Cisco Systems Inc. (NASDAQ:CSCO)

Debt to Equity Trend

The debt to equity ratio showed a gradual decline from 0.38 in late 2020 to a low of 0.17 in late 2023, indicating a reduction in reliance on debt relative to equity over this period. However, beginning in early 2024, the ratio increased significantly, peaking around 0.71 in late 2024 before slightly declining to 0.60 by mid-2025. This suggests a recent increase in financial leverage through debt financing.

Debt to Capital Trend

This ratio mirrors the debt to equity pattern, decreasing steadily from 0.28 in the fourth quarter of 2020 to 0.14 by late 2023, showing a stronger equity base. Starting 2024, the ratio rose sharply to about 0.41 and remained relatively stable through mid-2025, indicating a heightened proportion of debt within the capital structure during this later period.

Debt to Assets Trend

The debt to assets ratio declined from 0.15 in late 2020 to 0.08 by late 2023, suggesting a reduction in debt relative to total assets. From early 2024 onwards, the ratio increased notably to approximately 0.26 and stayed near this level through mid-2025, indicating a higher asset base financed by debt in recent quarters.

Financial Leverage Trend

Financial leverage, measured as a ratio, decreased moderately from 2.49 in late 2020 to 2.18 by late 2023, reflecting a slight reduction in use of debt relative to equity. From early 2024, the leverage jumped to around 2.7 and remained elevated through mid-2025, consistent with increased debt levels observed in other ratios.

Interest Coverage Trend

Interest coverage ratio exhibited a strong and consistent upward trend from 25.98 at the end of 2020, peaking at 41.54 during the second quarter of 2022. This indicates improved capacity to meet interest obligations, likely due to increasing earnings or reduced interest expense. However, starting in early 2024, there was a marked decline to a low near 7.13 in mid-2025, suggesting a diminished ability to cover interest expenses despite higher financial leverage. This decline warrants attention as it may signify increased risk from higher debt costs or reduced earnings relative to debt service requirements.

Overall Analysis

Throughout the period, there was a notable shift from a conservative debt stance with steadily decreasing leverage ratios and strong interest coverage through 2023, to a more leveraged position beginning in early 2024. The increase in debt-related ratios and financial leverage in this latter stage is accompanied by a significant decline in interest coverage, indicating potential pressures on debt servicing capacity. This transition highlights a changing financial risk profile, which may impact future borrowing costs and financial stability if the trend continues without corresponding earnings growth.

Total Debt

The total debt level shows a notable fluctuation over the observed periods. Initially, debt remains relatively stable around the range of 11,500 to 14,500 million US dollars, with a gradual decline from October 2020 through October 2023. A significant spike occurs starting in January 2024, where debt rises sharply to over 31,900 million US dollars before slightly decreasing to approximately 28,100 million US dollars by July 2025. This indicates a substantial increase in borrowing or liabilities in early 2024, followed by a modest reduction later.

Total Equity

Total equity exhibits a consistent upward trend throughout most of the periods. Starting at about 38,157 million US dollars in October 2020, equity steadily grows and reaches a peak close to 46,251 million US dollars by January 2024. Thereafter, it experiences slight fluctuation but remains relatively stable around the 45,000 to 46,800 million US dollars range through mid-2025. This suggests continuous accumulation of shareholder value or retained earnings over time.

Debt to Equity Ratio

The debt to equity ratio reflects the interplay between debt and equity levels. From October 2020 to October 2023, the ratio decreases gradually from 0.38 to 0.17, which indicates a reduction in financial leverage and lower relative indebtedness compared to equity. However, starting January 2024, the ratio increases sharply to around 0.7, coinciding with the significant rise in total debt. This elevated ratio persists with minor fluctuations, remaining above 0.6 through July 2025. The increase suggests a shift towards greater leverage and higher financial risk after a period of deleveraging.

Overall Observations

The company initially demonstrates a conservative capital structure with growing equity and declining debt, leading to a diminishing debt to equity ratio, which can be interpreted as strengthening financial stability. A marked change occurs in 2024, likely due to strategic financing decisions or external factors necessitating increased borrowing. This results in a sharp rise in debt and leverage ratios, although equity remains relatively stable. The recent leverage levels indicate a higher reliance on debt financing which may affect the company's risk profile and cost of capital going forward.

The analysis of the financial metrics over the reported periods reveals varied trends in the company's debt structure and capital composition. The data spans multiple quarters, illustrating both stability and notable fluctuations in debt levels and capital management.

Total Debt

The total debt exhibited an initial decline from approximately $14.6 billion in late 2020 to around $7.7 billion by late 2023, indicating a significant reduction in leverage during this timeframe. However, from early 2024, there was a sharp and substantial increase in total debt, peaking near $32 billion by mid-2024, before stabilizing slightly below that level through the middle of 2025. This pronounced increase in debt levels in the recent periods suggests a strategic decision to raise liabilities considerably, which could be related to financing activities, acquisitions, or capital expenditures.

Total Capital

Total capital remained relatively stable between $49 billion and $53 billion from late 2020 through most of 2023, reflecting consistent capital structure during this interval. Starting in late 2023 and moving into 2024, total capital rose significantly, reaching highs of approximately $77 billion by mid-2024. This upward trend continued with moderate fluctuations through mid-2025, implying an expansion or revaluation of capital resources alongside increased debt.

Debt to Capital Ratio

The debt-to-capital ratio initially decreased from 0.28 in late 2020 to a trough of approximately 0.14 by late 2023, consistent with the observed reduction in debt relative to capital. Beginning in early 2024, the ratio sharply rose to around 0.41 and remained elevated through mid-2025, indicating that the proportion of debt used in the capital structure significantly increased during this recent period. This shift points to greater reliance on debt financing relative to the company's capital base.

Overall, the company's financial structure demonstrated a disciplined reduction in debt relative to capital through 2023, followed by a considerable shift toward higher leverage starting in 2024. The reasons for this change could include strategic investment, restructuring, or other financial maneuvers aiming to optimize capital deployment. The elevated debt levels and debt-to-capital ratio after 2023 warrant close monitoring to assess potential impacts on credit risk, interest obligations, and financial flexibility.

The financial data presents a detailed overview of debt-related metrics and asset holdings over a series of quarterly periods.

Total Debt

The total debt figures initially show a gradual decline from a high of approximately 14.6 billion US dollars in late 2020 to a low point of around 7.65 billion US dollars by the fourth quarter of 2023. This trend indicates sustained efforts to reduce debt over this period. However, starting in the first quarter of 2024, total debt rises sharply, peaking at nearly 32 billion US dollars by mid-2024, before slightly decreasing but still remaining elevated above 28 billion US dollars towards mid-2025. This considerable increase suggests a substantial financing or investment activity requiring additional debt.

Total Assets

Total assets fluctuate moderately between approximately 93 billion and 101 billion US dollars from late 2020 through early 2024, showing relative stability with minor quarterly variations. Thereafter, assets rise significantly to nearly 123 billion US dollars in mid-2024 and maintain that elevated level through mid-2025. This increase in assets aligns with the notable rise in total debt, potentially reflecting capital investments or acquisitions funded via borrowing.

Debt to Assets Ratio

The debt to assets ratio exhibits a clear declining trend from 0.15 at the start of the period to a low of around 0.08 in late 2023, indicating a strengthening balance sheet with reduced leverage relative to asset base. From early 2024 onwards, this ratio abruptly increases to approximately 0.26 and remains elevated, suggesting a heightened reliance on debt financing relative to assets. Though this level is notably higher than previous quarters, the ratio stabilizes somewhat, pointing to a new leverage norm for the company.

In summary, the data reflects a two-phase pattern in the company’s financial structure: an initial period of debt reduction and asset stability followed by a significant uptick in both debt and assets, accompanied by increased leverage ratios. This shift implies strategic decisions towards expansion or investment that require additional financial leverage starting in early 2024.

Total Assets

The total assets exhibit moderate fluctuations over the observed periods. Starting near 95 billion US dollars, the asset base experienced occasional slight declines and recoveries, remaining largely within a range of approximately 92 to 101 billion US dollars. Notably, from early 2023 onwards, there is a marked increase with total assets peaking around 124 billion US dollars by mid-2024 before a moderate decline towards 122 billion by mid-2025. This suggests a general upward trend in asset growth in the latter periods.

Total Equity

Equity shows a consistent upward movement through most periods, starting close to 38 billion US dollars and gradually rising to approximately 46.8 billion by mid-2025. Although there are minor fluctuations, the overall trend indicates strengthening shareholder equity, which aligns with the rising total assets in the same timeframe. The increase in equity appears steady, suggesting retained earnings growth or capital infusions without abrupt volatility.

Financial Leverage Ratio

The financial leverage ratio, representing the relationship between total assets and equity, exhibits a declining trend initially, moving from about 2.49 down to a low near 2.18 during early 2024. This reduction in leverage means the company was reducing its reliance on debt relative to equity during that period. However, from early 2024 onward, leverage rises significantly, reaching a peak near 2.74 by mid-2024 before slightly moderating to about 2.61 by mid-2025. This shift indicates an increased use of debt financing or other liabilities relative to equity in the most recent periods.

Overall Analysis

The data suggests a company experiencing growth in both assets and equity with conservative leverage initially. The later period shows increased financial leverage alongside growth in total assets and equity, which may indicate strategic borrowing or investment activity aimed at expansion or operational scaling. While equity growth supports the strengthening of the company’s financial base, the rising leverage post-2024 implies heightened financial risk that should be monitored. The balance between leveraging assets for growth and maintaining solid equity levels reflects an approach toward expansion, though it calls for careful risk management considering the higher debt proportions.

The financial data reveals several notable trends in earnings before interest and tax (EBIT), interest expense, and interest coverage over the observed periods.

Earnings Before Interest and Tax (EBIT)

The EBIT figures indicate a general upward trend from late 2020 through the first half of 2023, reaching a peak of 4,582 million USD in July 2023. This growth phase is characterized by consistent quarterly increases with minor fluctuations. However, post this peak, a decline is observed beginning in October 2023, with EBIT dropping to 2,592 million USD by January 2024. After this low point, EBIT demonstrates some recovery, fluctuating between approximately 2,685 million USD and 3,367 million USD towards mid-2025. The most recent quarters indicate some stabilization but at levels below the prior peak.

Interest Expense

Interest expenses remained relatively stable and low from late 2020 through early 2024, fluctuating modestly around the 90 to 120 million USD range. A marked increase occurs starting in January 2024, with interest expenses jumping sharply to 357 million USD and sustaining elevated levels around 400 million USD through mid-2025. This sudden rise signifies potentially increased borrowing costs or higher debt levels during this period.

Interest Coverage Ratio

The interest coverage ratio shows a strong upward trajectory from approximately 26 times in late 2020 to a peak exceeding 41 times in mid-2022. This indicates improved ability to cover interest obligations from earnings over these periods. However, beginning in early 2024, the ratio declines sharply, falling to around 8 times by mid-2025. Despite some minor improvements near the end of the data series, the ratio remains significantly lower than earlier periods, reflecting decreased buffer to meet interest expenses and signaling heightened financial risk.

In summary, the financial performance before interest and tax appreciated steadily through mid-2023 before a downturn and partial recovery. Concurrently, interest expenses were initially stable but rose considerably from early 2024 onward. This combination led to a pronounced decline in the interest coverage ratio, raising concerns about the company’s ability to comfortably service its debt in the later periods analyzed.