Ferrari N.V. (RACE) Balance Sheet

The balance sheet has expanded steadily, driven by increased PPE and cash, but the equity decline in 2026Q2 appears tied to a one-time retained earnings adjustment, given the prior quarter's $4.0B retained earnings. This suggests the underlying business remains profitable, but investors should monitor whether this is a recurring pattern or a seasonal anomaly.

The D/E ratio has trended upward from 0.80 to 0.86 over the period, with debt peaking at $3.4B in 2024Q4. However, cash balances have remained robust, and the current ratio of 2.37 suggests ample short-term coverage. The leverage increase appears strategic, likely funding expansion and shareholder returns, but the rising trend warrants monitoring given the cyclical nature of the auto industry.

The growth in PPE reflects Ferrari's ongoing investment in production capacity and product development, consistent with the elevated capex noted in cash flow analysis. Goodwill has been flat, suggesting no major acquisitions, and the asset mix remains asset-light relative to mass-market automakers, preserving flexibility. The increasing PPE base may signal a move toward more capital-intensive operations, but it also supports future growth.

The negative retained earnings in 2025Q4 appears to be a data anomaly or a one-time charge, as it rebounded to $3.6B by 2026Q2. Excluding that outlier, retained earnings have grown steadily, reflecting Ferrari's ability to generate and retain profits. The equity base is solid, with no evidence of dilution from stock-based compensation, and shareholder returns are being funded from cash flow rather than debt.

The current ratio has generally trended upward, with a peak of 3.37 in 2024Q4, indicating strong liquidity. Cash levels have fluctuated between $1.3B and $1.9B, but the consistent current ratio above 1.6 suggests Ferrari can comfortably meet near-term liabilities. This liquidity, combined with robust operating cash flow, provides a buffer against economic downturns or unexpected capex needs.

The doubling of deferred revenue over the period suggests that Ferrari's order book remains strong, with customers paying deposits well in advance. This provides forward revenue visibility and reduces demand uncertainty, which is particularly valuable in a cyclical industry. The trend aligns with the company's reputation for exclusivity and long waiting lists, supporting the sustainability of its premium pricing model.