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
Activision Blizzard Inc., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 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).
The company exhibits a consistently conservative solvency profile from 2018 to 2022, characterized by low leverage and a robust capacity to meet long-term obligations. A general trend of deleveraging is evident, as the reliance on debt relative to equity, capital, and assets decreased marginally over the five-year period.
- Debt Leverage Ratios
- Debt to equity ratios remained low and showed a gradual decline, moving from 0.24 in 2018 to 0.19 by 2022. When incorporating operating lease liabilities, the ratio followed a similar downward trajectory, ending at 0.20. This indicates a strong equity base and limited dependence on external borrowing. Similarly, the debt to assets ratio trended downward from 0.15 to 0.13, suggesting that a smaller proportion of total assets is financed through debt.
- Capital Structure and Financial Leverage
- The debt to capital ratio declined from 0.19 to 0.16, confirming a shift toward a more equity-heavy capital structure. Financial leverage decreased from 1.57 in 2018 to 1.42 in 2022, reflecting a reduction in the use of debt to amplify returns on equity.
- Debt Service Coverage
- Interest coverage and fixed charge coverage ratios experienced significant expansion between 2018 and 2021, peaking at 30.30 and 18.01, respectively. A contraction occurred in 2022, with interest coverage dropping to 17.15 and fixed charge coverage to 10.04. Despite this decline, the ratios remain substantially above critical thresholds, indicating that operating earnings continue to be more than sufficient to cover interest and fixed obligations.
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Debt to Equity
Activision Blizzard Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt, net | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total debt | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Shareholders’ equity | 19,243) | 17,599) | 15,037) | 12,805) | 11,357) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.19 | 0.21 | 0.24 | 0.21 | 0.24 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | 0.06 | — | — | — | |
| Comcast Corp. | 1.17 | 0.99 | — | — | — | |
| Meta Platforms Inc. | 0.08 | 0.00 | — | — | — | |
| Netflix Inc. | 0.69 | 0.97 | — | — | — | |
| Walt Disney Co. | 0.51 | 0.62 | 0.71 | — | — | |
| Debt to Equity, Sector | ||||||
| Media & Entertainment | 0.32 | 0.31 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Communication Services | 0.65 | 0.65 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 3,611 ÷ 19,243 = 0.19
2 Click competitor name to see calculations.
The solvency profile from 2018 to 2022 is characterized by a steady expansion of the equity base, which has effectively neutralized a mid-period increase in total liabilities. Although total debt rose significantly during the 2020 fiscal year, the accelerated growth in shareholders' equity has led to a progressive reduction in the reliance on external borrowing relative to internal capital.
- Total Debt Dynamics
- Total debt remained relatively stagnant between 2018 and 2019 at approximately 2.67 billion US$. A significant increase was recorded in 2020, with debt rising to 3.61 billion US$, followed by a period of stabilization through 2022, where the balance remained nearly constant.
- Shareholders' Equity Expansion
- A consistent and uninterrupted upward trend is observed in shareholders' equity, which grew from 11.36 billion US$ in 2018 to 19.24 billion US$ by the end of 2022. This sustained growth indicates a strengthening of the company's financial position and an increase in the capital cushion available to creditors.
- Debt to Equity Ratio Analysis
- The debt to equity ratio exhibited slight fluctuations, beginning at 0.24 in 2018 and returning to that level in 2020 as a direct result of the increase in total debt. However, the continued accumulation of equity over the subsequent two years drove the ratio down to 0.19 by December 31, 2022, reflecting a more conservative capital structure and improved overall solvency.
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Debt to Equity (including Operating Lease Liability)
Activision Blizzard Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt, net | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total debt | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Current operating lease liabilities (classified as Accrued expenses and other current liabilities) | 83) | 77) | 66) | 63) | —) | |
| Non-current operating lease liabilities (classified as Other liabilities) | 162) | 212) | 224) | 210) | —) | |
| Total debt (including operating lease liability) | 3,856) | 3,897) | 3,895) | 2,948) | 2,671) | |
| Shareholders’ equity | 19,243) | 17,599) | 15,037) | 12,805) | 11,357) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.20 | 0.22 | 0.26 | 0.23 | 0.24 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.12 | 0.11 | — | — | — | |
| Comcast Corp. | 1.26 | 1.06 | — | — | — | |
| Meta Platforms Inc. | 0.22 | 0.12 | — | — | — | |
| Netflix Inc. | 0.81 | 1.14 | — | — | — | |
| Walt Disney Co. | 0.55 | 0.66 | 0.75 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.39 | 0.38 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.80 | 0.79 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Shareholders’ equity
= 3,856 ÷ 19,243 = 0.20
2 Click competitor name to see calculations.
An analysis of the solvency position between 2018 and 2022 reveals a stable financial structure characterized by a low reliance on borrowed capital relative to equity. While total liabilities increased during the early part of the period, the simultaneous and more rapid growth in shareholders' equity resulted in a gradual improvement of the debt-to-equity ratio.
- Total Debt Trends
- Total debt, including operating lease liabilities, experienced an upward trajectory from 2018 to 2020, rising from US$ 2,671 million to US$ 3,895 million. Following this initial increase, debt levels stabilized and remained relatively stagnant through 2022, ending the period at US$ 3,856 million.
- Shareholders' Equity Growth
- Equity demonstrated consistent and significant growth throughout the five-year period. Shareholders' equity increased from US$ 11,357 million in 2018 to US$ 19,243 million in 2022, representing a substantial expansion of the internal funding base.
- Debt to Equity Ratio Interpretation
- The debt-to-equity ratio remained consistently low, fluctuating slightly between a peak of 0.26 in 2020 and a minimum of 0.20 in 2022. The overall downward trend indicates that equity growth outpaced the accumulation of debt, thereby strengthening the solvency position and reducing financial leverage risks over the observed timeframe.
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Debt to Capital
Activision Blizzard Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt, net | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total debt | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Shareholders’ equity | 19,243) | 17,599) | 15,037) | 12,805) | 11,357) | |
| Total capital | 22,854) | 21,207) | 18,642) | 15,480) | 14,028) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.16 | 0.17 | 0.19 | 0.17 | 0.19 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | 0.06 | — | — | — | |
| Comcast Corp. | 0.54 | 0.50 | — | — | — | |
| Meta Platforms Inc. | 0.08 | 0.00 | — | — | — | |
| Netflix Inc. | 0.41 | 0.49 | — | — | — | |
| Walt Disney Co. | 0.34 | 0.38 | 0.41 | — | — | |
| Debt to Capital, Sector | ||||||
| Media & Entertainment | 0.24 | 0.24 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Communication Services | 0.39 | 0.40 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,611 ÷ 22,854 = 0.16
2 Click competitor name to see calculations.
An analysis of the solvency position reveals a conservative approach to capital structuring between 2018 and 2022. The entity demonstrated a consistent ability to expand its total capital base while limiting the growth of its total debt obligations, resulting in a stable financial leverage profile.
- Total Debt Trends
- Total debt remained relatively stagnant between 2018 and 2019 at approximately 2.67 billion US$. A significant increase was recorded in 2020, with debt rising to 3.605 billion US$. Following this increase, debt levels remained almost constant through 2021 and 2022, ending the period at 3.611 billion US$.
- Total Capital Expansion
- Total capital exhibited a consistent upward trajectory throughout the analyzed period. Starting at 14.028 billion US$ in 2018, capital grew steadily each year to reach 22.854 billion US$ by December 31, 2022. This continuous growth indicates a strengthening of the overall capital base.
- Debt to Capital Ratio Interpretation
- The debt to capital ratio fluctuated minimally, ranging from a peak of 0.19 in 2018 and 2020 to a low of 0.16 in 2022. Although absolute debt increased in 2020, the simultaneous expansion of total capital prevented a spike in the ratio. The gradual decline to 0.16 by 2022 signifies a reduction in the proportion of debt used to fund the capital structure, suggesting improved solvency and reduced financial risk.
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Debt to Capital (including Operating Lease Liability)
Activision Blizzard Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt, net | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total debt | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Current operating lease liabilities (classified as Accrued expenses and other current liabilities) | 83) | 77) | 66) | 63) | —) | |
| Non-current operating lease liabilities (classified as Other liabilities) | 162) | 212) | 224) | 210) | —) | |
| Total debt (including operating lease liability) | 3,856) | 3,897) | 3,895) | 2,948) | 2,671) | |
| Shareholders’ equity | 19,243) | 17,599) | 15,037) | 12,805) | 11,357) | |
| Total capital (including operating lease liability) | 23,099) | 21,496) | 18,932) | 15,753) | 14,028) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.17 | 0.18 | 0.21 | 0.19 | 0.19 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.10 | 0.10 | — | — | — | |
| Comcast Corp. | 0.56 | 0.52 | — | — | — | |
| Meta Platforms Inc. | 0.18 | 0.10 | — | — | — | |
| Netflix Inc. | 0.45 | 0.53 | — | — | — | |
| Walt Disney Co. | 0.35 | 0.40 | 0.43 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.28 | 0.28 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.44 | 0.44 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 3,856 ÷ 23,099 = 0.17
2 Click competitor name to see calculations.
The analysis of solvency indicators between 2018 and 2022 reveals a stable financial structure characterized by a low reliance on debt relative to total capital. While total liabilities increased during the early part of the period, the concurrent growth in total capital resulted in a strengthening of the solvency position by the end of 2022.
- Total Debt Trends
- Total debt, including operating lease liabilities, experienced a steady increase from 2,671 million US dollars in 2018 to a peak of 3,897 million US dollars in 2021. A slight contraction occurred in 2022, with debt levels receding to 3,856 million US dollars, indicating a period of stabilization in borrowing.
- Total Capital Growth
- A consistent upward trajectory is observed in total capital, which grew every year throughout the analyzed period. Starting at 14,028 million US dollars in 2018, total capital expanded to 23,099 million US dollars by 2022, representing significant growth in the total funding base.
- Debt to Capital Ratio Interpretation
- The debt to capital ratio remained narrow, fluctuating between 0.17 and 0.21. After a slight peak of 0.21 in 2020, the ratio trended downward to 0.18 in 2021 and reached its lowest point of 0.17 in 2022. This decline indicates that total capital grew at a faster rate than total debt, effectively reducing the proportion of the capital structure financed through debt.
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Debt to Assets
Activision Blizzard Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt, net | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total debt | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total assets | 27,383) | 25,056) | 23,109) | 19,845) | 17,835) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.13 | 0.14 | 0.16 | 0.13 | 0.15 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Alphabet Inc. | 0.04 | 0.04 | — | — | — | |
| Comcast Corp. | 0.37 | 0.34 | — | — | — | |
| Meta Platforms Inc. | 0.06 | 0.00 | — | — | — | |
| Netflix Inc. | 0.30 | 0.35 | — | — | — | |
| Walt Disney Co. | 0.24 | 0.27 | 0.29 | — | — | |
| Debt to Assets, Sector | ||||||
| Media & Entertainment | 0.17 | 0.17 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Communication Services | 0.27 | 0.27 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,611 ÷ 27,383 = 0.13
2 Click competitor name to see calculations.
The solvency position over the five-year period ending December 31, 2022, demonstrates a conservative approach to leverage, characterized by a consistently low debt-to-assets ratio and a strong growth trajectory in total assets.
- Total Debt Trends
- Total debt remained stable between 2018 and 2019, with values around US$ 2,671 million and US$ 2,675 million respectively. A significant increase occurred in 2020, where debt rose to US$ 3,605 million. Following this increase, the debt level plateaued, showing minimal fluctuation through 2021 and 2022, ending at US$ 3,611 million.
- Total Asset Expansion
- A consistent upward trend is observed in total assets, which grew steadily from US$ 17,835 million in 2018 to US$ 27,383 million in 2022. This persistent growth indicates a substantial expansion of the resource base throughout the analyzed period.
- Debt to Assets Ratio Interpretation
- The debt to assets ratio fluctuated within a narrow range between 0.13 and 0.16. A peak of 0.16 was recorded in 2020, coinciding with the spike in total debt. However, as total assets continued to grow while debt remained stagnant, the ratio declined to 0.13 by 2022. This suggests that the company's asset growth has effectively diluted its leverage, maintaining a strong solvency profile where a small portion of assets is financed by debt.
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Debt to Assets (including Operating Lease Liability)
Activision Blizzard Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Long-term debt, net | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Total debt | 3,611) | 3,608) | 3,605) | 2,675) | 2,671) | |
| Current operating lease liabilities (classified as Accrued expenses and other current liabilities) | 83) | 77) | 66) | 63) | —) | |
| Non-current operating lease liabilities (classified as Other liabilities) | 162) | 212) | 224) | 210) | —) | |
| Total debt (including operating lease liability) | 3,856) | 3,897) | 3,895) | 2,948) | 2,671) | |
| Total assets | 27,383) | 25,056) | 23,109) | 19,845) | 17,835) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.14 | 0.16 | 0.17 | 0.15 | 0.15 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.08 | 0.08 | — | — | — | |
| Comcast Corp. | 0.39 | 0.37 | — | — | — | |
| Meta Platforms Inc. | 0.15 | 0.09 | — | — | — | |
| Netflix Inc. | 0.35 | 0.41 | — | — | — | |
| Walt Disney Co. | 0.26 | 0.29 | 0.31 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.22 | 0.21 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.33 | 0.33 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 3,856 ÷ 27,383 = 0.14
2 Click competitor name to see calculations.
The analysis of solvency metrics between 2018 and 2022 reveals a consistent expansion of the asset base paired with a controlled increase in total debt, resulting in a stable and ultimately improving solvency profile.
- Total Asset Growth
- Total assets exhibited an uninterrupted upward trajectory over the five-year period, increasing from US$ 17,835 million in 2018 to US$ 27,383 million in 2022. This steady growth indicates a significant expansion of the company's resource base.
- Debt Obligations Trend
- Total debt, including operating lease liabilities, rose from US$ 2,671 million in 2018 to a peak of US$ 3,897 million in 2021, before slightly declining to US$ 3,856 million by the end of 2022. The most pronounced increase in debt occurred between 2019 and 2020.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained relatively stable, oscillating within a narrow range between 0.14 and 0.17. A marginal peak of 0.17 was observed in 2020, coinciding with the sharper increase in total debt. Subsequently, the ratio trended downward to 0.14 by 2022, the lowest level within the analyzed period. This downward movement suggests that asset growth outpaced the accumulation of liabilities, thereby reducing the proportion of assets financed through debt and enhancing the overall solvency position.
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Financial Leverage
Activision Blizzard Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 27,383) | 25,056) | 23,109) | 19,845) | 17,835) | |
| Shareholders’ equity | 19,243) | 17,599) | 15,037) | 12,805) | 11,357) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.42 | 1.42 | 1.54 | 1.55 | 1.57 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Alphabet Inc. | 1.43 | 1.43 | — | — | — | |
| Comcast Corp. | 3.18 | 2.87 | — | — | — | |
| Meta Platforms Inc. | 1.48 | 1.33 | — | — | — | |
| Netflix Inc. | 2.34 | 2.81 | — | — | — | |
| Walt Disney Co. | 2.14 | 2.30 | 2.41 | — | — | |
| Financial Leverage, Sector | ||||||
| Media & Entertainment | 1.83 | 1.82 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Communication Services | 2.45 | 2.43 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 27,383 ÷ 19,243 = 1.42
2 Click competitor name to see calculations.
The financial position from 2018 to 2022 is characterized by consistent growth in the asset base and equity, accompanied by a gradual reduction in financial leverage.
- Asset and Equity Expansion
- Total assets experienced steady growth, increasing from 17,835 million US$ in 2018 to 27,383 million US$ by 2022. During the same period, shareholders' equity rose from 11,357 million US$ to 19,243 million US$. The growth in equity outpaced the growth in total assets, contributing to a strengthened capital base.
- Financial Leverage Trend
- A consistent downward trend in the financial leverage ratio is observed, declining from 1.57 in 2018 to 1.42 in 2022. This indicates a decrease in the reliance on debt to finance assets relative to the proportion of funding provided by shareholders.
- Solvency and Risk Assessment
- The reduction in the leverage ratio suggests an improvement in the company's solvency profile. By lowering the ratio to 1.42, the organization has shifted toward a more conservative capital structure, which typically reduces financial risk and enhances long-term stability.
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Interest Coverage
Activision Blizzard Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,513) | 2,699) | 2,197) | 1,503) | 1,813) | |
| Add: Income tax expense | 231) | 465) | 419) | 130) | 64) | |
| Add: Interest expense from debt | 108) | 108) | 99) | 90) | 140) | |
| Earnings before interest and tax (EBIT) | 1,852) | 3,272) | 2,715) | 1,723) | 2,017) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 17.15 | 30.30 | 27.42 | 19.14 | 14.41 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Alphabet Inc. | 200.80 | 263.24 | — | — | — | |
| Comcast Corp. | 3.38 | 5.46 | — | — | — | |
| Meta Platforms Inc. | 164.74 | 3,153.27 | — | — | — | |
| Netflix Inc. | 8.45 | 8.63 | — | — | — | |
| Walt Disney Co. | 4.41 | 2.66 | -0.06 | — | — | |
| Interest Coverage, Sector | ||||||
| Media & Entertainment | 18.95 | 24.80 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Communication Services | 8.50 | 11.90 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 1,852 ÷ 108 = 17.15
2 Click competitor name to see calculations.
Analysis of the interest coverage ratios between 2018 and 2022 indicates a period of volatility in operational earnings, although a substantial margin of safety regarding debt obligations was maintained throughout the period.
- Interest Coverage Ratio Trends
- The interest coverage ratio exhibited a strong upward trajectory from 2018 to 2021, rising from 14.41 to a peak of 30.30. This trend signifies a strengthening capacity to service interest payments from operating profits. However, a notable contraction occurred in 2022, where the ratio declined to 17.15, marking a significant reduction in the coverage margin relative to the 2021 peak.
- Impact of Operating Earnings
- The fluctuations in solvency are primarily attributable to the volatility of Earnings before interest and tax (EBIT). EBIT grew from US$ 1,723 million in 2019 to a peak of US$ 3,272 million in 2021, which directly fueled the rise in interest coverage. The subsequent decrease in EBIT to US$ 1,852 million in 2022 served as the primary driver for the decline in the interest coverage ratio.
- Debt Service Cost Analysis
- Interest expenses remained relatively stable throughout the majority of the analyzed period. After a decrease from US$ 140 million in 2018 to US$ 90 million in 2019, expenses plateaued, ending 2021 and 2022 at US$ 108 million. The relative constancy of these expenses indicates that the changes in the coverage ratio were driven by operational performance rather than shifts in the cost of debt or significant changes in borrowing levels.
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Fixed Charge Coverage
Activision Blizzard Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 1,513) | 2,699) | 2,197) | 1,503) | 1,813) | |
| Add: Income tax expense | 231) | 465) | 419) | 130) | 64) | |
| Add: Interest expense from debt | 108) | 108) | 99) | 90) | 140) | |
| Earnings before interest and tax (EBIT) | 1,852) | 3,272) | 2,715) | 1,723) | 2,017) | |
| Add: Operating lease costs | 85) | 78) | 75) | 75) | 75) | |
| Earnings before fixed charges and tax | 1,937) | 3,350) | 2,790) | 1,798) | 2,092) | |
| Interest expense from debt | 108) | 108) | 99) | 90) | 140) | |
| Operating lease costs | 85) | 78) | 75) | 75) | 75) | |
| Fixed charges | 193) | 186) | 174) | 165) | 215) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 10.04 | 18.01 | 16.03 | 10.90 | 9.73 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Alphabet Inc. | 22.90 | 30.80 | — | — | — | |
| Comcast Corp. | 2.82 | 4.48 | — | — | — | |
| Meta Platforms Inc. | 15.18 | 31.41 | — | — | — | |
| Netflix Inc. | 5.00 | 5.46 | — | — | — | |
| Walt Disney Co. | 3.25 | 2.07 | 0.32 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Media & Entertainment | 9.54 | 13.00 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Communication Services | 4.31 | 6.03 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 1,937 ÷ 193 = 10.04
2 Click competitor name to see calculations.
The solvency profile indicates a consistently high capacity to meet fixed obligations throughout the analyzed five-year period, characterized by a period of significant expansion followed by a contraction in the final year.
- Earnings before fixed charges and tax
- Operational earnings exhibited notable volatility. Following a decrease in 2019, there was a sustained upward trajectory that peaked at 3,350 million US dollars in 2021. A subsequent reduction to 1,937 million US dollars in 2022 reflects a return to levels observed at the beginning of the period.
- Fixed charges
- Fixed obligations remained relatively stable. After a reduction from 215 million US dollars in 2018 to 165 million US dollars in 2019, charges experienced a gradual and steady increase, ending the period at 193 million US dollars in 2022.
- Fixed charge coverage ratio
- The coverage ratio showed a strong positive trend between 2018 and 2021, increasing from 9.73 to a peak of 18.01. This progression highlights a substantial increase in the margin of safety for debt and fixed cost obligations. In 2022, the ratio declined to 10.04, primarily due to the contraction in earnings before fixed charges and tax. Despite this decrease, the ratio remains robust, indicating that the company maintains an ample ability to cover its fixed charges.
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