Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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Solvency Ratios (Summary)
Activision Blizzard Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
The analysis of the financial leverage and debt-related ratios over the observed periods reveals a generally favorable trend in the company's capital structure and risk profile.
- Debt to Equity Ratio
- This ratio exhibits a gradual decline from 0.23 in March 2019 to 0.17 in June 2023. The consistent downward movement indicates a progressive reduction in reliance on debt financing relative to shareholders' equity, signaling a strengthening equity base and possibly a more conservative approach to leveraging.
- Debt to Capital Ratio
- Similar to the debt to equity ratio, this metric trends downward from 0.19 in early 2019 to 0.15 by mid-2023. This supports the observation that the company's overall capital structure is becoming less debt-intensive over time.
- Debt to Assets Ratio
- This ratio remains relatively stable, fluctuating narrowly around the 0.13 to 0.15 range without drastic variations. Such stability suggests consistent asset financing policies, with debt representing a moderate and steady portion of total assets.
- Financial Leverage Ratio
- The financial leverage ratio shows minor fluctuations between 1.36 and 1.55, reflecting slight variability in the proportion of total assets financed by equity. Toward the latter part of the timeline, the ratio settles around 1.36 to 1.37, indicating a mild decrease in leverage intensity and a possibly more stable capital structure.
- Interest Coverage Ratio
- Data for interest coverage is available only from June 2022 onward. Initially extremely high at 107.07, it then decreases to approximately 17.15 in December 2022 before recovering to 24.86 in June 2023. Despite the decline, these values reflect a strong capacity to meet interest obligations comfortably, denoting solid earnings relative to interest expenses.
In summary, the company demonstrates a trend toward reducing debt relative to equity and overall capital, while maintaining stable asset financing through debt. Financial leverage is modest and slightly declining, implying cautious management of financial risk. Interest coverage remains robust, indicating solid earnings strength to cover interest expenses, though some volatility is noted in recent quarters.
Debt Ratios
Coverage Ratios
Debt to Equity
Activision Blizzard Inc., debt to equity calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Long-term debt, net | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||
| Alphabet Inc. | ||||||||||||||||||||||||
| Comcast Corp. | ||||||||||||||||||||||||
| Meta Platforms Inc. | ||||||||||||||||||||||||
| Netflix Inc. | ||||||||||||||||||||||||
| Trade Desk Inc. | ||||||||||||||||||||||||
| Walt Disney Co. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data indicates a consistent evolution in the company’s capital structure over the observed periods. Total debt remained relatively stable from early 2019 through mid-2020, with a value just above 2,600 million USD, before experiencing a noticeable increase starting in the third quarter of 2020 to approximately 3,600 million USD. This elevated debt level was maintained steadily through the subsequent periods up to mid-2023.
Conversely, shareholders’ equity exhibited a steady upward trend throughout the entire time frame. Beginning at approximately 11,600 million USD in the first quarter of 2019, equity increased consistently each quarter, reaching over 20,700 million USD by mid-2023. This persistent growth suggests robust retained earnings and possibly capital infusions that strengthened the equity base.
The debt-to-equity ratio reflects the interplay between the company’s leverage and its equity growth. Initially, this ratio decreased slightly from 0.23 to around 0.20 by mid-2020, indicating a modest reduction in leverage relative to equity despite the constant total debt. When total debt rose sharply in late 2020, the ratio temporarily increased to about 0.25, signaling a higher leverage position. Following this peak, the ratio declined steadily through 2022 and into 2023, ultimately reaching 0.17 by mid-2023. This downward trend implies that equity growth outpaced debt accumulation during this period, resulting in a stronger equity buffer relative to debt.
- Total Debt
- Stable near 2,670 million USD until mid-2020, then increased to ~3,600 million USD, remaining constant thereafter.
- Shareholders’ Equity
- Consistent quarter-over-quarter growth from 11,596 million USD to 20,793 million USD, indicating solid equity expansion.
- Debt to Equity Ratio
- Initially decreased slowly, peaked in late 2020 following debt increase, then steadily declined to 0.17 in mid-2023, reflecting improved equity relative to debt.
Overall, the data suggests prudent financial management with a significant equity base growth, managing leverage effectively despite the increased absolute debt levels observed starting in the third quarter of 2020. The decline in the debt-to-equity ratio in recent periods points to a strengthened financial position and potentially reduced financial risk.
Debt to Capital
Activision Blizzard Inc., debt to capital calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Long-term debt, net | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||
| Alphabet Inc. | ||||||||||||||||||||||||
| Comcast Corp. | ||||||||||||||||||||||||
| Meta Platforms Inc. | ||||||||||||||||||||||||
| Netflix Inc. | ||||||||||||||||||||||||
| Trade Desk Inc. | ||||||||||||||||||||||||
| Walt Disney Co. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt maintained a relatively steady level around 2,670 million US dollars from the first quarter of 2019 through the second quarter of 2020. Starting in the third quarter of 2020, there was a marked increase to approximately 3,600 million US dollars, which remained stable at that elevated level through the first half of 2023. This indicates a significant rise in debt between mid-2020 and late 2020, after which the debt level plateaued.
- Total Capital
- Total capital exhibited a consistent upward trend throughout the entire period. Beginning at approximately 14,268 million US dollars in the first quarter of 2019, it increased steadily each quarter, reaching approximately 24,405 million US dollars by the second quarter of 2023. The growth in total capital suggests ongoing capital accumulation or financing activity, potentially through retained earnings or equity issuance.
- Debt to Capital Ratio
- The debt to capital ratio started at 0.19 in early 2019 and exhibited a slight decline to a low of 0.16 by the middle of 2020, reflecting a period when total capital growth outpaced debt levels. A notable uptick occurred in the third quarter of 2020, rising to about 0.20, aligning with the significant increase in total debt. Following that peak, the ratio has gradually decreased again, reaching approximately 0.15 by mid-2023. This trend suggests a moderation in leverage relative to the overall capital base after the spike in late 2020.
- Summary of Trends
- The data reveals an initial phase of financial stability in debt levels followed by a distinct increase in total debt during the third quarter of 2020 that persisted thereafter. Concurrently, total capital has shown continuous growth, leading to a long-term reduction in the proportion of debt relative to capital despite the earlier rise in borrowing. The debt to capital ratio trends reflect prudent management of leverage, with a temporary increase during late 2020 but subsequent improvement as capital growth outpaced debt.
Debt to Assets
Activision Blizzard Inc., debt to assets calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Long-term debt, net | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||
| Alphabet Inc. | ||||||||||||||||||||||||
| Comcast Corp. | ||||||||||||||||||||||||
| Meta Platforms Inc. | ||||||||||||||||||||||||
| Netflix Inc. | ||||||||||||||||||||||||
| Trade Desk Inc. | ||||||||||||||||||||||||
| Walt Disney Co. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends regarding the company's debt, assets, and leverage over the examined periods.
- Total Debt
-
The total debt remained relatively stable from March 2019 through June 2020, fluctuating marginally around 2,672 to 2,676 million USD. A significant increase is observed starting in September 2020, with debt rising sharply to approximately 3,604 million USD and maintaining this elevated level through June 2023, with only minimal incremental changes. This suggests an increase in borrowing or issuance of debt instruments beginning in late 2020, after a prolonged period of stable debt levels.
- Total Assets
-
Total assets exhibit a steady growth trend throughout the entire timeframe, increasing from about 17,948 million USD in March 2019 to 28,518 million USD by June 2023. The growth is generally consistent quarter-over-quarter, with occasional more pronounced increases observed particularly from mid-2020 onward. This upward trajectory indicates ongoing asset accumulation or appreciation, supporting an expansion of the company’s asset base over the four-year period.
- Debt to Assets Ratio
-
The debt to assets ratio starts at approximately 0.15 in early 2019 and experiences slight fluctuations, decreasing to around 0.13 - 0.14 in some quarters. Despite the notable rise in total debt in late 2020, the ratio does not increase proportionally but rather remains fairly steady between 0.13 and 0.17 throughout the entire period. This stability suggests that the growth in assets has generally matched or outpaced the increase in debt, indicating maintained leverage discipline and possibly effective asset management relative to debt levels.
In summary, the company has significantly increased its debt starting in the second half of 2020, while continuously growing its total assets throughout the observed timeframe. The relative stability of the debt to assets ratio implies that despite higher absolute debt levels, the company's leverage position has remained controlled, reflecting a balanced approach to financing and asset growth.
Financial Leverage
Activision Blizzard Inc., financial leverage calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||
| Alphabet Inc. | ||||||||||||||||||||||||
| Comcast Corp. | ||||||||||||||||||||||||
| Meta Platforms Inc. | ||||||||||||||||||||||||
| Netflix Inc. | ||||||||||||||||||||||||
| Trade Desk Inc. | ||||||||||||||||||||||||
| Walt Disney Co. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data indicates several notable trends in the company's financial position over the periods presented. The total assets demonstrated a steady upward trajectory from March 31, 2019, through June 30, 2023. Beginning at $17,948 million, assets fluctuated modestly but maintained overall growth, reaching $28,518 million by the latest quarter. This reflects a significant expansion in the asset base, indicative of potential reinvestment and asset acquisition strategies.
Shareholders’ equity similarly trended upward consistently during the same timeframe. Starting at $11,596 million in March 2019, equity rose steadily each quarter, reaching $20,793 million by June 2023. This steady increase indicates a strengthening capital base, likely reflecting retained earnings growth and possibly equity financing activities. The growth in equity outpaced inflationary pressures and suggests enhanced financial stability and resilience.
Financial leverage ratios fluctuated within a relatively narrow range across the observed quarters. Beginning at 1.55 in the first quarter of 2019, the ratio fluctuated between 1.36 and 1.55, showing a slight overall decline towards the end of the period. This trend may imply a gradual reduction in reliance on debt financing relative to equity, which aligns with the increasing shareholders' equity. The leverage ratio remaining near or below 1.5 suggests balanced financial structure management, maintaining moderate risk levels.
- Total Assets
- Progressive growth from $17,948 million to $28,518 million over approximately four years.
- Positive asset accumulation indicating expansion and reinvestment.
- Shareholders’ Equity
- Consistent incremental increases from $11,596 million to $20,793 million.
- Signifies improved financial strength and retained earnings growth.
- Financial Leverage Ratio
- Range maintained from 1.36 to 1.55, with a slight downward drift in recent periods.
- Indicates stable capital structure with cautious leverage management.
Overall, the company exhibits a robust financial profile marked by asset growth and strengthened equity. The stable leverage suggests prudent financial policies contributing to risk mitigation. These trends collectively portray a financially healthier position benefiting from accumulated earnings and asset base expansion while maintaining controlled leverage levels.
Interest Coverage
Activision Blizzard Inc., interest coverage calculation (quarterly data)
| Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||
| Add: Interest expense from debt | ||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||
| Comcast Corp. | ||||||||||||||||||||||||
| Netflix Inc. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q2 2023 Calculation
Interest coverage
= (EBITQ2 2023
+ EBITQ1 2023
+ EBITQ4 2022
+ EBITQ3 2022)
÷ (Interest expenseQ2 2023
+ Interest expenseQ1 2023
+ Interest expenseQ4 2022
+ Interest expenseQ3 2022)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT figures demonstrate notable volatility across the observed quarters. Initially, EBIT was at 567 million USD in the first quarter of 2019, followed by a downward trend reaching a low of 249 million in the third quarter of 2019. Subsequently, there was a recovery period culminating in a peak of 1002 million USD in the second quarter of 2021. After this peak, EBIT fluctuated with a general tendency to decline towards the end of 2022 but rebounded again in the first and second quarters of 2023, reaching 922 million and 751 million USD respectively.
- Interest expense from debt
- Interest expense data is only available from the first quarter of 2022 onwards. During this period, the expense remained relatively stable, oscillating between 27 million and 54 million USD. There was a notable spike to 54 million in the third quarter of 2022, but otherwise, interest expenses consistently hovered around 27 million USD.
- Interest coverage ratio
- The interest coverage ratio, available starting in the first quarter of 2022, shows a declining trend from an exceptionally high coverage of 107.07 in March 2022 to a low of 17.15 in December 2022. This indicates a significant increase in interest burden relative to EBIT during that year. However, the ratio improved in the first two quarters of 2023, rising to 21.13 and 24.86, signaling better ability to cover interest expenses compared to the end of 2022.
- Overall Financial Insights
- The company’s operating profitability as measured by EBIT has shown periods of both growth and decline, with a peak in mid-2021 followed by a dip and partial recovery in 2023. Interest expenses have been modest but relatively consistent once disclosed. The declining interest coverage ratio in 2022 indicates that the company faced pressure in managing interest obligations relative to EBIT during that period, but the improvement in 2023 suggests some easing of this pressure. The trends suggest fluctuating operating performance with manageable but variable interest obligations.