Activision Blizzard Inc. (NASDAQ:ATVI)

Debt to Equity

The debt to equity ratio demonstrates a slight decline over the observed period, decreasing from 0.24 in 2018 to 0.19 in 2022. This suggests a gradual reduction in reliance on debt financing relative to shareholders' equity. When including operating lease liabilities, the ratio follows a similar declining trajectory from 0.24 in 2018 to 0.20 in 2022, indicating a consistent reduction in overall debt obligations compared to equity.

Debt to Capital

Debt to capital ratios, both excluding and including operating lease liabilities, exhibit a downward trend across the five years. The metric decreases from 0.19 (excluding leases) and 0.19 (including leases) in 2018 to 0.16 and 0.17 respectively in 2022. This decline implies a moderately improving capital structure with less dependence on debt.

Debt to Assets

Debt to assets ratios present a reduction over time as well. Excluding operating lease liabilities, the ratio drops from 0.15 in 2018 to 0.13 in 2022, and including leases, it decreases from 0.15 to 0.14. The consistent decline in these ratios suggests an incremental increase in asset base relative to outstanding debt.

Financial Leverage

The financial leverage ratio declines modestly from 1.57 in 2018 to 1.42 in 2021 and holds steady at 1.42 in 2022. This reduction points toward a slight decrease in total assets financed by equity, implying a marginally stronger equity position relative to total assets.

Interest Coverage

The interest coverage ratio shows a general upward trend from 14.41 in 2018 to a peak of 30.30 in 2021, indicating an improved capacity to meet interest expenses through earnings. However, in 2022, this ratio significantly decreases to 17.15, which may reflect a notable increase in interest expenses, a decrease in earnings, or both, thus slightly weakening interest coverage.

Fixed Charge Coverage

Fixed charge coverage similarly increases from 9.73 in 2018 to a high of 18.01 in 2021, suggesting enhanced ability to cover fixed financial obligations. Nevertheless, it declines markedly to 10.04 in 2022, indicating reduced coverage capacity and possibly more stringent financial conditions in the latest period.

Total Debt

The total debt of the company remained relatively stable from 2018 to 2019, with a slight increase from 2671 million US dollars to 2675 million. A notable rise occurred in 2020, with total debt increasing to 3605 million US dollars. This level was maintained through 2021 and 2022 with minor increments, indicating a period of increased leverage but subsequent stabilization in debt levels.

Shareholders' Equity

Shareholders’ equity demonstrated consistent growth throughout the analyzed period. Starting at 11357 million US dollars in 2018, it increased steadily each year, reaching 19243 million US dollars by 2022. This positive trend reflects ongoing reinvestment and accumulation of value attributable to shareholders, showing strengthening financial foundation and capital base over time.

Debt to Equity Ratio

The debt to equity ratio exhibited a decreasing trend overall, indicating an improving balance between debt and equity financing. The ratio declined from 0.24 in 2018 to 0.19 in 2022, with minor fluctuations: it dipped to 0.21 in 2019, returned to 0.24 in 2020 coinciding with the increase in total debt, and then decreased again subsequently. This pattern suggests that although debt increased notably in 2020, the growth in equity outpaced debt in general, reducing the relative financial risk associated with leverage.

Total Debt (including operating lease liability)

The total debt showed a general upward trend from 2018 to 2020, increasing from 2,671 million US dollars to 3,895 million US dollars. After 2020, the debt level remained relatively stable around the 3,850 to 3,900 million US dollars range through 2022.

Shareholders’ Equity

Shareholders' equity exhibited consistent growth over the five-year period, rising steadily each year from 11,357 million US dollars in 2018 to 19,243 million US dollars in 2022. This indicates a strengthening equity base for the company.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio remained low and relatively stable throughout the period, fluctuating slightly but trending downward overall from 0.24 in 2018 to 0.20 in 2022. This suggests an improving capital structure with decreased reliance on debt relative to equity.

Summary

The company's financial leverage has been managed prudently, as evidenced by the stable total debt levels coupled with continuous growth in shareholders’ equity. The gradual decline in the debt to equity ratio emphasizes enhanced financial stability and potentially lower risk for creditors. The growth in equity suggests retained earnings or additional equity financing contributing positively to the company's balance sheet strength.

Total Debt

The total debt remained relatively stable between 2018 and 2019, registering a slight increase from 2,671 million US dollars to 2,675 million US dollars. There was a notable rise in 2020 when total debt increased to 3,605 million US dollars, followed by marginal growth in 2021 and 2022, reaching 3,608 million and 3,611 million US dollars respectively. This indicates a significant debt accumulation primarily occurring in 2020, with minimal changes thereafter.

Total Capital

Total capital exhibited a consistent upward trend throughout the five-year period. Starting at 14,028 million US dollars in 2018, it steadily increased each year, reaching 15,480 million in 2019, 18,642 million in 2020, 21,207 million in 2021, and finally 22,854 million US dollars in 2022. This continuous growth in total capital suggests an expansion in the company's financial resources or equity base over time.

Debt to Capital Ratio

The debt to capital ratio displayed moderate fluctuations but generally indicated a decreasing trend. Beginning at 0.19 in 2018, the ratio slightly decreased to 0.17 in 2019, increased back to 0.19 in 2020, and then declined again to 0.17 in 2021, followed by further reduction to 0.16 in 2022. This downward trend suggests an improvement in the company’s capital structure, with debt constituting a smaller portion of total capital over time despite the rise in absolute debt levels.

Total debt (including operating lease liability)

The total debt has shown an overall increasing trend from 2018 to 2020, rising from 2,671 million US dollars to 3,895 million US dollars. This was followed by a stabilization period from 2020 to 2022, with total debt values remaining relatively flat at around 3,856 to 3,897 million US dollars.

Total capital (including operating lease liability)

Total capital demonstrated consistent growth over the entire period, increasing each year from 14,028 million US dollars in 2018 to 23,099 million US dollars in 2022. This steady rise indicates continuous capital base expansion over the five-year span.

Debt to capital ratio (including operating lease liability)

The debt to capital ratio remained quite stable overall, fluctuating slightly between 0.19 in 2018 and 2019 to a peak of 0.21 in 2020, before declining steadily to 0.17 by 2022. This suggests an improving capital structure with a gradual reduction in leverage relative to the capital base in the latter years.

Total Debt

The total debt remained relatively stable from 2018 to 2019, with a slight increase from 2,671 million USD to 2,675 million USD. However, there was a notable increase in 2020, with total debt rising to 3,605 million USD, followed by a stable level through 2021 and 2022 at approximately 3,608 and 3,611 million USD respectively.

Total Assets

Total assets showed consistent growth over the period analyzed. Assets increased from 17,835 million USD in 2018 to 19,845 million USD in 2019. Growth accelerated in subsequent years, reaching 23,109 million USD in 2020, then 25,056 million USD in 2021, and peaking at 27,383 million USD in 2022. This reflects a sustained expansion of the asset base over the five-year period.

Debt to Assets Ratio

The debt to assets ratio exhibited moderate fluctuations. It started at 0.15 in 2018, decreased to 0.13 in 2019, indicating a relative reduction in leverage. The ratio then increased to 0.16 in 2020, coinciding with the rise in total debt. In 2021 and 2022, the ratio declined again to 0.14 and 0.13 respectively, suggesting an improvement in asset coverage relative to debt, despite the higher absolute debt values.

Summary

Overall, the company demonstrated an upward trend in total assets, with steady growth each year. Total debt increased significantly in 2020 and then stabilized, suggesting strategic borrowing or capital structure adjustment during that period. The debt to assets ratio remained relatively low throughout the years, indicating that the company's leverage was managed prudently relative to its growing asset base. The trend suggests cautious financial management with an emphasis on maintaining a strong balance sheet while supporting growth through controlled debt increases.

Total Debt (Including Operating Lease Liability)

The total debt exhibited an upward trend from 2018 through 2020, increasing from 2,671 million USD in 2018 to 3,895 million USD in 2020. This represents a significant rise during this period. Following 2020, the total debt stabilized, remaining relatively constant with slight fluctuations, recording 3,897 million USD in 2021 and a marginal decrease to 3,856 million USD in 2022.

Total Assets

Total assets demonstrated consistent growth over the analyzed period. Starting at 17,835 million USD in 2018, assets increased each year, reaching 19,845 million USD in 2019, then rising more sharply to 23,109 million USD in 2020. The upward trajectory persisted with assets reaching 25,056 million USD in 2021 and further increasing to 27,383 million USD in 2022. This steady asset growth suggests ongoing expansion or accumulation of resources.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio maintained a relatively stable position across the years examined, indicating proportionate growth between debt and assets. In 2018 and 2019, the ratio was consistent at 0.15. It increased slightly to 0.17 in 2020, aligning with the rise in total debt during that year. However, the ratio decreased to 0.16 in 2021 and further declined to 0.14 in 2022, reflecting that asset growth outpaced that of debt in the latter years, thereby improving the company’s balance sheet leverage position overall.

Total Assets

The total assets of the company displayed a consistent upward trajectory over the five-year period. Starting at US$17,835 million in 2018, assets increased each year, reaching US$27,383 million by the end of 2022. This represents a substantial growth of approximately 53.5% over the period, indicating an ongoing expansion in the company’s resource base.

Shareholders’ Equity

Shareholders’ equity also showed a steady increase during the same timeframe. Beginning at US$11,357 million in 2018, equity rose annually, reaching US$19,243 million in 2022. This growth amounts to roughly 69.5%, suggesting the company has been successful in retaining earnings and/or raising capital to support its operations and growth.

Financial Leverage

The financial leverage ratio demonstrated a slight but notable decline over the years, moving from 1.57 in 2018 down to 1.42 by 2022. This decrease implies a gradual reduction in the company’s reliance on debt relative to equity. The trend towards lower leverage could signify a strengthening balance sheet and potentially lower financial risk.

The data reveals several important trends in the company's financial performance over the five-year period ending December 31, 2022.

Earnings before interest and tax (EBIT)

The EBIT shows a generally upward trajectory from 2018 through 2021, increasing significantly each year from $2017 million to a peak of $3272 million in 2021. However, in 2022, there is a noticeable decline to $1852 million, which represents a substantial reduction compared to the previous year, almost halving the peak value.

Interest expense from debt

The interest expense from debt decreases from $140 million in 2018 to $90 million in 2019 but then exhibits a gradual increase over the subsequent years, rising to $108 million in both 2021 and 2022. This suggests some stabilization at a higher level after the initial drop.

Interest coverage ratio

The interest coverage ratio improves consistently from 2018 through 2021, rising from 14.41 to a peak of 30.3, indicating an increasing ability to cover interest expenses with earnings before interest and tax. However, in 2022, the ratio declines sharply to 17.15, reflecting the combined effect of decreased EBIT and sustained interest expenses. Though the ratio remains above the 2018 level, the reduction in 2022 signals a weakening in the company's coverage ability relative to the prior year.

Earnings before fixed charges and tax

The earnings exhibited a fluctuating pattern over the five-year period. Starting at 2,092 million US dollars in 2018, there was a decline to 1,798 million in 2019. This was followed by a significant increase to 2,790 million in 2020 and a further rise to the highest level of 3,350 million in 2021. However, in 2022, earnings dropped sharply to 1,937 million, marking a notable decrease compared to the previous two years.

Fixed charges

Fixed charges showed a moderate decline from 215 million US dollars in 2018 to 165 million in 2019. Subsequently, a gradual increase took place, with fixed charges rising to 174 million in 2020, 186 million in 2021, and 193 million in 2022. Overall, fixed charges remained relatively stable with minor fluctuations.

Fixed charge coverage

The fixed charge coverage ratio demonstrated a general improvement from 9.73 in 2018 to 10.9 in 2019 and then surged to 16.03 in 2020. A peak performance was reached in 2021 with a ratio of 18.01. However, this was followed by a decrease to 10.04 in 2022, indicating a reduction in the ability to cover fixed charges from earnings relative to the prior two years.