Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Etsy Inc., solvency ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The company's solvency profile from 2017 to 2021 is characterized by a significant increase in leverage paired with a substantial improvement in debt-servicing capacity. While the reliance on debt to finance operations and assets has grown, the corresponding growth in earnings has drastically strengthened the margins of safety for meeting financial obligations.
- Capital Structure and Leverage Trends
- A consistent upward trajectory is observed across all leverage metrics. The debt-to-equity ratio rose from 0.18 in 2017 to 3.80 in 2021, indicating a shift toward a more debt-heavy capital structure. Similarly, financial leverage increased from 1.53 to 6.10 over the same period, reflecting a higher proportion of total assets financed through debt relative to equity.
- The debt-to-assets ratio climbed from 0.12 in 2017 to 0.62 in 2021, confirming that a greater percentage of the asset base is now funded by creditors. Debt to capital followed a similar pattern, increasing from 0.15 to 0.79, which highlights a structural change in how the entity funds its growth.
- The minimal variance between standard solvency ratios and those including operating lease liabilities suggests that lease obligations represent a negligible portion of the overall debt burden.
- Debt Service and Coverage Analysis
- Despite the increase in total leverage, the ability to service debt has improved exponentially. The interest coverage ratio grew from 3.90 in 2017 to 48.71 in 2021, with the most aggressive expansion occurring between 2020 and 2021. This indicates that operating income has grown at a rate far exceeding the increase in interest expenses.
- The fixed charge coverage ratio mirrored this trend, rising from 3.12 in 2017 to 30.11 in 2021. This significant increase demonstrates a robust capacity to meet all fixed financial commitments, effectively mitigating the risks associated with the higher debt levels observed in the leverage ratios.
In summary, the company has transitioned to a more aggressive leverage posture, but this strategy has been supported by an exceptional increase in profitability and cash flow generation, resulting in a solvency position that is more resilient in terms of coverage despite the higher nominal debt load.
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Debt to Equity
Etsy Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Finance lease obligations, current | 2,418) | 8,537) | 8,275) | 3,884) | 5,798) | |
| Finance lease obligations, net of current portion | 110,283) | 44,979) | 53,611) | 2,095) | 4,115) | |
| Facility financing obligation | —) | —) | —) | 59,991) | 60,049) | |
| Long-term debt, net | 2,275,418) | 1,062,299) | 785,126) | 276,486) | —) | |
| Total debt | 2,388,119) | 1,115,815) | 847,012) | 342,456) | 69,962) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 3.80 | 1.50 | 2.08 | 0.85 | 0.18 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Amazon.com Inc. | 0.54 | — | — | — | — | |
| Home Depot Inc. | 11.29 | — | — | — | — | |
| Lowe’s Cos. Inc. | 15.16 | — | — | — | — | |
| TJX Cos. Inc. | 1.04 | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 0.93 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Consumer Discretionary | 1.50 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 2,388,119 ÷ 628,619 = 3.80
2 Click competitor name to see calculations.
The financial trajectory between 2017 and 2021 is characterized by a substantial increase in financial leverage and an aggressive expansion of total debt obligations.
- Total Debt Accumulation
- A consistent upward trend in total debt is observed, rising from 69,962 thousand US dollars in 2017 to 2,388,119 thousand US dollars by the end of 2021. The most significant acceleration occurred between 2020 and 2021, where debt levels more than doubled within a single fiscal year.
- Stockholders' Equity Fluctuations
- Equity levels remained relatively stable from 2017 through 2019. A notable increase occurred in 2020, reaching 742,424 thousand US dollars, followed by a contraction to 628,619 thousand US dollars in 2021. This volatility suggests that equity growth was unable to keep pace with the rapid accumulation of debt.
- Debt to Equity Ratio Evolution
- The debt to equity ratio demonstrates a dramatic shift in the company's capital structure. Starting at a conservative 0.18 in 2017, the ratio climbed to 2.08 by 2019. Although a temporary reduction to 1.50 occurred in 2020—corresponding with the peak in stockholders' equity—the ratio surged to 3.80 in 2021. This progression indicates a significant increase in financial risk and a heavy reliance on borrowed capital to fund operations or growth by the end of the period.
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Debt to Equity (including Operating Lease Liability)
Etsy Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Finance lease obligations, current | 2,418) | 8,537) | 8,275) | 3,884) | 5,798) | |
| Finance lease obligations, net of current portion | 110,283) | 44,979) | 53,611) | 2,095) | 4,115) | |
| Facility financing obligation | —) | —) | —) | 59,991) | 60,049) | |
| Long-term debt, net | 2,275,418) | 1,062,299) | 785,126) | 276,486) | —) | |
| Total debt | 2,388,119) | 1,115,815) | 847,012) | 342,456) | 69,962) | |
| Operating lease obligations, current (included in Other current liabilities) | 4,018) | 4,516) | 4,134) | —) | —) | |
| Operating lease obligations, net of current portion (included in Other liabilities) | 43,746) | 17,202) | 22,322) | —) | —) | |
| Total debt (including operating lease liability) | 2,435,883) | 1,137,533) | 873,468) | 342,456) | 69,962) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 3.87 | 1.53 | 2.15 | 0.85 | 0.18 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Amazon.com Inc. | 0.96 | — | — | — | — | |
| Home Depot Inc. | 13.16 | — | — | — | — | |
| Lowe’s Cos. Inc. | 18.24 | — | — | — | — | |
| TJX Cos. Inc. | 2.66 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Consumer Discretionary Distribution & Retail | 1.46 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Consumer Discretionary | 1.87 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 2,435,883 ÷ 628,619 = 3.87
2 Click competitor name to see calculations.
The solvency profile of the company exhibited a significant transition toward higher financial leverage between 2017 and 2021, characterized by a substantial increase in total liabilities relative to shareholder equity.
- Total Debt Expansion
- A consistent and accelerating upward trend in total debt, including operating lease liabilities, is observed. Total debt grew from 69,962 thousand US$ in 2017 to 2,435,883 thousand US$ by 2021. This represents a substantial expansion of the liability base, with the most pronounced increase occurring between 2020 and 2021, where debt obligations more than doubled in a single year.
- Stockholders' Equity Volatility
- Equity remained relatively stable from 2017 through 2019, staying within the range of 396,894 thousand US$ and 406,634 thousand US$. A notable increase was recorded in 2020, peaking at 742,424 thousand US$, followed by a reduction to 628,619 thousand US$ in 2021. These fluctuations in equity served as a counterweight to debt growth in 2020 but were insufficient to offset the debt surge in 2021.
- Debt-to-Equity Ratio Analysis
- The debt-to-equity ratio rose sharply from 0.18 in 2017 to 2.15 in 2019, signaling a rapid shift in the capital structure toward higher leverage. Although the ratio temporarily improved to 1.53 in 2020—driven by the increase in stockholders' equity—it climbed to a period high of 3.87 in 2021. This final ratio indicates that the company's debt-funded obligations, including leases, were nearly four times the value of its equity by the end of the analyzed period, reflecting a significantly higher risk profile regarding long-term solvency.
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Debt to Capital
Etsy Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Finance lease obligations, current | 2,418) | 8,537) | 8,275) | 3,884) | 5,798) | |
| Finance lease obligations, net of current portion | 110,283) | 44,979) | 53,611) | 2,095) | 4,115) | |
| Facility financing obligation | —) | —) | —) | 59,991) | 60,049) | |
| Long-term debt, net | 2,275,418) | 1,062,299) | 785,126) | 276,486) | —) | |
| Total debt | 2,388,119) | 1,115,815) | 847,012) | 342,456) | 69,962) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Total capital | 3,016,738) | 1,858,239) | 1,253,646) | 743,354) | 466,856) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.79 | 0.60 | 0.68 | 0.46 | 0.15 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Amazon.com Inc. | 0.35 | — | — | — | — | |
| Home Depot Inc. | 0.92 | — | — | — | — | |
| Lowe’s Cos. Inc. | 0.94 | — | — | — | — | |
| TJX Cos. Inc. | 0.51 | — | — | — | — | |
| Debt to Capital, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 0.48 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Consumer Discretionary | 0.60 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 2,388,119 ÷ 3,016,738 = 0.79
2 Click competitor name to see calculations.
A significant upward trend in leverage is observed between 2017 and 2021, characterized by a substantial increase in both total debt and the debt to capital ratio. The company shifted from a low-leverage capital structure to one heavily reliant on debt financing over the five-year period.
- Total Debt Expansion
- Total debt experienced exponential growth, rising from US$ 69,962 thousand in 2017 to US$ 2,388,119 thousand by the end of 2021. The most pronounced increase occurred between 2020 and 2021, where debt more than doubled, indicating a period of aggressive borrowing.
- Total Capital Growth
- Total capital grew steadily from US$ 466,856 thousand in 2017 to US$ 3,016,738 thousand in 2021. While capital increased overall, the rate of growth was driven primarily by the accumulation of debt rather than equity contributions.
- Debt to Capital Ratio Analysis
- The debt to capital ratio rose from a low of 0.15 in 2017 to a peak of 0.79 in 2021. A sharp increase is noted between 2017 and 2019, where the ratio climbed from 0.15 to 0.68. A brief stabilization occurred in 2020, with the ratio dipping slightly to 0.60, before rising sharply to 0.79 in 2021. This progression indicates that by the end of the period, debt constituted nearly 80% of the company's total capital structure.
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Debt to Capital (including Operating Lease Liability)
Etsy Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Finance lease obligations, current | 2,418) | 8,537) | 8,275) | 3,884) | 5,798) | |
| Finance lease obligations, net of current portion | 110,283) | 44,979) | 53,611) | 2,095) | 4,115) | |
| Facility financing obligation | —) | —) | —) | 59,991) | 60,049) | |
| Long-term debt, net | 2,275,418) | 1,062,299) | 785,126) | 276,486) | —) | |
| Total debt | 2,388,119) | 1,115,815) | 847,012) | 342,456) | 69,962) | |
| Operating lease obligations, current (included in Other current liabilities) | 4,018) | 4,516) | 4,134) | —) | —) | |
| Operating lease obligations, net of current portion (included in Other liabilities) | 43,746) | 17,202) | 22,322) | —) | —) | |
| Total debt (including operating lease liability) | 2,435,883) | 1,137,533) | 873,468) | 342,456) | 69,962) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Total capital (including operating lease liability) | 3,064,502) | 1,879,957) | 1,280,102) | 743,354) | 466,856) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.79 | 0.61 | 0.68 | 0.46 | 0.15 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Amazon.com Inc. | 0.49 | — | — | — | — | |
| Home Depot Inc. | 0.93 | — | — | — | — | |
| Lowe’s Cos. Inc. | 0.95 | — | — | — | — | |
| TJX Cos. Inc. | 0.73 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Consumer Discretionary Distribution & Retail | 0.59 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Consumer Discretionary | 0.65 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 2,435,883 ÷ 3,064,502 = 0.79
2 Click competitor name to see calculations.
An analysis of solvency metrics from 2017 to 2021 reveals a significant increase in the company's reliance on debt and lease liabilities to fund its capital structure.
- Total Debt Growth
- A substantial upward trajectory is evident in total debt, which rose from US$ 69,962 thousand in 2017 to US$ 2,435,883 thousand by 2021. The most aggressive expansion occurred between 2017 and 2019, and again in 2021, where debt more than doubled within a single fiscal year.
- Total Capital Expansion
- Total capital grew consistently throughout the period, increasing from US$ 466,856 thousand in 2017 to US$ 3,064,502 thousand in 2021. While the overall capital base expanded, the growth was heavily driven by the accumulation of debt and lease obligations.
- Debt to Capital Ratio Trends
- The debt to capital ratio exhibits a strong overall increase, rising from 0.15 in 2017 to 0.79 in 2021. This indicates a fundamental shift in the financial structure toward higher leverage. A temporary moderation is observed in 2020, where the ratio decreased slightly to 0.61, suggesting that capital growth momentarily outpaced debt increases during that year. However, this trend reversed sharply in 2021, with the ratio reaching its five-year peak, signaling a higher proportion of debt relative to the total capital employed.
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Debt to Assets
Etsy Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Finance lease obligations, current | 2,418) | 8,537) | 8,275) | 3,884) | 5,798) | |
| Finance lease obligations, net of current portion | 110,283) | 44,979) | 53,611) | 2,095) | 4,115) | |
| Facility financing obligation | —) | —) | —) | 59,991) | 60,049) | |
| Long-term debt, net | 2,275,418) | 1,062,299) | 785,126) | 276,486) | —) | |
| Total debt | 2,388,119) | 1,115,815) | 847,012) | 342,456) | 69,962) | |
| Total assets | 3,831,809) | 2,404,489) | 1,542,352) | 901,851) | 605,583) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.62 | 0.46 | 0.55 | 0.38 | 0.12 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Amazon.com Inc. | 0.18 | — | — | — | — | |
| Home Depot Inc. | 0.53 | — | — | — | — | |
| Lowe’s Cos. Inc. | 0.47 | — | — | — | — | |
| TJX Cos. Inc. | 0.20 | — | — | — | — | |
| Debt to Assets, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 0.24 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Consumer Discretionary | 0.36 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 2,388,119 ÷ 3,831,809 = 0.62
2 Click competitor name to see calculations.
A significant increase in financial leverage is observed over the five-year period from 2017 to 2021, characterized by a substantial expansion in both total debt and total assets.
- Total Debt Evolution
- Total debt experienced an aggressive upward trajectory, rising from 69,962 thousand US dollars in 2017 to 2,388,119 thousand US dollars by 2021. The most pronounced acceleration occurred between 2020 and 2021, where debt obligations more than doubled within a single fiscal year.
- Total Asset Growth
- Total assets grew consistently throughout the period, increasing from 605,583 thousand US dollars in 2017 to 3,831,809 thousand US dollars in 2021. This steady expansion indicates a period of rapid resource accumulation to support operational growth.
- Debt to Assets Ratio Analysis
- The debt to assets ratio demonstrates a general increasing trend, ascending from 0.12 in 2017 to a peak of 0.62 in 2021. Although a moderate decline to 0.46 was recorded in 2020, the overall pattern reveals a strategic shift toward higher leverage. By the end of the analyzed period, approximately 62% of total assets were financed through debt, representing a substantial increase from the 12% reliance observed in 2017.
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Debt to Assets (including Operating Lease Liability)
Etsy Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Finance lease obligations, current | 2,418) | 8,537) | 8,275) | 3,884) | 5,798) | |
| Finance lease obligations, net of current portion | 110,283) | 44,979) | 53,611) | 2,095) | 4,115) | |
| Facility financing obligation | —) | —) | —) | 59,991) | 60,049) | |
| Long-term debt, net | 2,275,418) | 1,062,299) | 785,126) | 276,486) | —) | |
| Total debt | 2,388,119) | 1,115,815) | 847,012) | 342,456) | 69,962) | |
| Operating lease obligations, current (included in Other current liabilities) | 4,018) | 4,516) | 4,134) | —) | —) | |
| Operating lease obligations, net of current portion (included in Other liabilities) | 43,746) | 17,202) | 22,322) | —) | —) | |
| Total debt (including operating lease liability) | 2,435,883) | 1,137,533) | 873,468) | 342,456) | 69,962) | |
| Total assets | 3,831,809) | 2,404,489) | 1,542,352) | 901,851) | 605,583) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.64 | 0.47 | 0.57 | 0.38 | 0.12 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Amazon.com Inc. | 0.31 | — | — | — | — | |
| Home Depot Inc. | 0.62 | — | — | — | — | |
| Lowe’s Cos. Inc. | 0.56 | — | — | — | — | |
| TJX Cos. Inc. | 0.50 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Consumer Discretionary Distribution & Retail | 0.38 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Consumer Discretionary | 0.44 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 2,435,883 ÷ 3,831,809 = 0.64
2 Click competitor name to see calculations.
Between 2017 and 2021, a significant expansion in both the total asset base and total debt obligations is observed. Total assets grew from approximately 605.6 million US dollars to 3.83 billion US dollars, while total debt, including operating lease liabilities, increased from 69.9 million US dollars to 2.44 billion US dollars.
- Overall Debt to Assets Trajectory
- The solvency ratio exhibits a general upward trend, rising from 0.12 in 2017 to a peak of 0.64 in 2021. This progression indicates a systemic shift in the capital structure, characterized by an increasing reliance on debt to finance the company's asset base.
- Initial Leverage Acceleration (2017–2019)
- A period of rapid leverage increase is evident from 2017 to 2019, during which the ratio rose sharply from 0.12 to 0.57. This indicates that debt accumulation significantly outpaced asset growth during these three years.
- Relative Stabilization (2020)
- A temporary decline in the ratio to 0.47 occurred in 2020. Although total debt continued to rise in absolute terms, the growth rate of total assets exceeded that of debt during this period, resulting in a short-term improvement in the solvency profile.
- Peak Leverage Positioning (2021)
- The ratio reached its highest point of 0.64 in 2021. This was driven by a substantial increase in total debt, which more than doubled from the prior year, surpassing the growth rate of total assets and increasing the overall financial leverage of the organization.
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Financial Leverage
Etsy Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 3,831,809) | 2,404,489) | 1,542,352) | 901,851) | 605,583) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 6.10 | 3.24 | 3.79 | 2.25 | 1.53 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Amazon.com Inc. | 3.04 | — | — | — | — | |
| Home Depot Inc. | 21.39 | — | — | — | — | |
| Lowe’s Cos. Inc. | 32.52 | — | — | — | — | |
| TJX Cos. Inc. | 5.28 | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 3.82 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Consumer Discretionary | 4.22 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 3,831,809 ÷ 628,619 = 6.10
2 Click competitor name to see calculations.
An analysis of the solvency position between 2017 and 2021 reveals a substantial increase in financial leverage, driven by rapid asset expansion that significantly outpaced the growth of stockholders' equity.
- Asset Growth Trends
- Total assets exhibited consistent and aggressive growth, increasing from 605.6 million US$ in 2017 to 3.83 billion US$ by 2021. This trajectory represents a continuous expansion of the company's resource base over the five-year period.
- Equity Stability and Fluctuations
- Stockholders' equity remained relatively stagnant from 2017 through 2019, maintaining a range near 400 million US$. A notable increase was recorded in 2020, where equity rose to 742.4 million US$, before experiencing a moderate decline to 628.6 million US$ in 2021.
- Financial Leverage Evolution
- The financial leverage ratio climbed from 1.53 in 2017 to 6.10 in 2021. Although a temporary decrease occurred in 2020—falling to 3.24 as a result of the spike in equity—the ratio reached its peak in 2021. This progression indicates a shift toward a more aggressive capital structure, with a heightened reliance on liabilities to fund asset acquisition and operational growth.
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Interest Coverage
Etsy Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 493,507) | 349,246) | 95,894) | 77,491) | 81,800) | |
| Add: Income tax expense | (21,853) | 16,463) | (15,248) | (22,413) | (49,535) | |
| Add: Interest expense | 9,885) | 42,025) | 24,320) | 22,178) | 11,130) | |
| Earnings before interest and tax (EBIT) | 481,539) | 407,734) | 104,966) | 77,256) | 43,395) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 48.71 | 9.70 | 4.32 | 3.48 | 3.90 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Amazon.com Inc. | 22.09 | — | — | — | — | |
| Home Depot Inc. | 13.60 | — | — | — | — | |
| Lowe’s Cos. Inc. | 9.88 | — | — | — | — | |
| TJX Cos. Inc. | 1.46 | — | — | — | — | |
| Interest Coverage, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 15.91 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Consumer Discretionary | 13.23 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 481,539 ÷ 9,885 = 48.71
2 Click competitor name to see calculations.
The company's ability to service its debt obligations experienced a significant strengthening between 2017 and 2021. This improvement is primarily driven by a substantial increase in operating earnings coupled with a strategic reduction in interest costs in the final year of the period.
- Earnings Before Interest and Tax (EBIT) Performance
- A consistent upward trajectory in EBIT is observed, growing from US$ 43,395 thousand in 2017 to US$ 481,539 thousand in 2021. A particularly sharp acceleration occurred in 2020, where earnings increased nearly fourfold compared to the previous year, providing a significantly larger cushion for debt servicing.
- Interest Expense Volatility
- Interest expenses exhibited a rising trend from 2017 through 2020, peaking at US$ 42,025 thousand. However, a drastic reduction is noted in 2021, with expenses falling to US$ 9,885 thousand, indicating a substantial decrease in the cost of borrowing or a reduction in total outstanding debt.
- Interest Coverage Ratio Progression
- The interest coverage ratio remained relatively stable between 3.48 and 4.32 from 2017 to 2019. A marked improvement began in 2020, with the ratio rising to 9.70, and culminated in a surge to 48.71 by the end of 2021. This progression reflects a transition from a moderate solvency position to an exceptionally strong capacity to cover interest payments from operating profits.
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Fixed Charge Coverage
Etsy Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 493,507) | 349,246) | 95,894) | 77,491) | 81,800) | |
| Add: Income tax expense | (21,853) | 16,463) | (15,248) | (22,413) | (49,535) | |
| Add: Interest expense | 9,885) | 42,025) | 24,320) | 22,178) | 11,130) | |
| Earnings before interest and tax (EBIT) | 481,539) | 407,734) | 104,966) | 77,256) | 43,395) | |
| Add: Operating lease cost | 6,320) | 5,847) | 5,405) | 3,800) | 4,100) | |
| Earnings before fixed charges and tax | 487,859) | 413,581) | 110,371) | 81,056) | 47,495) | |
| Interest expense | 9,885) | 42,025) | 24,320) | 22,178) | 11,130) | |
| Operating lease cost | 6,320) | 5,847) | 5,405) | 3,800) | 4,100) | |
| Fixed charges | 16,205) | 47,872) | 29,725) | 25,978) | 15,230) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 30.11 | 8.64 | 3.71 | 3.12 | 3.12 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Amazon.com Inc. | 5.24 | — | — | — | — | |
| Home Depot Inc. | 8.97 | — | — | — | — | |
| Lowe’s Cos. Inc. | 6.05 | — | — | — | — | |
| TJX Cos. Inc. | 1.04 | — | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 5.29 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Consumer Discretionary | 5.60 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 487,859 ÷ 16,205 = 30.11
2 Click competitor name to see calculations.
The solvency profile exhibits a substantial strengthening over the five-year period from 2017 to 2021. A consistent upward trajectory in the capacity to meet fixed obligations is evident, culminating in a significant expansion of the financial cushion by the end of the period.
- Earnings before fixed charges and tax
- A strong growth trend is observed in earnings, which rose from 47,495 thousand US$ in 2017 to 487,859 thousand US$ in 2021. The most significant acceleration occurred between 2019 and 2020, where earnings increased from 110,371 thousand US$ to 413,581 thousand US$, representing a nearly four-fold increase within a single fiscal year.
- Fixed charges
- Fixed obligations experienced a steady increase from 2017 through 2020, rising from 15,230 thousand US$ to a peak of 47,872 thousand US$. However, a sharp reversal occurred in 2021, with charges declining to 16,205 thousand US$, indicating a substantial reduction in fixed financial commitments.
- Fixed charge coverage ratio
- The coverage ratio remained stagnant at 3.12 between 2017 and 2018, followed by a moderate increase to 3.71 in 2019. The ratio then experienced exponential growth, climbing to 8.64 in 2020 and reaching 30.11 in 2021. This rapid ascent is the result of the simultaneous surge in earnings and the sharp contraction of fixed charges in the final year of the analysis.
The convergence of rapidly increasing earnings and decreasing fixed charges has resulted in a vastly improved solvency position. The transition from a ratio of 3.12 to 30.11 indicates that the risk associated with meeting fixed obligations has been significantly mitigated.
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