Shockwave Medical Inc. (NASDAQ:SWAV)

The relationship between total debt and stockholders’ equity has undergone a significant transformation between 2019 and 2023. Initially, the company maintained a consistently low level of debt relative to equity, but this dynamic shifted dramatically in the most recent year.

Debt to Equity Ratio

From 2019 through 2021, the debt to equity ratio remained stable at approximately 0.07. This indicates that for every dollar of equity, the company held approximately seven cents of debt. A slight decrease was observed in 2022, with the ratio falling to 0.05, suggesting a further reduction in relative debt. However, a substantial increase occurred in 2023, with the debt to equity ratio rising to 1.09. This signifies that the company now carries approximately $1.09 of debt for every dollar of equity.

Total debt exhibited modest increases from 2019 to 2021, moving from US$13,819 thousand to US$17,130 thousand. A more considerable increase was then noted in 2022, reaching US$24,198 thousand. The largest increase in total debt occurred in 2023, escalating to US$731,863 thousand. This represents a significant change in the company’s capital structure.

Stockholders’ equity demonstrated consistent growth throughout the period. It increased from US$192,653 thousand in 2019 to US$241,830 thousand in 2021, and continued to rise to US$511,316 thousand in 2022. This growth continued into 2023, reaching US$668,677 thousand. While equity increased, the substantial rise in total debt in 2023 outpaced equity growth, resulting in the marked increase in the debt to equity ratio.

The substantial increase in the debt to equity ratio in 2023 warrants further investigation to understand the reasons behind the increased debt financing and its potential implications for the company’s financial risk and future performance.