Illumina Inc. (NASDAQ:ILMN)

Debt to Equity and Debt Ratios

The debt to equity ratio shows a decreasing trend from 0.58 in 2016 to 0.25 in both 2019 and 2020, indicating a reduction in reliance on debt relative to equity over time. When including operating lease liabilities, the ratio follows a similar trend but remains slightly higher at 0.41 in the last two years, reflecting the impact of operational leasing commitments on financial leverage.

The debt to capital ratio also declines consistently from 0.37 in 2016 to 0.20 in 2019 and 2020, suggesting an improved capital structure with a lower proportion of debt financing. Including operating lease liabilities, this ratio is somewhat elevated in the final years, at 0.29, but still shows a downward progression compared to earlier years.

The debt to assets ratio follows a decreasing pattern from 0.30 in 2016 to 0.16 in 2019 and 2020, implying a reduction in the proportion of assets funded by debt. However, this ratio including operating lease liabilities remains higher, with 0.26 in 2019 and 0.25 in 2020, demonstrating the significance of lease obligations on total debt exposure.

Financial Leverage

Financial leverage decreases moderately from 1.95 in 2016 to 1.62 in 2020, indicating a reduced use of borrowed funds relative to shareholders' equity. The decline is gradual, denoting consistent efforts to manage leverage over the period.

Interest and Fixed Charge Coverage

Interest coverage fluctuates over the five-year span, initially increasing sharply from 17.91 in 2016 to a peak of 29.19 in 2017, then declining to 16.68 in 2018 before rising again to 22.5 in 2019, and finally decreasing to 18.47 in 2020. Despite volatility, the coverage remains strong, indicating the company’s consistent capability to meet interest obligations.

Fixed charge coverage follows a similar pattern, peaking at 13.57 in 2017, then declining to 7.44 by 2020. The trend points to some reduction in the ability to cover fixed charges with operating income, which might warrant monitoring despite remaining in a generally comfortable range.

Total Debt

The total debt exhibited some fluctuation throughout the period. It increased from $1,272 million in 2016 to a peak of $1,997 million in 2018, followed by a significant reduction to $1,141 million in 2019. There was a slight increase in 2020 to $1,184 million. Overall, after rising initially, the total debt stabilized at a lower level in the last two years.

Total Stockholders’ Equity

Stockholders’ equity showed a consistent upward trend over the five-year period. It grew steadily from $2,197 million in 2016 to $4,694 million in 2020, more than doubling in value. This indicates a strengthening equity base and potential accumulation of retained earnings or capital contributions over time.

Debt to Equity Ratio

The debt-to-equity ratio declined notably across the analyzed period. Starting at 0.58 in 2016, it decreased to 0.49 in 2017, slightly increased to 0.53 in 2018, and then sharply dropped to 0.25 in both 2019 and 2020. This trend reflects a reduction in leverage relative to the equity base, signaling a more conservative capital structure by the end of the period.

Total debt (including operating lease liability)

The total debt exhibited an increasing trend from 2016 to 2018, rising from 1,272 million USD to 1,997 million USD. Following this peak, debt levels decreased slightly in 2019 to 1,881 million USD and then showed a marginal increase to 1,906 million USD in 2020. Overall, the total debt demonstrates some volatility with a notable peak in 2018.

Total Illumina stockholders’ equity

Stockholders' equity showed a consistent and significant upward trajectory throughout the five-year period. Starting at 2,197 million USD in 2016, equity increased each year, reaching 4,694 million USD by the end of 2020. This represents more than a doubling of equity over the period, indicating strong growth in net assets funded by shareholders.

Debt to equity ratio (including operating lease liability)

The debt-to-equity ratio decreased from 0.58 in 2016 to 0.41 by 2019 and remained stable at 0.41 in 2020. The declining ratio suggests an improving capital structure with a relative reduction in leverage over the years, driven by both the increased equity base and the moderated debt levels after 2018.

Total debt

The total debt showed a fluctuating trend over the observed periods. Initially, it increased from 1,272 million US dollars in 2016 to a peak of 1,997 million US dollars in 2018. Subsequently, the total debt declined sharply to 1,141 million US dollars in 2019 and then experienced a slight increase to 1,184 million US dollars in 2020.

Total capital

Total capital demonstrated a consistent upward trend throughout the period examined. It rose significantly from 3,469 million US dollars in 2016 to 5,878 million US dollars in 2020, with notable increments in the years 2017 and 2018, remaining relatively stable between 2018 and 2019.

Debt to capital ratio

The debt to capital ratio decreased steadily over the five-year span. Starting at 0.37 in 2016, it dropped to 0.20 by 2019 and stayed at this lower level in 2020. This reduction indicates an improving capital structure with a relatively lower reliance on debt financing compared to total capital.

Total Debt (including operating lease liability)

The total debt showed an overall increasing trend from $1,272 million in 2016 to $1,906 million in 2020. The debt rose steadily from 2016 to 2018, reaching a peak of $1,997 million in 2018 before slightly decreasing in 2019 to $1,881 million, and then increasing again in 2020 to $1,906 million. This indicates a growing but somewhat fluctuating level of debt over the period.

Total Capital (including operating lease liability)

Total capital experienced consistent growth throughout the five-year period, increasing from $3,469 million in 2016 to $6,600 million in 2020. This represents nearly a doubling of the capital base, with significant year-over-year increments, particularly between 2017 and 2018, and continued strong growth thereafter. The upward trend suggests expansion and increased financing capacity or equity support.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio declined from 0.37 in 2016 to 0.29 in both 2019 and 2020. This decrease indicates an improvement in the company's capital structure, reflecting a relatively lower reliance on debt financing compared to total capital over time. Despite the absolute increase in total debt, the more substantial growth in total capital reduced the proportion of debt within the capital structure, suggesting strengthened financial stability.

The annual financial data reveals several noteworthy trends regarding the company's debt and asset management over the five-year period ending in 2020.

Total Debt

Total debt initially increased from $1,272 million in 2016 to $1,336 million in 2017, followed by a more substantial rise to $1,997 million in 2018. Thereafter, a marked decrease occurred in 2019, bringing total debt down to $1,141 million. A slight increase was seen in 2020, with total debt rising to $1,184 million. Overall, the total debt shows a peak in 2018 before declining and stabilizing in subsequent years.

Total Assets

Total assets demonstrated a consistent upward trajectory throughout the analyzed timeframe. Assets increased significantly from $4,281 million in 2016 to $5,257 million in 2017, and then to $6,959 million in 2018. This growth continued more moderately with $7,316 million in 2019, reaching $7,585 million by the end of 2020. The data indicates a steady expansion in asset base over the period.

Debt to Assets Ratio

The debt to assets ratio, a key indicator of financial leverage and risk, exhibited a decline from 0.30 in 2016 to 0.25 in 2017. It then increased slightly to 0.29 in 2018, corresponding with the peak in total debt. Following this, a significant decrease occurred in 2019, dropping to 0.16, where it remained stable in 2020. This decline in leverage ratio suggests improved financial stability and lower relative debt burden in recent years.

In summary, the company experienced growth in total assets coupled with fluctuating total debt, which peaked notably in 2018 before decreasing. The accompanying decline in the debt to assets ratio after 2018 indicates a reduction in financial leverage and a stronger asset base relative to debt. These trends suggest an overall improvement in the company's balance sheet strength and risk profile towards the end of the period analyzed.

Total Debt (Including Operating Lease Liability)

The total debt showed an initial increase from 1,272 million USD in 2016 to 1,336 million USD in 2017. It then rose sharply to reach 1,997 million USD in 2018. Subsequently, total debt decreased slightly to 1,881 million USD in 2019 and remained relatively stable at 1,906 million USD in 2020.

Total Assets

Total assets exhibited consistent growth over the period, increasing substantially from 4,281 million USD in 2016 to 5,257 million USD in 2017, followed by continued growth to 6,959 million USD in 2018. The upward trend persisted in 2019 and 2020, with assets reaching 7,316 million USD and 7,585 million USD respectively, indicating expansion of the company’s asset base each year.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio demonstrates a generally declining trend, starting at 0.30 in 2016 and decreasing to 0.25 in 2017. It increased to 0.29 in 2018 but dropped again to 0.26 in 2019 and further to 0.25 in 2020. This suggests that, despite fluctuations, the company has maintained or slightly improved its leverage position relative to its growing asset base, indicating relatively stable financial risk over the period.

The financial data reveals several key trends in the company's balance sheet components over the five-year period ending in 2020. Notably, the total assets demonstrated consistent growth each year, increasing from 4,281 million US dollars in 2016 to 7,585 million US dollars in 2020. This represents a substantial expansion of the company's asset base, reflecting ongoing investments or acquisitions.

Similarly, the total stockholders' equity followed an upward trajectory, rising from 2,197 million US dollars in 2016 to 4,694 million US dollars in 2020. This steady increase in equity indicates accumulation of retained earnings and possibly additional equity financing, strengthening the company’s capital structure over time.

Financial leverage

The financial leverage ratio showed a gradual decline from 1.95 in 2016 to 1.59 in 2019, before slightly increasing to 1.62 in 2020. This downward trend until 2019 suggests a reduction in the relative use of debt financing compared to equity, indicating a more conservative financing approach. The slight uptick in the last year may denote a marginal increase in debt or other liabilities relative to equity but remains significantly lower than the levels observed in 2016 and 2017.

Overall, the data indicates the company increased its asset base and shareholder equity substantially while moderately decreasing its reliance on debt financing, thereby improving its financial stability and capital structure during this period.

Earnings Before Interest and Tax (EBIT)

The EBIT showed significant fluctuation over the five-year period. Starting at $594 million in 2016, it increased sharply to a peak of $1,080 million in 2017. This was followed by a decline to $951 million in 2018. Subsequently, EBIT rose again to $1,170 million in 2019 before falling to $905 million in 2020. Overall, the trend indicates considerable variability with no consistent upward or downward trajectory.

Interest Expense

Interest expense increased steadily from $33 million in 2016 to $57 million in 2018. After reaching this peak, it decreased slightly to $52 million in 2019 and further to $49 million in 2020. The pattern suggests an initial rise in borrowing costs or debt levels, followed by a modest reduction in interest outflows in the last two years.

Interest Coverage Ratio

The interest coverage ratio, which measures the ability to meet interest obligations from EBIT, exhibited pronounced fluctuations. It rose dramatically from 17.91 in 2016 to a high of 29.19 in 2017, indicating improved capacity to cover interest costs. However, this ratio dropped to 16.68 in 2018, then climbed again to 22.5 in 2019, before declining to 18.47 in 2020. The ratio remains well above the critical threshold of 1, demonstrating relatively strong coverage throughout, despite the volatility.

Overall Analysis

The data reflect a business environment with variable EBIT performance that directly influenced the interest coverage capability. Interest expenses grew in the early years but have recently lessened, partially offsetting the decline in EBIT. The interest coverage ratio fluctuated in response to these trends but maintained a healthy level, suggesting the company has consistently managed its earnings relative to interest obligations effectively. The volatility in EBIT and interest coverage could indicate exposure to operational or market uncertainties impacting earnings.

The financial data reveals notable fluctuations and trends over the five-year period ending December 31, 2020.

Earnings before fixed charges and tax

There was a significant upward movement from 2016 to 2017, with earnings increasing from 640 million US dollars to 1,126 million US dollars. Following that, earnings dipped slightly in 2018 to 1,006 million US dollars but rebounded to 1,254 million US dollars in 2019. However, in 2020, earnings decreased to 989 million US dollars, indicating some volatility in operational profitability within the period.

Fixed charges

Fixed charges showed a steady increase over the years. Starting at 79 million US dollars in 2016, fixed charges rose gradually each year, reaching 133 million US dollars by the end of 2020. This rise suggests increasing costs related to fixed obligations such as interest expenses or lease payments.

Fixed charge coverage ratio

This ratio, which measures the firm's ability to meet fixed charges through operating earnings, fluctuated notably. It peaked in 2017 at 13.57, indicating strong coverage. Subsequent years showed a decline, with the ratio falling to 7.44 by 2020. The decrease suggests a decreasing cushion to cover fixed charges, reflecting either reduced earnings capacity relative to fixed obligations or increased fixed costs impacting financial flexibility.

Overall, while earnings experienced peaks and troughs, the steady increase in fixed charges combined with the downward trend in the fixed charge coverage ratio by 2020 signals a potential concern regarding the company's ability to comfortably cover its fixed financial commitments in the later years of the review period.