Advanced Micro Devices Inc. (NASDAQ:AMD)

The solvency position, as indicated by the presented ratios, demonstrates a generally improving trend over the five-year period, though with some fluctuations. Initial years show a relatively stable debt profile, followed by a period of increased risk, and then a return to strengthening solvency metrics. A closer examination of individual ratios reveals nuanced patterns.

Debt Ratios (Debt to Equity, Debt to Capital, Debt to Assets)

Debt ratios, both with and without the inclusion of operating lease liabilities, generally decreased from 2021 through 2024. Debt to equity decreased from 0.04 in 2021 to a low of 0.03 in 2024, before increasing slightly to 0.05 in 2025. Similar patterns are observed in debt to capital and debt to assets ratios. The inclusion of operating lease liabilities consistently results in higher ratio values, indicating a more substantial debt burden when these obligations are considered. The 2025 values suggest a potential reversal of the downward trend observed in prior years.

Leverage Ratios (Financial Leverage)

Financial leverage remained relatively stable between 2022 and 2024, fluctuating around 1.2. A slight increase to 1.22 is observed in 2025. This indicates a consistent, though moderate, reliance on debt financing. The initial value in 2021 was significantly higher at 1.66, suggesting a more leveraged position in that year.

Coverage Ratios (Interest Coverage, Fixed Charge Coverage)

Interest coverage and fixed charge coverage ratios experienced significant volatility. Interest coverage decreased dramatically from 109.09 in 2021 to 14.61 in 2022, and further to 5.79 in 2023, indicating a reduced ability to cover interest expenses with earnings. However, a substantial recovery is observed in 2024 (22.98) and 2025 (32.80). Fixed charge coverage followed a similar pattern, declining sharply from 36.00 in 2021 to 3.18 in 2023, before increasing to 9.46 in 2024 and 13.74 in 2025. The improvements in both coverage ratios in the later years suggest a strengthening capacity to meet fixed financial obligations.

Overall, the solvency position appears to have weakened in 2022 and 2023, but has since demonstrated a marked improvement through 2025. The increase in debt ratios in 2025 warrants monitoring to determine if it represents a sustained shift or a temporary fluctuation. The substantial recovery in coverage ratios is a positive indicator, suggesting improved financial flexibility.

The debt to equity ratio exhibits fluctuations over the observed period. Initially low, the ratio increased before stabilizing and then increasing again. This suggests a changing reliance on debt financing relative to equity.

Debt to Equity Ratio - Overall Trend

The debt to equity ratio began at 0.04 in 2021. It rose to 0.05 in 2022 and remained relatively stable at 0.04 in 2023. A decrease to 0.03 was noted in 2024, followed by an increase to 0.05 in 2025. This indicates periods of increased and decreased financial leverage.

Total debt demonstrated a significant increase between 2021 and 2022, rising from US$313 million to US$2,467 million. It remained approximately constant in 2023, then decreased to US$1,721 million in 2024 before increasing substantially to US$3,222 million in 2025.

Debt to Equity Ratio - Debt Component

The substantial increase in total debt in 2022, coupled with a simultaneous increase in stockholders’ equity, initially resulted in a modest increase in the debt to equity ratio. The subsequent stabilization of debt in 2023, alongside continued growth in equity, led to a slight decrease in the ratio. The decrease in debt in 2024 further contributed to a lower ratio, but the subsequent increase in debt in 2025, alongside equity growth, brought the ratio back to 0.05.

Stockholders’ equity consistently increased throughout the period, moving from US$7,497 million in 2021 to US$62,999 million in 2025. This consistent growth in equity partially offset the impact of debt fluctuations on the debt to equity ratio.

Debt to Equity Ratio - Equity Component

The consistent growth in stockholders’ equity served as a mitigating factor against increases in the debt to equity ratio. Without the equity growth, the increases in total debt would have resulted in a more pronounced increase in the ratio. The equity growth suggests internal profitability and/or successful capital raising activities.

The observed fluctuations in the debt to equity ratio warrant further investigation to understand the underlying drivers of debt levels and their implications for the company’s financial risk profile.

The debt to equity ratio, inclusive of operating lease liabilities, demonstrates considerable fluctuation over the observed five-year period. Initially low, the ratio increased significantly before stabilizing and then increasing again. This suggests evolving financing strategies and potentially changing risk profiles.

Total Debt (including operating lease liability)

Total debt exhibited a substantial increase from US$732 million in 2021 to US$2,956 million in 2022. This growth moderated in subsequent years, reaching US$3,109 million in 2023, before decreasing to US$2,321 million in 2024. A further increase is observed in 2025, with total debt reaching US$4,006 million.

Stockholders’ Equity

Stockholders’ equity demonstrated a consistent upward trend throughout the period. Beginning at US$7,497 million in 2021, equity grew substantially to US$54,750 million in 2022. This growth continued, albeit at a slower pace, reaching US$55,892 million in 2023, US$57,568 million in 2024, and US$62,999 million in 2025.

Debt to Equity Ratio

The debt to equity ratio began at 0.10 in 2021. A significant decrease to 0.05 was observed in 2022, coinciding with the substantial increase in stockholders’ equity. The ratio remained relatively stable at 0.06 in 2023, decreased further to 0.04 in 2024, and then increased to 0.06 in 2025. The 2025 value indicates a return to a level similar to that observed in 2023, despite continued growth in equity, due to the larger increase in total debt.

The observed pattern suggests that while the company has significantly increased its equity base, its debt levels have also fluctuated, leading to variations in the debt to equity ratio. The increase in debt in 2025, coupled with a relatively smaller increase in equity, warrants further investigation to understand the underlying reasons and potential implications for the company’s financial leverage.

The debt to capital ratio exhibits a generally stable profile over the observed period, with some fluctuation in later years. Initial values are low, increasing significantly in 2022 before decreasing and then rising again.

Overall Trend

From 2021 to 2023, the debt to capital ratio remained consistently at 0.04. A decrease is then observed in 2024, falling to 0.03, before increasing to 0.05 in 2025. This indicates a relatively low reliance on debt financing for much of the period, with a slight increase in leverage in the most recent year.

Significant Changes

The most notable change occurs between 2021 and 2022. Total debt increased substantially, from US$313 million to US$2,467 million, while total capital also rose significantly, from US$7,810 million to US$57,217 million. This large increase in both debt and capital resulted in the ratio remaining constant at 0.04. The subsequent decrease in 2024, driven by a reduction in total debt to US$1,721 million, suggests a period of debt reduction. The increase in 2025, with total debt reaching US$3,222 million and total capital at US$66,221 million, indicates a renewed reliance on debt financing.

Ratio Values

The ratio consistently remained below 0.1 throughout the period. The values suggest that, even with the increases in debt, the company maintains a substantial capital base relative to its debt obligations. The 2025 value of 0.05 represents the highest ratio observed, but still indicates a conservative capital structure.

In summary, the debt to capital ratio demonstrates a period of stability followed by moderate fluctuation. While debt levels increased in 2022 and 2025, the company’s capital base has grown commensurately, maintaining a relatively low level of debt financing overall.

The Debt to Capital ratio, inclusive of operating lease liabilities, demonstrates a fluctuating pattern over the five-year period. Initially, the ratio experienced a substantial decrease followed by a period of relative stability, and then a subsequent increase.

Initial Decline (2021-2022)

A significant reduction in the Debt to Capital ratio is observed from 0.09 in 2021 to 0.05 in 2022. This decrease is attributable to a considerably larger increase in Total Capital compared to the increase in Total Debt, including operating lease liability. The increase in Total Capital suggests potential equity raises, retained earnings growth, or other factors bolstering the company’s capital base.

Period of Stability (2022-2024)

From 2022 through 2024, the ratio remained relatively stable, fluctuating between 0.05 and 0.04. While Total Debt decreased from 2022 to 2024, Total Capital experienced modest growth, resulting in a consistent ratio. This suggests a balanced approach to capital structure management during this period.

Subsequent Increase (2024-2025)

In 2025, the Debt to Capital ratio increased to 0.06. This rise is primarily driven by a larger increase in Total Debt, including operating lease liability, relative to the growth in Total Capital. The increase in debt may indicate strategic investments, acquisitions, or a shift in financing strategy.

Overall Trend

The overall trend indicates a move towards a more leveraged capital structure in 2025 after a period of relative deleveraging and stability. While the ratio remains relatively low, the increase warrants monitoring to assess its potential impact on financial flexibility and risk profile.

The fluctuations in Total Debt and Total Capital are key drivers of the observed changes in the Debt to Capital ratio. Further investigation into the underlying causes of these changes would provide a more comprehensive understanding of the company’s financial position.

The debt to assets ratio exhibits fluctuations over the observed five-year period. Initially, the ratio is low and relatively stable, then increases before decreasing and stabilizing again. A review of the specific values reveals a pattern of increasing leverage followed by a deleveraging phase and a subsequent increase in debt relative to assets.

Initial Period (2021-2022)

The debt to assets ratio begins at 0.03 in 2021 and increases to 0.04 in 2022. This indicates a modest increase in the proportion of assets financed by debt. While the increase is not substantial, it signals a shift towards greater financial leverage.

Stabilization (2022-2023)

The ratio remains constant at 0.04 for 2022 and 2023, suggesting a period of stable capital structure. Total debt remained relatively flat during this period, while total assets experienced a slight increase.

Deleveraging (2023-2024)

A notable decrease is observed in 2024, with the debt to assets ratio declining to 0.02. This reduction is primarily driven by a decrease in total debt, while total assets continue to grow. This suggests a deliberate effort to reduce financial leverage and improve the company’s solvency position.

Re-leveraging (2024-2025)

In 2025, the ratio returns to 0.04, mirroring the levels seen in 2022 and 2023. This is attributable to a significant increase in total debt, coupled with a moderate increase in total assets. This indicates a renewed reliance on debt financing.

Overall, the debt to assets ratio demonstrates a cyclical pattern. The company experienced a period of increasing leverage, followed by a period of deleveraging, and then a return to previous leverage levels. The fluctuations suggest active management of the capital structure, potentially in response to investment opportunities or changing market conditions.

The debt to assets ratio, including operating lease liability, demonstrates fluctuations over the observed five-year period. Initially, the ratio was low, then increased significantly before decreasing again, and finally showing an increase in the most recent year.

Overall Trend

The ratio began at 0.06 in 2021, indicating a relatively low level of debt financing compared to assets. A substantial increase was observed in 2022, reaching 0.04, followed by a slight decrease to 0.05 in 2023. The ratio then declined to a low of 0.03 in 2024 before rising to 0.05 in 2025.

Significant Changes

The most notable change occurred between 2021 and 2022, with the ratio nearly doubling. This suggests a significant increase in debt relative to assets during that period. The subsequent decrease in 2024 indicates a reduction in debt or an increase in assets, or a combination of both. The increase in 2025 reverses the 2024 trend, suggesting renewed debt accumulation or slower asset growth.

Ratio Values

The ratio remained below 0.1 throughout the period, suggesting that assets consistently exceeded liabilities. However, the fluctuations indicate changes in the company’s capital structure and financing strategies. The 2025 value returns the ratio to the level observed in 2023.

The observed pattern suggests a dynamic financial strategy, potentially influenced by investment opportunities, market conditions, or operational needs. Further investigation into the underlying drivers of these changes would be necessary to fully understand the implications for the company’s financial health.

The financial leverage of the company demonstrates a generally stable pattern over the five-year period examined. Total assets experienced substantial growth, particularly between 2021 and 2022, followed by more moderate increases in subsequent years. Stockholders’ equity also increased significantly from 2021 to 2022, and continued to grow, though at a slower pace, through 2025. The financial leverage ratio itself remained relatively consistent, fluctuating within a narrow range.

Financial Leverage

The financial leverage ratio decreased from 1.66 in 2021 to 1.23 in 2022, indicating a reduced reliance on debt financing relative to equity. This decrease coincided with the substantial increase in stockholders’ equity. From 2022 through 2024, the ratio remained stable, hovering around 1.21 to 1.20. A slight increase to 1.22 is observed in 2025, suggesting a marginal increase in financial leverage, though remaining near the lower levels established in recent years.

The consistent financial leverage ratio, despite the growth in both assets and equity, suggests a deliberate approach to capital structure management. The company appears to be effectively balancing debt and equity financing as it expands. The initial significant decrease in leverage followed by stability indicates a strengthening financial position. The modest increase in 2025 warrants continued monitoring, but does not currently signal a significant shift in the company’s financial risk profile.

Asset and Equity Growth

Total assets grew from US$12,419 million in 2021 to US$76,926 million in 2025, representing a substantial expansion of the company’s resource base. Stockholders’ equity mirrored this growth, increasing from US$7,497 million to US$62,999 million over the same period. The consistent growth in both components of the balance sheet supports the observed stability in the financial leverage ratio.

In summary, the company’s financial leverage has remained controlled and relatively stable despite significant growth in both assets and equity. This suggests prudent financial management and a strengthening financial foundation.

The interest coverage ratio exhibits significant fluctuation over the observed period. Initial values are notably high, followed by a substantial decline, and then a recovery towards higher levels.

Earnings before interest and tax (EBIT)

EBIT demonstrates a considerable decrease from 2021 to 2022, followed by a further reduction in 2023. A recovery is then observed in 2024 and continues into 2025, reaching the highest value in the period.

Interest expense

Interest expense generally increases throughout the period. While relatively low in 2021, it rises significantly in 2022 and 2023, before stabilizing and continuing to increase moderately in 2024 and 2025.

Interest Coverage Ratio

The interest coverage ratio begins at a high of 109.09 in 2021. A dramatic decrease is then seen in 2022, falling to 14.61. This downward trend continues in 2023, reaching a low of 5.79. A substantial increase is observed in 2024, with the ratio climbing to 22.98, and this positive momentum continues into 2025, reaching 32.80. The ratio’s movement is largely driven by the fluctuations in EBIT, with the increasing interest expense moderating the recovery.

The observed pattern suggests a period of reduced profitability, impacting the ability to cover interest obligations, followed by a strengthening financial position and improved capacity to meet those obligations. The increasing interest expense, while not the primary driver of the initial decline, contributes to the overall dynamic.

The company’s fixed charge coverage exhibited significant fluctuations over the five-year period. Initial coverage was strong, but declined substantially before recovering to levels exceeding the initial period.

Earnings Before Fixed Charges and Tax

Earnings before fixed charges and tax decreased considerably from 2021 to 2022, then continued to decline through 2023, reaching a low point. A substantial increase occurred in 2024, and this upward trend continued into 2025, surpassing the 2021 level.

Fixed Charges

Fixed charges increased consistently from 2021 to 2025. The rate of increase was most pronounced between 2021 and 2022, and then moderated in subsequent years, though remaining positive. The increase in fixed charges is less dramatic than the fluctuations in earnings before fixed charges and tax.

Fixed Charge Coverage

The fixed charge coverage ratio began at 36.00 in 2021. A sharp decrease was observed in 2022, falling to 6.82. This downward trend continued in 2023, reaching a low of 3.18. A significant recovery began in 2024, with the ratio increasing to 9.46, and further improvement occurred in 2025, reaching 13.74. The 2025 ratio represents the highest level of coverage within the observed period.

The substantial decline in earnings before fixed charges and tax between 2021 and 2023 directly impacted the fixed charge coverage ratio. The subsequent recovery in earnings, coupled with a more moderate increase in fixed charges, drove the improvement in coverage observed in 2024 and 2025. The company’s ability to comfortably meet its fixed obligations appears to have strengthened in the latter part of the period.