Broadcom Inc. (NASDAQ:AVGO)

The analysis of the financial ratios over the observed quarterly periods reveals meaningful trends in the company's leverage and ability to cover interest expenses. These trends provide insight into the evolving financial risk profile and operational performance stability.

Debt to Equity Ratio

This ratio demonstrates a general downward trend from the beginning towards the latter periods, declining from approximately 1.75 to 0.80. The initial phase shows relatively stable but elevated leverage, with minor fluctuations around 1.60 to 1.90. Starting from early 2024, the ratio decreases more significantly, indicating a reduction in reliance on debt financing relative to shareholders' equity, which implies a strengthening equity base or debt reduction.

Debt to Capital Ratio

The ratio maintains stability around 0.62 to 0.65 in the earlier periods, reflecting a consistent capital structure with debt comprising about two-thirds of the capital. However, from early 2024 onward, a steady decline is observed, reaching around 0.44 by the end of the data set. This signals a shift towards lower leverage and potentially lower financial risk.

Debt to Assets Ratio

Throughout the periods, this ratio remains fairly constant near 0.54 to 0.55 initially, which indicates that just over half of the company's assets are financed through debt. From the start of 2024 onwards, a noticeable decrease occurs, dropping to 0.38 by late 2025, paralleling the reduction seen in the other leverage ratios and confirming a trend of deleveraging and increasing asset coverage by equity or other means.

Financial Leverage Ratio

This ratio gradually decreases from approximately 3.2 to 2.1 over the observed timeframe. The decline is relatively smooth, with more pronounced reductions occurring from early 2024. This trend aligns with the reductions in other debt-related ratios and suggests a decrease in the extent to which assets are financed by liabilities, indicating a strengthening of the equity position relative to total assets.

Interest Coverage Ratio

The interest coverage ratio shows a dynamic pattern, initially improving considerably from 2.82 to above 10.0 by late 2023, demonstrating a substantially enhanced ability to meet interest obligations from earnings. However, starting in early 2024, the ratio declines to a low of approximately 3.51, suggesting temporary pressures or reduced earnings relative to interest expense during that period. Subsequently, it recovers steadily back up to about 8.08 by late 2025. This fluctuation could indicate variability in operating performance or changes in interest expense levels during the period.

Overall, the company exhibits a clear trend towards deleveraging starting in early 2024, characterized by reductions in debt ratios and financial leverage. Concurrently, the interest coverage ratio reflects an initial peak in financial strength, a mid-period dip, and a subsequent recovery, indicating variability in earnings or interest expenses but generally strong capacity to cover interest over the entire period. These trends collectively suggest an improving financial risk profile with enhanced resilience against debt-related obligations over time.

The analysis of the financial trends reveals several key observations related to debt, equity, and leverage ratios over the examined periods.

Total Debt

Total debt remained relatively stable from early 2021 through the end of 2023, hovering in the range of approximately $39 billion to $41 billion. However, beginning in February 2024, there is a noticeable increase, with total debt rising sharply to around $75.9 billion. Following this peak, there is a gradual decline over subsequent quarters, reducing to approximately $65.1 billion by November 2025.

Stockholders’ Equity

Equity experienced modest fluctuations in the initial period from 2021 to late 2023, generally ranging between roughly $20.8 billion and $24.9 billion. Starting from the first quarter of 2024, a significant increase in equity is observed, with values surging to over $70 billion and continuing to rise, reaching approximately $81.3 billion by November 2025. This substantial growth indicates either equity injections, retained earnings accumulation, or asset revaluation during this phase.

Debt to Equity Ratio

The debt to equity ratio demonstrated a declining trend over the entire period, reflecting a reduction in leverage. In the initial years up to late 2023, the ratio fluctuated but generally decreased from 1.75 to around 1.64. Following early 2024, the ratio dropped more sharply from approximately 1.08 to 0.8 by November 2025. This downward movement suggests an improved capital structure with relatively lower debt compared to equity, indicating potential strengthening of the balance sheet and reduced financial risk.

Overall, the financial data show a period of stable leverage followed by substantial capital restructuring starting in early 2024, characterized by increased equity capitalization and a corresponding reduction in the debt to equity ratio. This shift may signal strategic financial decisions aimed at strengthening the company's balance sheet and supporting future growth or investment plans.

Total Debt

The total debt remained relatively stable from early 2021 through late 2023, fluctuating slightly around the 39,000 million US dollar mark. Starting from approximately 41,932 million US dollars in January 2021, total debt decreased slightly and maintained a level near 39,200 million US dollars through October 2023. From early 2024 onward, there was a significant increase in total debt, peaking at around 75,901 million US dollars in February 2024. Subsequently, total debt demonstrated a gradual downward trend, declining to approximately 65,136 million US dollars by November 2025, though it remained considerably elevated compared to the earlier periods.

Total Capital

Total capital exhibited a pattern of relative stability and moderate fluctuations from January 2021 until late 2023, ranging between approximately 60,371 million US dollars and 63,217 million US dollars. However, beginning in early 2024, total capital sharply increased in tandem with the rise in total debt, reaching a peak of about 146,185 million US dollars in February 2024. After this peak, total capital experienced a modest decline but remained significantly elevated, fluctuating within the range of roughly 135,244 million to 146,428 million US dollars through November 2025.

Debt to Capital Ratio

The debt to capital ratio showed a gradual decline over the observed period. Initially fluctuating between 0.61 and 0.65 from early 2021 to late 2023, the ratio indicated that debt made up approximately 61% to 65% of total capital during this phase. Starting in early 2024, following the rapid increase in both debt and total capital, the ratio decreased markedly, dropping from 0.62 in late 2023 to 0.44 by November 2025. This downward trend suggests a relative improvement in the capital structure, with debt constituting a smaller proportion of total capital over time despite the absolute increase in debt levels.

Overall Trends and Insights

The data reveals a period of relative financial stability in terms of debt and capital through early 2021 to late 2023, followed by a significant restructuring or financial event in early 2024 that caused both total debt and total capital to surge rapidly. Despite the higher absolute values, the proportion of debt to total capital decreased steadily after this event, indicating a potential strategic effort to strengthen the capital base or improve leverage ratios. The decline in the debt to capital ratio towards the end of the timeframe points to a more conservative or balanced capital structure, possibly reflecting adjustments in financing strategy or repayment of certain liabilities. The overall analysis highlights a critical shift occurring around early 2024, with ongoing management of debt and capital levels thereafter.

The analysis of the financial data over the observed periods reveals distinct trends in total debt, total assets, and the debt to assets ratio.

Total Debt

The total debt remained relatively stable between January 2021 and October 2023, fluctuating slightly around the 39,000 million US$ mark. From February 2024, there is a significant increase in total debt reaching a peak near 76,000 million US$, followed by a gradual decrease through November 2025 but still remaining above 64,000 million US$. This indicates a substantial rise in leverage or borrowing activity starting early 2024, with a partial reduction thereafter.

Total Assets

Total assets show minor fluctuations and a slight decreasing trend from January 2021 to October 2023, hovering around the 71,000 to 73,000 million US$ range. From February 2024 onward, total assets experience a dramatic increase to approximately 178,000 million US$, followed by a gradual decline but maintaining levels above 165,000 million US$ towards November 2025. This suggests an expansion in asset base coinciding with the increase in total debt during this period.

Debt to Assets Ratio

The debt to assets ratio remained consistently around 0.53 to 0.55 through October 2023, reflecting a stable leverage profile relative to asset size. Starting February 2024, the ratio declines steadily from 0.43 down to 0.38 by November 2025. Despite the elevated total debt observed, the larger growth in assets results in a lower relative leverage ratio, indicating improved balance sheet strength and reduced financial risk on a proportional basis over the latter periods.

In summary, the period prior to 2024 is characterized by stable debt and asset levels with consistent leverage. A pronounced shift occurs beginning in early 2024 with a strong increase in both assets and liabilities, though proportionally asset growth outpaces debt accumulation, leading to a lowering debt to asset ratio over time. This pattern suggests strategic debt-financed asset growth with improving leverage metrics following the peak borrowing phase.

The analysis of the quarterly financial data reveals several important trends in the financial position and leverage of the company over the observed periods.

Total Assets

The total assets exhibited relative stability with minor fluctuations during the initial periods, ranging roughly between 71,000 and 77,000 million US dollars. However, starting from the quarter ending February 4, 2024, there is a notable jump, with total assets increasing dramatically to values around 165,000 to 177,000 million US dollars. This indicates a significant expansion in the company’s asset base during the last eight quarters under review.

Stockholders’ Equity

Stockholders’ equity followed a similar pattern of initial stability and then strong growth. Initially, it hovered in the range of approximately 20,000 to 25,000 million US dollars. From early 2024 onwards, stockholders’ equity showed a substantial increase, reaching around 65,000 to 81,000 million US dollars in subsequent quarters. This indicates a reinforcement of the company's capital structure, possibly through retained earnings, equity issuance, or other equity-enhancing activities.

Financial Leverage

Financial leverage, expressed as a ratio, demonstrated a declining trend over the entire period. Beginning at a high of above 3.2 in early 2021, it gradually decreased to about 3.0 by late 2023. The decline became more pronounced in the quarters following February 2024, with leverage ratios falling below 2.6 and eventually reaching approximately 2.1 by November 2025. This downward trajectory in financial leverage indicates the company is reducing its reliance on debt financing relative to equity, enhancing its financial stability.

In summary, the data indicates that the company experienced a phase of substantial growth in asset size and equity base starting in early 2024. Concurrently, the firm has improved its financial posture by reducing leverage, pointing towards a strategic emphasis on strengthening the balance sheet and possibly lowering financial risk. These shifts imply enhanced financial robustness and potentially greater capacity for future investments or operational resilience.

The analysis of the quarterly financial data reveals several notable trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratios over the examined periods.

Earnings Before Interest and Tax (EBIT)

EBIT generally exhibited a strong upward trajectory with some fluctuations across the time series. Starting at $1,954 million, it increased steadily to peak at $7,630 million by the end of the period. Intermittent dips were visible, particularly in the early 2024 quarters, where EBIT decreased substantially to $2,268 million before resuming its growth trend. Despite this temporary decline, the overall trend indicates growing operational profitability.

Interest Expense

Interest expense remained relatively stable in the earlier quarters, fluctuating modestly between $405 million and $570 million. However, from early 2024 onwards, there was a marked increase in interest costs, reaching as high as $1,064 million, before declining somewhat towards the latter periods. This rise in interest expense may correspond to increased debt levels or higher borrowing costs during that timeframe.

Interest Coverage Ratio

The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, largely improved over the course of the periods analyzed. It started at 2.82 and climbed to a peak of 10.31, indicating enhanced ability to cover interest expenses. Nevertheless, early 2024 saw a decline to 3.51, coinciding with the drop in EBIT and increase in interest expense. Following this, the ratio rebounded, settling around 8.08 by the final periods, suggesting a recovery and strengthening of financial health.

In summary, operational performance improved significantly over the period, as reflected by rising EBIT and a generally strong interest coverage ratio. The mid-cycle fluctuations in both EBIT and interest expense temporarily affected coverage, but the subsequent recovery underscores resilience. The increased interest expense in 2024 highlights a period of elevated financing costs that should be monitored going forward.