Texas Instruments Inc. (NASDAQ:TXN)

Over the observed period, the company’s solvency ratios demonstrate a generally increasing trend in financial leverage and associated debt metrics, coupled with a declining trend in its ability to cover its interest expense. These shifts suggest a growing reliance on debt financing.

Debt to Equity

The debt to equity ratio exhibited relative stability between March 2022 and December 2022, fluctuating between 0.51 and 0.60. Beginning in March 2023, the ratio began a consistent upward trend, peaking at 0.86 in June 2025 before slightly decreasing to 0.86 in December 2025. This indicates an increasing proportion of financing derived from debt relative to equity.

Debt to Capital

Similar to the debt to equity ratio, the debt to capital ratio showed a gradual increase throughout the period. Starting at 0.36 in March 2022, it rose to 0.46 by December 2024 and remained stable at 0.46 through December 2025. This suggests a growing proportion of the company’s capital structure is financed by debt.

Debt to Assets

The debt to assets ratio followed a similar pattern, increasing from 0.31 in March 2022 to 0.41 in December 2024, and remaining relatively stable at 0.41 in December 2025. This indicates that a larger portion of the company’s assets are financed by debt.

Financial Leverage

Financial leverage, as measured by the ratio, consistently increased over the period, moving from 1.80 in March 2022 to 2.13 in December 2025. This signifies a greater use of debt to amplify returns on equity, but also increases financial risk.

Interest Coverage

In contrast to the increasing debt ratios, the interest coverage ratio demonstrated a consistent downward trend. Starting at 51.03 in March 2022, it declined to 11.52 in December 2025. While the ratio remains above 10, indicating a sufficient ability to cover interest obligations, the decreasing trend warrants monitoring as it suggests a diminishing cushion against potential increases in interest rates or declines in earnings.

In summary, the observed trends suggest a strategic shift towards increased debt financing. While the company currently maintains a comfortable interest coverage ratio, the declining trend requires continued attention to ensure long-term financial stability.

The debt to equity ratio exhibits a clear upward trend over the observed period, indicating increasing financial leverage. Initially, the ratio stood at 0.55 in March 2022, and generally fluctuated between 0.51 and 0.67 through the end of 2023. A significant increase began in March 2024, reaching 0.84, and remained elevated throughout the period, peaking at 0.86 in June 2025 and December 2025.

Overall Trend

The ratio demonstrates a consistent increase in reliance on debt financing relative to equity. The increase from 0.55 in March 2022 to 0.86 in June 2025 and December 2025 represents a substantial shift in the company’s capital structure.

Short-Term Fluctuations (2022-2023)

From March 2022 to December 2023, the debt to equity ratio experienced moderate fluctuations. It initially decreased to 0.51 in June 2022 before rising again to 0.60 by December 2022. The ratio continued to fluctuate, reaching a high of 0.70 in June 2023, before decreasing slightly to 0.66 and 0.67 in the subsequent quarters.

Significant Increase (2024-2025)

Beginning in March 2024, the debt to equity ratio increased markedly. The ratio rose from 0.84 to 0.81 and 0.80 in the following two quarters, before decreasing slightly to 0.78 in March 2025. It then increased again to 0.86 in June 2025 and remained at that level through December 2025. This period signifies a deliberate or necessary increase in debt financing.

Underlying Components

The increase in the debt to equity ratio is driven by a faster rate of growth in total debt compared to stockholders’ equity. While both components generally increased over the period, the growth in total debt was more pronounced, particularly from March 2024 onwards. Total debt increased from US$8,735 million in December 2022 to US$14,048 million in December 2025, while stockholders’ equity increased from US$14,577 million to US$16,273 million over the same period.

The observed trend suggests a potential increase in financial risk. While increased leverage can amplify returns, it also elevates the company’s vulnerability to economic downturns and interest rate fluctuations. Continued monitoring of this ratio is recommended.

The debt to capital ratio for the analyzed period demonstrates a generally increasing trend, indicating a growing reliance on debt financing relative to equity and other capital sources. Initial values were relatively stable, followed by a more pronounced increase in later periods.

Overall Trend

The debt to capital ratio began at 0.36 in March 2022 and generally increased to 0.46 by March 2025, remaining at 0.46 through December 2025. This represents a 27.8% increase over the observed period.

Initial Stability (Mar 2022 - Dec 2022)

From March 2022 to December 2022, the ratio fluctuated between 0.34 and 0.37. This suggests a period of relatively consistent capital structure management. Total debt remained relatively stable during this timeframe, while total capital experienced moderate growth.

Increasing Leverage (Mar 2023 - Dec 2023)

A noticeable increase in the ratio began in March 2023, rising from 0.40 to 0.40 in December 2023. This coincided with a more substantial increase in total debt, from US$10,126 million to US$11,223 million, while total capital also increased, but at a slower rate.

Peak and Stabilization (Mar 2024 - Dec 2025)

The ratio peaked at 0.46 in March 2024, before stabilizing between 0.45 and 0.46 for the remainder of the analyzed period. While total debt fluctuated, it remained elevated, and total capital growth appeared to moderate, contributing to the sustained higher ratio. Total debt decreased slightly from March 2024 to December 2025, but total capital decreased at a similar rate, maintaining the ratio.

The observed trend suggests a shift towards increased financial leverage. Continued monitoring of this ratio is recommended to assess potential risks associated with higher debt levels and their impact on financial flexibility.

The debt-to-assets ratio for the analyzed period demonstrates a generally increasing trend, indicating a growing reliance on debt financing relative to the company’s asset base. Initial values were relatively stable, followed by a more pronounced increase in later periods.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The debt-to-assets ratio fluctuated between 0.29 and 0.32 during this timeframe. It began at 0.31, decreased slightly to 0.29, then increased to 0.30 and 0.32, suggesting a modest level of financial leverage and relative stability in the company’s capital structure.

Increasing Leverage (Mar 31, 2023 – Dec 31, 2023)

A clear upward trend emerged, with the ratio increasing from 0.35 to 0.36, then holding steady at 0.35 and 0.35. This indicates a growing proportion of debt used to finance assets. Total debt increased significantly during this period, while asset growth was also present but at a slower pace.

Peak and Stabilization (Mar 31, 2024 – Dec 31, 2025)

The ratio peaked at 0.41 in March 2024, before decreasing slightly to 0.40, 0.39, and 0.38. It then stabilized around 0.38 to 0.41 over the final four quarters. While remaining elevated compared to earlier periods, the ratio’s stabilization suggests a potential plateau in the company’s increasing leverage. Total debt remained relatively consistent during this period, while total assets experienced minor fluctuations.

Overall, the trend suggests a shift towards greater financial leverage. The increase in the debt-to-assets ratio warrants monitoring to assess potential risks associated with higher debt levels, such as increased interest expense and financial vulnerability during economic downturns. The recent stabilization, however, may indicate a deliberate effort to manage leverage or a natural consequence of asset and debt growth reaching equilibrium.

Financial leverage, as indicated by the ratio of total assets to stockholders’ equity, exhibits a generally increasing trend over the observed period. The ratio began at 1.80 in March 2022 and concluded at 2.13 in December 2025. This suggests a growing reliance on debt financing relative to equity financing.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The financial leverage ratio fluctuated modestly between 1.75 and 1.87 during this timeframe. An initial decrease from 1.80 to 1.75 was followed by a recovery and a slight increase to 1.87 by the end of 2022. This suggests a relatively stable capital structure during this period.

Growth Phase (Mar 31, 2023 – Sep 30, 2023)

A consistent upward trend is observed from March 2023 through September 2023, with the ratio increasing from 1.92 to 1.94 and then to 1.90. This indicates an increasing proportion of assets financed by debt.

Peak Leverage (Mar 31, 2024 – Dec 31, 2024)

The ratio reached its highest points during this period, peaking at 2.05 in March 2024 and remaining at 2.04 in June 2024, before increasing to 2.10 by December 2024. This represents the highest level of financial leverage observed throughout the analyzed timeframe.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The ratio experienced a slight decrease to 2.06 in March 2025, followed by an increase to 2.13 in June 2025, and a slight decrease to 2.11 in September 2025, before stabilizing at 2.13 in December 2025. While fluctuating, the ratio remained at a high level, indicating continued reliance on financial leverage.

Overall, the trend suggests a deliberate or necessary increase in the use of debt to finance asset growth. While not necessarily indicative of financial distress, the increasing leverage warrants continued monitoring to ensure the company maintains a sustainable capital structure and can comfortably meet its debt obligations.

The interest coverage ratio demonstrates a consistent downward trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially strong, the ratio has decreased significantly, indicating a weakening ability to meet interest obligations from earnings before interest and tax.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The interest coverage ratio began at a high of 51.03 and fluctuated within a relatively narrow range, remaining above 47.88 throughout this period. This suggests a robust capacity to cover interest expenses with operating income.

Declining Trend (Mar 31, 2023 – Dec 31, 2024)

A noticeable decline commenced in March 2023, with the ratio falling from 42.10 to 11.73 by December 2024. This decrease coincides with a rise in interest and debt expense, coupled with a reduction in earnings before interest and tax. The rate of decline accelerated during this phase.

Stabilization (Mar 31, 2025 – Dec 31, 2025)

The downward trend appears to stabilize in the final two periods observed. The ratio moves from 11.45 in March 2025 to 11.52 in December 2025, indicating a potential leveling off, although still significantly lower than initial values. The ratio remains above 10, suggesting the company can still cover its interest obligations, but with a considerably reduced margin.

Earnings and Expense Relationship

The decline in the interest coverage ratio is directly attributable to the combination of decreasing earnings before interest and tax and increasing interest and debt expense. While earnings decreased from approximately US$2,578 million in March 2022 to US$1,513 million in December 2025, interest and debt expense increased from US$52 million to US$141 million over the same period. This widening gap significantly impacted the company’s ability to comfortably cover its interest obligations.

Overall, the observed trend suggests a deterioration in the company’s solvency position with respect to interest coverage. While the company continues to generate sufficient earnings to cover its interest expense, the shrinking margin warrants continued monitoring.