Analog Devices Inc. (NASDAQ:ADI)

The financial ratios of the company show distinct trends over the observed quarterly periods, highlighting changes in leverage and debt management as well as earnings protection against interest expenses.

Debt to Equity Ratio

This ratio decreased significantly from 0.43 to 0.18 between early 2021 and late 2021, indicating a reduction in reliance on debt relative to shareholders' equity. After stabilizing around 0.17-0.20 for several quarters, a gradual increase is noted starting early 2024, reaching 0.25 by late 2025. This suggests a modest uptick in debt usage relative to equity in the most recent periods.

Debt to Capital Ratio

Following a similar pattern to the debt to equity ratio, the debt to capital ratio dropped sharply from 0.30 to about 0.14-0.16 during 2021. The ratio then remained fairly stable until early 2024, where a mild increase is observable, peaking at 0.20 toward the end of 2025, signifying a cautious increase in total debt relative to the company’s capital structure.

Debt to Assets Ratio

The debt to assets ratio also decreased significantly from 0.24 in early 2021 to near 0.12 in late 2021. Similar to the other debt ratios, a modest upward trend begins in early 2024, increasing from 0.14 to 0.18 by late 2025. This indicates a growing proportion of debt financing relative to total assets over recent quarters.

Financial Leverage

Financial leverage declined from approximately 1.77 in early 2021 to about 1.37 by late 2021, reflecting a reduction in total asset exposure relative to equity. This ratio remained relatively stable around 1.35 to 1.42 through the subsequent quarters, with a slight increase noted towards the end of the period, implying moderate changes in leverage but no extreme fluctuations.

Interest Coverage Ratio

The interest coverage ratio exhibited fluctuation across the periods. Starting from 9.14 in early 2021, it initially rose to a peak above 19 in early 2023, demonstrating strong earnings relative to interest expenses. However, the ratio declined steadily after this peak, dropping to around 6.3 to 9.5 by late 2025. This decline suggests that earnings available to cover interest obligations have become less robust recently, potentially signaling increased financing costs or lower operating income.

Overall, the company's leverage ratios improved significantly in 2021, reflecting reduced debt levels relative to equity, capital, and assets. From 2022 onwards, these ratios have shown a gradual increase, suggesting a cautious rise in debt use. Financial leverage remained relatively stable, indicating controlled exposure to debt risk. The interest coverage ratio's peak in early 2023 followed by a downward trend highlights a reduced buffer to meet interest expenses in the most recent periods, warranting monitoring of operating earnings relative to financial obligations.

Total Debt

The total debt showed a moderate increase from early 2021 through late 2021, rising from approximately $5.15 billion to about $6.77 billion by October 2021. Subsequently, total debt remained relatively stable around the $6.25 billion to $6.55 billion range until early 2023, after which it experienced a gradual upward trend. Notably, from early 2024, total debt saw a more pronounced increase, reaching nearly $8.1 billion by May 2024. The latter part of the data through 2025 indicates fluctuations with a slight downward tendency, yet total debt remained elevated above $7.1 billion, peaking at nearly $8.7 billion during mid-2025 before settling near $8.6 billion by November 2025.

Shareholders’ Equity

Shareholders’ equity exhibited stable growth through the first three quarters of 2021, increasing steadily from around $12.1 billion to $12.3 billion. However, a significant and abrupt surge occurred by October 2021, with equity rising sharply to nearly $38 billion. After this peak, a gradual decline is observable, with equity decreasing consistently over subsequent periods, leveling off in the $35 billion to $36 billion range through early 2024. The downtrend resumed thereafter, and equity declined moderately to approximately $33.8 billion by the end of the observed period in November 2025. Overall, equity showed a notable peak followed by a slow but steady erosion.

Debt to Equity Ratio

The debt to equity ratio began at about 0.43 in early 2021 and trended downward throughout most of that year, reaching a low of about 0.17 in mid-2021 through early 2022. This decline reflects both the increase in equity and the relative stability or slight growth in debt during this period. Beginning in mid-2022, the ratio gradually increased, reflecting the rise in total debt combined with the decline in equity. By late 2023 and throughout 2024, the ratio rose moderately, stabilizing around 0.22 to 0.25. The highest levels were observed in 2025, with the ratio peaking near 0.25, suggesting a return to higher leverage after a period of relatively low leverage ratios.

Summary of Trends

The data indicates that the company managed a substantial increase in both debt and equity during late 2021, suggesting a significant capital change or transaction at that time. Following this event, equity gradually eroded, while debt slowly increased, leading to a moderate rise in the debt to equity ratio. This signals a shift towards higher leverage over the more recent quarters. The stability of debt levels in some periods contrasts with the steady decline in equity, emphasizing the changing financial structure. The overall pattern demonstrates careful management of financial leverage with increased indebtedness relative to equity in the later periods.

The analysis of the financial data reveals notable trends in the company's debt structure and capital composition over the observed periods.

Total Debt

The total debt exhibits an initial stable plateau around 5.15 million thousand US dollars during early 2021, followed by a significant increase peaking near 6.77 million thousand US dollars in October 2021. Subsequently, debt levels maintain a range between approximately 6.25 million and 6.95 million thousand US dollars through late 2023. From early 2024, debt sharply rises, reaching a maximum around 8.72 million thousand US dollars by August 2025, before slightly declining but still remaining elevated near 8.59 million thousand US dollars at the end of the period.

Total Capital

Total capital remains relatively steady between 17.2 million and 17.4 million thousand US dollars until October 2021, when it dramatically increases to over 44.7 million thousand US dollars. Afterwards, it gradually declines and stabilizes in the range of 42 to 43 million thousand US dollars, with only minor fluctuations through November 2025. This volatility in capital levels during the middle of the timeline indicates possible changes in equity or asset base during that period.

Debt to Capital Ratio

The debt to capital ratio starts near 0.3 in early 2021, indicating that debt comprised approximately 30% of total capital at that time. This ratio sharply decreases to about 0.15 by late 2021, correlating with the significant rise in total capital relative to debt. From early 2022 to early 2024, the ratio remains stable around 0.15 to 0.16, suggesting consistent leverage levels. Afterward, there is a gradual upward trend in leverage, peaking close to 0.2 by late 2025, consistent with the observed increase in debt and modest decreases in total capital.

In summary, the company's financial structure reflects a period of capitalization expansion in late 2021, leading to reduced leverage, followed by a gradual increase in debt levels and leverage ratios from 2024 onward. This indicates a strategic shift potentially emphasizing increased borrowing or financial leverage in recent periods while maintaining a relatively stable capital base through the latter part of the timeline.

The financial data reveals several notable trends in the company's debt and asset management over the observed periods.

Total Debt

Total debt initially remained stable around US$5.1 billion from early 2021 through mid-2021. A significant increase occurred at the end of 2021, rising sharply to approximately US$6.8 billion. Subsequently, debt levels fluctuated moderately, with general upward movement through late 2024, peaking near US$8.7 billion in mid-2025 before slightly declining at the end of the period.

Total Assets

Total assets were relatively stable around US$21.4 billion during the first three quarters of 2021, followed by a marked jump to over US$52 billion at the end of 2021. After this peak, total assets gradually declined over the subsequent quarters, decreasing steadily to just under US$48 billion by late 2025. This downward trend suggests a reduction in asset base over time following the large jump.

Debt to Assets Ratio

The debt to assets ratio started around 0.24 in early 2021, reflecting the stable debt and asset levels during that period. After the substantial asset increase at the end of 2021, the ratio dropped sharply to roughly 0.13, indicating a proportional increase in assets relative to debt. However, over the following quarters, the ratio showed a gradual and consistent increase, reaching about 0.18 by late 2025. This upward trend indicates that debt levels have grown at a faster pace than assets or that asset values have declined more rapidly relative to debt, pointing to a slight increase in leverage risk over time.

In summary, the company experienced a significant capital or asset acquisition event around late 2021, which greatly increased its asset base. Despite this, debt showed a rising trend overall, especially in the later periods, leading to a gradual increase in leverage. The declining assets after the initial spike alongside increasing debt may warrant further attention to assess the sustainability of the company's capital structure and its impact on financial stability.

The analysis of the financial data over multiple quarters reveals several notable trends and patterns pertaining to the company’s total assets, shareholders’ equity, and financial leverage ratio.

Total Assets

Total assets exhibit a significant and abrupt increase in the fourth quarter of 2021, rising sharply from approximately 21.6 billion to over 52 billion US dollars. Following this spike, total assets show a slight but consistent downward trend, gradually declining from around 52 billion in late 2021 to approximately 48 billion by the middle of 2024. Minor fluctuations occur throughout this period, but the overall trajectory is a steady decrease extending to the first quarter of 2025, where total assets stabilize near 48 billion US dollars.

Shareholders’ Equity

A similar pattern is observed in shareholders’ equity, which nearly triples from about 12 billion in the third quarter of 2021 to nearly 38 billion in the fourth quarter of 2021. After reaching this peak, equity gradually diminishes over subsequent quarters. The decline is continuous and consistent, moving from roughly 38 billion in late 2021 down to around 34 billion by mid-2025. This trend reflects a gradual erosion of equity over the observed period despite the significant earlier increase.

Financial Leverage Ratio

The financial leverage ratio shows an inverse pattern compared to total assets and equity around the sharp increase in late 2021. Initially, leverage is relatively higher at around 1.77, then drops markedly to approximately 1.38 in the fourth quarter of 2021, coinciding with the rise in total assets and equity. Post this adjustment, the leverage ratio remains relatively stable within a narrow range of 1.35 to 1.42, indicating a consistent capital structure. Minor fluctuations are visible, with a slight upward trend toward the end of the period, reaching about 1.42 in early 2025.

In summary, the data illustrates a major structural change around late 2021, likely due to a significant corporate event such as an acquisition or capital restructuring. This event results in a substantial increase in total assets and shareholders’ equity accompanied by a reduction in financial leverage. Following this event, the company experiences a gradual decrease in both assets and equity while maintaining a stable financial leverage ratio, signaling controlled management of debt relative to equity during the subsequent quarters.

The earnings before interest and tax (EBIT) demonstrate significant variability across the quarters presented. From early 2021 to mid-2021, EBIT shows a general upward trend, peaking at 616,937 thousand USD in July 2021. However, a notable anomaly occurs in the quarter ending October 30, 2021, when EBIT sharply declines to a negative 101,546 thousand USD, indicating a period of operational loss or extraordinary expenses. Following this dip, EBIT recovers strongly, reaching over 1 million USD in October 2022 and maintaining relatively high levels through early 2023. Subsequently, EBIT fluctuates but remains positive, with values generally ranging from 400,000 to nearly 1 million USD toward the later periods, showing signs of recovery and stabilization.

Interest expense remains relatively stable over the periods, fluctuating between approximately 42,000 and 88,000 thousand USD. While there is some increase over time, the increments appear gradual and do not exhibit sharp spikes, suggesting steady financing costs without sudden debt increases or refinancing events impacting interest charges dramatically.

The interest coverage ratio, calculated as EBIT divided by interest expense, reflects the company’s ability to meet interest obligations from operating earnings. This ratio experiences significant fluctuations, starting at 9.14 in early 2021, rising to a peak of 19.42 in January 2023, and then declining again toward the later quarters. The ratio dips notably following the EBIT loss in October 2021, indicating a reduced buffer for covering interest expenses during that period. Although there is a general trend of improvement in the interest coverage ratio from 2021 to early 2023, a downward trend is apparent in the latest quarters, albeit still maintaining a ratio above 6, suggesting the company continues to comfortably cover interest costs despite some erosion in coverage strength.

Overall, the company displays resilience with a capacity to generate sufficient EBIT to cover interest expenses despite a significant operational setback in late 2021. The stability in interest expense combined with the generally strong interest coverage ratio points to prudent financial management and an ability to service debt effectively, albeit with some caution warranted due to recent declines in coverage strength.