from 2017 to 2021. Starting at 47,495 thousand US dollars in 2017, the figure increased steadily each year, reaching 81,056 thousand in 2018, 110,371 thousand in 2019, with a marked jump to 413,581 thousand in 2020, and peaking at 487,859 thousand in 2021. This indicates strong growth in operating profitability before accounting for fixed financial obligations.

Fixed charges

The fixed charges fluctuated over the period. They started at 15,230 thousand US dollars in 2017, rose to 25,978 thousand in 2018, and then increased further to 29,725 thousand in 2019. In 2020, fixed charges surged to 47,872 thousand but declined sharply to 16,205 thousand in 2021. This variability suggests changes in the company's financing or lease obligations, with a notable reduction in fixed costs in the most recent year.

Fixed charge coverage ratio

The fixed charge coverage ratio demonstrates significant improvement over the years. The ratio remained steady at 3.12 in both 2017 and 2018, increased to 3.71 in 2019, and then rose sharply to 8.64 in 2020. In 2021, the ratio reached an exceptionally high level of 30.11. This trend indicates a rapidly growing ability to cover fixed financial charges through earnings, suggesting enhanced financial stability and reduced risk from fixed obligations by the end of the period.