Cisco Systems Inc. (NASDAQ:CSCO)

Debt to Equity and Related Metrics

The debt to equity ratio shows a general downward trend from 0.38 in 2020 to a low of 0.19 in 2023, indicating a steady decrease in leverage relative to equity over this period. However, there is a notable increase in 2024 to 0.68, followed by a slight decrease to 0.60 in 2025. This pattern is mirrored in the debt to equity ratio including operating lease liability, maintaining a similar trend but with slightly higher values.

Debt to Capital Ratios

Debt to capital ratios follow a similar trajectory to debt to equity, declining from 0.28 in 2020 to 0.16 in 2023, suggesting a stronger capital structure with reduced reliance on debt. This trend reverses sharply in 2024, rising to 0.41 and remaining elevated at 0.37 in 2025. Including operating lease liabilities, these values are marginally higher but display the same pattern.

Debt to Assets Ratios

The debt to assets ratio declines consistently from 0.15 in 2020 to 0.08 in 2023, indicating a reduction in leverage when measured against total assets. Similar to other leverage measures, there is a marked increase in 2024 to 0.25, with a slight decrease to 0.23 in 2025. The inclusion of operating lease liabilities results in marginally higher but comparable ratios.

Financial Leverage

Financial leverage remains relatively stable over the first four years, decreasing slightly from 2.5 in 2020 to 2.3 in 2023. However, it rises to 2.74 in 2024 before decreasing slightly to 2.61 in 2025. This suggests an increase in the use of debt relative to equity in the later years, consistent with the trends observed in other leverage ratios.

Interest and Fixed Charge Coverage

Interest coverage shows an initial increasing trend from 24.88 in 2020 to a peak of 41.21 in 2022, indicating growing capability to service interest expenses. This ratio declines afterward, particularly sharply after 2023, falling to 13.16 in 2024 and further to 7.97 in 2025, suggesting reduced earnings relative to interest obligations. Fixed charge coverage follows a parallel pattern, increasing from 14.79 to 20.3 between 2020 and 2022, then decreasing to 6.32 by 2025. These declines point to lower coverage of fixed financial charges in recent periods, signaling increased financial risk.

The financial data reveals notable trends in the company's capital structure over the observed periods. A key observation is the fluctuation in total debt levels. Initially, there is a consistent decline in total debt from 14,583 million US dollars in July 2020 to 8,391 million US dollars in July 2023, indicating a significant reduction in borrowing. However, this trend reverses sharply in the subsequent years, with total debt escalating to 30,962 million US dollars in July 2024 and slightly decreasing to 28,093 million US dollars in July 2025.

Equity values exhibit a steady and gradual increase throughout the periods. The equity base rises from 37,920 million US dollars in July 2020 to 46,843 million US dollars in July 2025, reflecting ongoing growth in shareholders' investment or accumulated earnings, which supports the company's financial stability.

The debt-to-equity ratio mirrors the dynamics of debt and equity. It declines steadily from 0.38 in July 2020 to 0.19 in July 2023, indicating a reduction in leverage and an improvement in financial solvency. Nevertheless, this ratio experiences a marked escalation to 0.68 by July 2024, followed by a slight decrease to 0.6 in July 2025, corresponding to the surge in total debt while equity growth remains moderate.

Total Debt

Initial steady decline from 2020 to 2023, sharp increase in 2024 and slight decrease in 2025.

Equity

Consistent gradual increase across all periods, reflecting enhanced shareholder value.

Debt to Equity Ratio

Decreasing trend until mid-period, followed by significant rise and slight correction, highlighting changing leverage levels.

The financial data reveals significant changes in the company's capital structure over the observed five-year period. There is clear evidence of fluctuations in both debt levels and equity, which subsequently influence the debt-to-equity ratio.

Total Debt (including operating lease liability)

The total debt decreased steadily from 15,585 million US dollars in mid-2020 to 9,411 million US dollars by mid-2023, marking a reduction of approximately 40%. However, there was a sharp reversal in this trend starting from July 2024, where total debt surged dramatically to 32,232 million US dollars, before slightly decreasing to 29,643 million US dollars by July 2025. This spike represents a significant increase, almost tripling the debt from the 2023 level.

Equity

Equity showed an overall upward trend across the years, though with some fluctuations. Starting at 37,920 million US dollars in mid-2020, equity increased to 44,353 million US dollars by mid-2023. It then continued a moderate growth trajectory, reaching 46,843 million US dollars in mid-2025. The equity growth appears to be steady and relatively stable compared to the debt changes.

Debt to Equity Ratio (including operating lease liability)

The debt-to-equity ratio declined consistently from 0.41 in 2020 to a low of 0.21 by mid-2023, reflecting the company's deleveraging during this period. However, similar to the trend in total debt, the ratio rose sharply to 0.71 in 2024, before moderating slightly to 0.63 in 2025. The increase indicates a substantial rise in the company's leverage after mid-2023, suggesting a strategic or operational shift towards higher borrowing.

Overall, the data suggests that the company focused on reducing its leverage in the earlier years, achieving a lower debt burden relative to equity. Starting from 2024, there is a notable strategic pivot with a large increase in debt that significantly raised the leverage ratios, while equity growth continued at a steady but less dramatic pace. This change may imply increased borrowing for financing growth initiatives, acquisitions, or other investments requiring substantial capital outlays.

Total Debt

The total debt demonstrated a declining trend from July 2020 to July 2023, decreasing steadily from 14,583 million USD to 8,391 million USD. However, a significant increase occurred in the subsequent two periods, where total debt rose sharply to 30,962 million USD in July 2024 and slightly decreased to 28,093 million USD in July 2025. This pattern indicates an initial focus on reducing leverage, followed by a considerable rise in borrowing within the last two years.

Total Capital

Total capital showed relative stability from July 2020 through July 2023, fluctuating within a narrow range between approximately 49,288 million USD and 52,801 million USD. From July 2024 onward, capital experienced a pronounced increase, peaking at 76,419 million USD before marginally declining to 74,936 million USD by July 2025. This upward shift in capital aligns with the rise in debt, suggesting increased overall funding levels.

Debt to Capital Ratio

The debt to capital ratio exhibited a consistent decline from 0.28 in July 2020 to 0.16 by July 2023, reflecting a reduction in leverage and possibly a strategic emphasis on strengthening the balance sheet. Contrastingly, the ratio more than doubled to 0.41 in July 2024, before slightly decreasing to 0.37 in July 2025. The sharp increase coincides with the surge in total debt, indicating a higher reliance on debt financing relative to capital in recent years.

Summary

Overall, the data reveals a two-phase financial strategy. Initially, the company reduced its debt levels and leverage, maintaining stable capital levels. Subsequently, both total debt and capital increased markedly, resulting in a higher debt to capital ratio. This shift suggests a more aggressive use of debt financing, potentially to support growth initiatives, acquisitions, or other capital-intensive activities during the latter years.

The financial data over the six-year period reveals significant shifts in the company’s debt structure and capital composition.

Total Debt (including operating lease liability)

The total debt showed a consistent decline from 2020 through 2023, dropping from 15,585 million US dollars in 2020 to 9,411 million US dollars in 2023. This indicates a steady reduction in leverage during this period. However, there is a pronounced increase in debt from 2023 to 2024, where it surged to 32,232 million US dollars, followed by a slight decrease to 29,643 million US dollars in 2025. This sudden rise points to a strategic decision or external factor leading to higher borrowing or lease obligations in the most recent years.

Total Capital (including operating lease liability)

Total capital remained relatively stable from 2020 to 2023, fluctuating mildly between 50,334 million and 53,969 million US dollars. In contrast, there is a significant increase in capital in 2024 to 77,689 million US dollars, which slightly decreased to 76,486 million in 2025. This substantial growth in capital alongside increased debt suggests either new financing activities or acquisitions substantially affecting the capital base.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio exhibited a downward trend from 0.29 in 2020 to 0.18 in 2023, reflecting a decreasing reliance on debt financing relative to the total capital, indicating improvement in the capital structure. However, consistent with the sharp rise in total debt and capital in 2024, the ratio reverses direction rapidly, jumping to 0.41 and slightly reducing to 0.39 in 2025. This increase indicates a higher proportion of debt in the capital structure during the later years, signifying potentially greater financial risk or a shift in financing strategy.

Total Debt

Over the observed periods, total debt initially decreased consistently from 14,583 million USD in 2020 to 8,391 million USD in 2023. However, a significant increase occurred in 2024, rising sharply to 30,962 million USD, followed by a slight reduction to 28,093 million USD in 2025. This reversal after a period of decline indicates a marked change in the company's financing strategy or capital structure during the latest years.

Total Assets

Total assets showed a generally upward trend with some fluctuations. Starting at 94,853 million USD in 2020, assets slightly increased to 97,497 million USD in 2021 but then decreased to 94,002 million USD in 2022. From 2022 onwards, assets grew substantially, reaching 124,413 million USD in 2024 before a minor decrease to 122,291 million USD in 2025. This overall growth suggests expansion or increased investment, particularly notable in the years 2023 and 2024.

Debt to Assets Ratio

The debt to assets ratio mirrored the changes in total debt relative to total assets. It decreased steadily from 0.15 in 2020 to a low of 0.08 in 2023, reflecting a lower proportion of debt financing during this period. Subsequently, the ratio increased significantly to 0.25 in 2024 and slightly decreased to 0.23 in 2025. This pattern corroborates the sharp increase in total debt in relation to the asset base, indicating higher leverage and potentially greater financial risk in the later periods.

Total debt (including operating lease liability)

The total debt demonstrates a declining trend from 2020 to 2023, decreasing steadily from $15,585 million to $9,411 million. However, there is a sharp increase in debt in 2024, reaching $32,232 million, followed by a slight decline to $29,643 million in 2025. This indicates a significant increase in leverage or borrowing in the latter two years after a period of reduction.

Total assets

Total assets show a gradual increase from 2020 to 2021, rising from $94,853 million to $97,497 million, followed by a slight decrease in 2022 to $94,002 million. Assets then increase again through 2023 to 2025, peaking at $124,413 million in 2024 and slightly decreasing to $122,291 million in 2025. Overall, the asset base grows moderately with a notable spike in 2024, which may correlate with the increased debt.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio follows a downward trend from 0.16 in 2020 to 0.09 in 2023, indicating improved asset coverage relative to debt and possibly reflecting debt reduction or asset base stability. However, there is a significant increase in this ratio in 2024 to 0.26, with a slight improvement to 0.24 in 2025. This trend suggests that debt grew at a much faster rate than assets in the later years, increasing financial leverage and potential risk.

Summary of trends

From 2020 through 2023, the company consistently lowered its total debt and improved its debt to assets ratio, reflecting a conservative financial approach in reducing leverage. Asset levels remained relatively stable with minor fluctuations during this period. However, in 2024, a sharp rise in total debt coupled with an increase in total assets led to a doubling of the debt to assets ratio, signaling a marked shift in financial strategy towards higher leverage. While assets increased significantly, debt growth outpaced asset growth, raising concerns about increased financial risk. In 2025, a slight reduction in debt and total assets occurred, with a modest decrease in the debt to assets ratio, but these changes remain at elevated levels compared to prior years. Overall, the data indicates a cycle of deleveraging followed by aggressive borrowing and asset expansion, warranting closer examination of the underlying causes and implications for financial stability.

The analysis of the financial data over the six-year period reveals several notable trends in the company's financial position and structure.

Total Assets

Total assets experienced moderate fluctuations throughout the period. Initially, assets rose slightly from 94,853 million USD in 2020 to peak at 101,852 million USD in 2023. Subsequently, there was a significant increase to 124,413 million USD in 2024, followed by a slight decline to 122,291 million USD in 2025. This overall trend suggests periods of asset growth with some year-to-year variability, with a substantial increase in 2024 indicating possible expansion or acquisition activities.

Equity

Equity showed steady growth over the same period, increasing from 37,920 million USD in 2020 to 46,843 million USD in 2025. Despite minor fluctuations, the general upward trajectory indicates a strengthening of the company’s net worth and possibly retained earnings accumulation. The growth in equity generally aligns with asset growth but at a more consistent and gradual pace, enhancing the company’s capital base.

Financial Leverage

The financial leverage ratio demonstrated a downward trend initially, decreasing from 2.5 in 2020 to 2.3 in 2023, suggesting a reduction in relative debt levels or improved equity. However, this trend reversed in 2024 with a rise to 2.74, followed by a decrease to 2.61 in 2025. The increase in 2024 leverage could be associated with the notable asset growth in that year, indicating a potential increase in debt or other liabilities taken on to finance expansion. The subsequent decrease suggests a partial deleveraging or an increase in equity relative to debt.

Overall, the data suggests a company that has been gradually expanding its asset base and equity, with some fluctuations in leverage indicative of varying financing strategies. The significant asset growth in 2024 and the corresponding rise in leverage merit attention, as they could impact financial risk profiles. The steady equity growth strengthens the balance sheet, while the changes in leverage reflect a dynamic approach to capital structure management.

Earnings Before Interest and Tax (EBIT)

The EBIT values exhibit a fluctuating trend over the analyzed periods. Starting at 14,555 million USD in 2020, there was a slight decrease in 2021 to 13,696 million USD, followed by a gradual increase reaching a peak of 15,745 million USD in 2023. However, subsequently, the EBIT declined notably in the last two periods, dropping to 13,240 million USD in 2024 and further to 12,693 million USD in 2025. This pattern suggests variability in operational profitability with a downturn in the most recent years.

Interest Expense

The interest expense shows a clear increasing trend through the periods. It decreased from 585 million USD in 2020 to 360 million USD in 2022, then reversed course, rising sharply to 1,006 million USD in 2024 and further escalating to 1,593 million USD in 2025. This rising interest cost indicates increased borrowing or higher interest rates impacting financial expenses significantly in the later years.

Interest Coverage Ratio

The interest coverage ratio, which measures the ability to meet interest obligations, initially improved from 24.88 in 2020 to a peak of 41.21 in 2022, indicating robust capacity to cover interest expenses. Subsequently, the ratio deteriorated considerably, falling to 36.87 in 2023 and declining sharply to 13.16 in 2024, and further down to 7.97 in 2025. This decline is primarily driven by increasing interest expenses combined with shrinking EBIT, reflecting growing financial risk and potentially reduced financial flexibility.

Analyzing the annual financial data reveals distinct trends in earnings before fixed charges and tax, fixed charges, and fixed charge coverage over the six-year period from 2020 to 2025.

Earnings before fixed charges and tax

This metric demonstrated fluctuations over the period. Starting at approximately 14,983 million US dollars in 2020, it experienced a slight decrease in 2021 to about 14,095 million. This was followed by an upward movement, peaking at 16,170 million in 2023. However, thereafter, a decline is observed with earnings diminishing to 13,660 million in 2024 and further to 13,188 million in 2025. Overall, there is a pattern of moderate volatility with a modest downward trend in the latter years.

Fixed charges

Fixed charges exhibited a generally increasing trend, with some variation across the years. Beginning at 1,013 million US dollars in 2020, this amount slightly decreased in subsequent years, reaching its lowest point at 750 million in 2022. After this trough, there was a significant rise, reaching 1,426 million in 2024 and continuing upward to 2,088 million by 2025. The sharp increase in fixed charges in the final years is notable and suggests rising financial obligations or interest costs during this time.

Fixed charge coverage

The fixed charge coverage ratio, which indicates the company's ability to meet fixed charges from earnings, displayed a declining trend in the later years despite strong levels in the earlier period. Starting at a robust 14.79 in 2020, the ratio improved to 20.3 by 2022, indicating better coverage and greater financial stability. However, it declined noticeably after 2022, falling to 9.58 in 2024 and further down to 6.32 in 2025. This sharp deterioration suggests a reduction in the cushion available to cover fixed financial expenses, likely driven by the combination of declining earnings and increasing fixed charges.

In summary, the data suggests that while earnings before fixed charges and tax initially showed strength and resilience, there has been a downward adjustment in the most recent years. The escalating fixed charges in the final two years have contributed to a weakening fixed charge coverage ratio, signaling potential strain on the company's ability to comfortably cover its fixed financial commitments. These trends warrant careful monitoring to assess financial risk and liquidity management going forward.