Advanced Micro Devices Inc. (NASDAQ:AMD)

The financial ratios exhibit several noteworthy trends over the five-year period ending in December 2024. The leverage-related ratios generally indicate a conservative use of debt with a decreasing trend in debt levels relative to equity, capital, and assets.

Debt to Equity

The debt to equity ratio declined steadily from 0.06 in 2020 to 0.03 in 2024, signifying a reduction in debt usage against shareholders' equity. When including operating lease liabilities, the ratio remained higher but also demonstrated a downward trend from 0.10 in 2020 and 2021 to 0.04 in 2024, reflecting lower lease-related obligations or improved capital structure management.

Debt to Capital

This ratio showed a similar pattern, decreasing from 0.05 in 2020 to 0.03 in 2024. Including operating lease liabilities, it fell more markedly from 0.09 in 2020 and 2021 to 0.04 in 2024, indicating an overall reduction in financed capital risk and possible deleveraging efforts.

Debt to Assets

The ratio was relatively stable, hovering around 0.03 to 0.04 through most years but achieving a low of 0.02 in 2024. Including operating lease liabilities, the ratio decreased from 0.06 in 2020 and 2021 to 0.03 in 2024, supporting the trend of lower debt burden in relation to total assets.

Financial Leverage

The financial leverage ratio decreased significantly from 1.54 in 2020 to around 1.20 in 2023 and 2024. This suggests a decreased reliance on debt financing and a stronger equity position over time.

Interest Coverage

The interest coverage ratio indicates the company's ability to meet interest expenses. The figure spiked to 109.09 in 2021 but declined sharply to 5.79 in 2023 before rebounding to 22.98 in 2024. Despite volatility, the ratio remains above 1, suggesting sufficient earnings to cover interest costs. The fluctuations may point to varying interest expenses or earnings before interest and taxes.

Fixed Charge Coverage

This ratio also showed volatility, peaking at 36.00 in 2021 but dropping to 3.18 in 2023 and rising again to 9.46 in 2024. Similar to interest coverage, it reflects the company's varying capacity to cover fixed financial charges over the years, with an overall trend of recovery following a dip.

In summary, the analysis reveals a gradual reduction in leverage ratios from 2020 through 2024, indicating more conservative financial management and lower reliance on debt and lease obligations. Coverage ratios experienced significant fluctuations but remained at levels that indicate the company’s overall ability to service its debt despite some volatility in earnings or expenses.

Total Debt

The total debt remained relatively stable in 2020 and 2021, with values of $330 million and $313 million respectively. However, there was a significant increase in total debt in 2022 and 2023, reaching approximately $2.47 billion in both years. In 2024, total debt decreased markedly to $1.72 billion, indicating a reduction in leverage compared to the previous two years.

Stockholders’ Equity

Stockholders' equity demonstrated a strong upward trend over the period. Starting from $5.84 billion in 2020, equity increased moderately to $7.50 billion in 2021. A substantial rise occurred in 2022, bringing equity to $54.75 billion, with further incremental increases to $55.89 billion in 2023 and $57.57 billion in 2024. This growth reflects enhanced capital accumulation and possibly retained earnings or equity injections.

Debt to Equity Ratio

The debt to equity ratio remained low throughout, indicating low financial leverage in relation to equity. The ratio decreased slightly from 0.06 in 2020 to 0.04 in 2021, and maintained a range between 0.03 to 0.05 thereafter. Despite the surge in total debt during 2022 and 2023, the ratio stayed stable due to the proportionally large increase in equity, suggesting that the company maintained a conservative capital structure relative to its equity base.

Total Debt (including operating lease liability)

The total debt exhibited a notable increase from 572 million US dollars at the end of 2020 to a peak of 3,109 million US dollars at the end of 2023. However, it subsequently declined to 2,321 million US dollars by the end of 2024. This indicates a significant expansion in liabilities over the initial years, followed by a reduction in the latest period.

Stockholders’ Equity

Stockholders’ equity showed a consistent upward trend throughout the five-year span. Starting at 5,837 million US dollars at the end of 2020, it rose substantially to 7,497 million by the end of 2021 and made a remarkable jump to 54,750 million at the end of 2022. The growth continued, reaching 57,568 million US dollars by the end of 2024. This reflects a strong increase in the company's equity base.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio remained relatively low and demonstrated a gradual decline over the period analyzed. Beginning at 0.1 at the end of 2020 and 2021, it decreased to 0.05 by the end of 2022, then slightly rose to 0.06 in 2023 before declining again to 0.04 in 2024. This trend suggests improved leverage management and a lower relative debt burden compared to equity over time.

Total Debt

The total debt remained relatively stable from 2020 to 2021, with a slight decrease from 330 million to 313 million. However, there was a significant increase in total debt in 2022, reaching 2,467 million and maintaining a similar level in 2023 at 2,468 million. By 2024, the total debt decreased noticeably to 1,721 million.

Total Capital

Total capital exhibited steady growth from 2020 through 2021, increasing from 6,167 million to 7,810 million. A pronounced surge occurred in 2022, when total capital expanded to 57,217 million, and this upward trend continued modestly through 2023 and 2024, reaching 58,360 million and 59,289 million respectively.

Debt to Capital Ratio

The debt to capital ratio declined slightly from 0.05 in 2020 to 0.04 in 2021, remaining constant through 2022 and 2023. In 2024, a further decrease in this ratio to 0.03 was observed. Despite the sharp increase in total debt in 2022 and 2023, the ratio remained stable due to the simultaneous substantial growth in total capital, indicating an increasing capitalization and a relatively lower reliance on debt financing over time.

Total Debt (including operating lease liability)

The total debt experienced a significant increase from 572 million USD in 2020 to 2956 million USD in 2022. This upward trend continued into 2023, reaching 3109 million USD, followed by a notable decrease to 2321 million USD in 2024. This pattern indicates a period of aggressive debt accumulation over two years, with a partial reduction in the most recent year.

Total Capital (including operating lease liability)

Total capital showed a substantial growth trend, increasing from 6409 million USD in 2020 to an exceptionally high level of 57706 million USD in 2022. The capital then slightly increased in subsequent years, reaching 59001 million USD in 2023 and 59889 million USD in 2024. This sharp rise in capital in 2022 marks a significant change in the company's capital structure.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio remained constant at 0.09 throughout 2020 and 2021, despite rising debt levels. This ratio dropped markedly to 0.05 in 2022 and remained stable through 2023 before further declining to 0.04 in 2024. The declining ratio suggests that the company's increase in capital outpaced the growth of its debt, indicating improved financial leverage and possibly stronger equity financing or asset base expansion.

The financial data over the observed periods indicate significant developments in the company's debt levels and asset base.

Total Debt

The total debt remains relatively stable from 2020 to 2021, decreasing slightly from 330 million USD to 313 million USD. However, there is a substantial increase in debt in 2022 and 2023, rising sharply to approximately 2,467 million USD and 2,468 million USD respectively. By 2024, total debt decreases notably to 1,721 million USD.

Total Assets

Total assets showcase a strong upward trend throughout the years. Beginning at 8,962 million USD in 2020, assets increase to 12,419 million USD in 2021, then surge dramatically to about 67,580 million USD in 2022 and slightly increase further to 67,885 million USD in 2023. The upward trajectory continues, reaching 69,226 million USD in 2024, indicating significant asset growth especially in the years 2022 and beyond.

Debt to Assets Ratio

The ratio of debt to assets remains very low throughout the periods, demonstrating a conservative leverage position relative to the asset base. It begins at 0.04 in 2020, dips slightly to 0.03 in 2021, returns to 0.04 in 2022 and 2023, then decreases further to 0.02 in 2024. Despite the large fluctuations in absolute debt amounts, the low and fairly stable ratio suggests that growth in assets has outpaced debt increases significantly, maintaining a low financial risk from leverage.

Overall, the company exhibits robust asset accumulation over the years with manageable debt levels relative to assets. The sharp rise in total debt during 2022 and 2023 is accompanied by a proportionally larger increase in total assets, resulting in a stable and low debt to asset ratio, which improves further in 2024. This pattern reflects effective leverage management amid considerable asset expansion.

Total Debt (including operating lease liability)

The total debt shows a notable increase from 572 million US dollars in 2020 to a peak of 3109 million US dollars in 2023. However, in 2024, there is a significant reduction to 2321 million US dollars, indicating a partial deleveraging after the prior increase.

Total Assets

Total assets have increased substantially from 8962 million US dollars in 2020 to 69226 million US dollars by 2024. The most dramatic growth occurred between 2021 and 2022 when assets surged from 12419 to 67580 million US dollars. Subsequent years show more moderate growth.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio remains low throughout the period, starting at 0.06 in 2020 and decreasing to 0.03 by 2024. This decline suggests that while total debt increased at certain points, the growth in assets outpaced debt increases, resulting in reduced leverage relative to asset base over time.

The annual financial data indicates notable fluctuations and developments in the company’s asset base and equity composition over the reported periods.

Total assets

Total assets show a steady increase from $8.962 billion in 2020 to $12.419 billion in 2021, followed by a sharp rise to $67.580 billion in 2022. Subsequently, total assets remain relatively stable, with minor increases to $67.885 billion in 2023 and $69.226 billion in 2024. This significant jump between 2021 and 2022 suggests a major expansion or acquisition event, after which growth plateaus.

Stockholders' equity

Equity mirrors the trend seen in total assets with an increase from $5.837 billion in 2020 to $7.497 billion in 2021, followed by a substantial leap to $54.750 billion in 2022. This figure continues to rise modestly in the subsequent years, reaching $55.892 billion in 2023 and $57.568 billion in 2024. The growth in equity coinciding with asset expansion implies equity-financed growth or retained earnings contributing to capital base enhancement.

Financial leverage

The financial leverage ratio exhibits a moderate ascending trend from 1.54 in 2020 to 1.66 in 2021, indicating a higher reliance on debt relative to equity during this period. However, there is a notable decline in leverage to 1.23 in 2022, which further decreases slightly to 1.21 in 2023 and 1.20 in 2024. The decreasing leverage ratio in the context of sharp asset and equity growth suggests a shift towards a stronger equity position and a lower proportion of debt financing relative to equity over time.

In summary, the company experienced significant growth in total assets and stockholders’ equity in 2022, with more moderate growth thereafter. Concurrently, financial leverage decreased after 2021, indicating a reduction in debt dependency relative to equity, reflecting a strengthening balance sheet and potentially improved financial stability.

Earnings before interest and tax (EBIT)

The EBIT values exhibit significant volatility over the observed period. Starting at 1,327 million USD in 2020, the figure increases sharply to 3,709 million USD in 2021, indicating robust operational profitability. However, in 2022, EBIT declines markedly to 1,286 million USD, followed by a further drop to 614 million USD in 2023. A recovery is observed in 2024, with EBIT rising to 2,114 million USD. This pattern suggests fluctuating operational efficiency or possible external market influences affecting the company’s earnings.

Interest expense

The interest expense shows some variability but remains relatively moderate throughout the years. From 47 million USD in 2020, it decreases slightly to 34 million USD in 2021, then increases to 88 million USD in 2022, rising further to 106 million USD in 2023, before decreasing again to 92 million USD in 2024. Overall, the trend indicates an increasing interest burden from 2021 through 2023, with some reduction in the last period.

Interest coverage ratio

The interest coverage ratio, which measures the ability to meet interest obligations from earnings, displays considerable fluctuation. It peaks dramatically at 109.09 in 2021, a reflection of the high EBIT and low interest expense that year. Subsequently, the ratio falls steeply to 14.61 in 2022 and declines further to 5.79 in 2023, implying reduced capacity to cover interest costs during these periods. A rebound to 22.98 in 2024 indicates improved financial resilience but still remains below the peak observed in 2021. The ratio’s volatility aligns with the fluctuations observed in EBIT and interest expenses.

The financial data reflect notable fluctuations in earnings before fixed charges and tax, fixed charges, and fixed charge coverage ratios over the five-year period.

Earnings before Fixed Charges and Tax (US$ in millions)

The earnings exhibited significant volatility. Starting at 1386 million in 2020, there was a substantial increase to 3780 million in 2021, marking a strong growth year. However, the figure declined sharply to 1404 million in 2022 and further decreased to 741 million in 2023, indicating a notable contraction in earnings. The year 2024 saw a partial recovery with earnings rising again to 2261 million, though still below the peak of 2021.

Fixed Charges (US$ in millions)

Fixed charges remained relatively stable in 2020 and 2021 at around 105-106 million. From 2022 onwards, there was a clear upward trend, increasing to 206 million in 2022, 233 million in 2023, and 239 million in 2024. This trend suggests rising fixed financial obligations over the latter years of the period.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio followed a pattern consistent with earnings performance and fixed charges. It peaked at 36 in 2021, reflecting strong earnings relative to fixed charges. This ratio then declined sharply to 6.82 in 2022 and further dropped to 3.18 in 2023, representing diminishing coverage of fixed charges by earnings. In 2024, the ratio increased to 9.46, indicating some improvement in the ability to cover fixed charges, yet remaining well below the levels seen in 2020 and 2021.

Overall, the data indicate a period of strong earnings and fixed charge coverage in 2021 followed by a significant downturn in subsequent years accompanied by rising fixed charges and weakening coverage ratios. The partial recovery in 2024 suggests some improvement in operating performance and financial flexibility, although it remains to be seen if this trend will be sustained.