Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Illumina Inc., solvency ratios
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
The solvency profile demonstrates a general trend toward deleveraging between 2016 and 2020, characterized by a marked reduction in debt-to-equity and debt-to-asset ratios beginning in 2019. The overall financial risk appears to have diminished as the reliance on borrowed capital decreased relative to equity and total assets.
- Leverage and Capital Structure
- The debt-to-equity ratio decreased from 0.58 in 2016 to 0.25 by 2020, with the most significant decline occurring between 2018 and 2019. A similar pattern is observed in the debt-to-capital ratio, which fell from 0.37 in 2016 to 0.20 in 2020. Financial leverage followed a corresponding downward trajectory, moving from 1.95 to 1.62 over the five-year period, indicating a shift toward a more conservative financing structure.
- Impact of Operating Lease Liabilities
- The inclusion of operating lease liabilities consistently elevates the solvency ratios compared to basic debt metrics. For instance, while the basic debt-to-assets ratio dropped to 0.16 by 2020, the ratio including lease liabilities remained higher at 0.25. This discrepancy suggests that lease obligations constitute a material portion of the company's total liabilities.
- Debt Service Coverage
- The capacity to service debt remains robust, although coverage ratios exhibited volatility. Interest coverage peaked at 29.19 in 2017 and concluded the period at 18.47 in 2020, indicating a strong ability to meet interest payments. Fixed charge coverage showed a similar peak in 2017 at 13.57 before declining to 7.44 by 2020; despite this decline, the ratio remains well above 1.0, suggesting that operational earnings are sufficient to cover fixed obligations.
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Debt to Equity
Illumina Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Build-to-suit lease liability | —) | —) | —) | 144) | 223) | |
| Long-term debt, current portion | 511) | —) | 1,107) | 10) | 1) | |
| Long-term debt, excluding current portion | 673) | 1,141) | 890) | 1,182) | 1,048) | |
| Total debt | 1,184) | 1,141) | 1,997) | 1,336) | 1,272) | |
| Total Illumina stockholders’ equity | 4,694) | 4,613) | 3,758) | 2,749) | 2,197) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.25 | 0.25 | 0.53 | 0.49 | 0.58 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to equity = Total debt ÷ Total Illumina stockholders’ equity
= 1,184 ÷ 4,694 = 0.25
2 Click competitor name to see calculations.
Analysis of solvency indicates a substantial strengthening of the balance sheet between 2016 and 2020. The period is characterized by a consistent expansion of the equity base coupled with a strategic reduction in total debt, resulting in a significantly lower reliance on borrowed capital and a more conservative financial structure.
- Total Debt Trends
- Debt levels experienced volatility, reaching a peak of 1,997 million USD in 2018. This was followed by a sharp correction in 2019, where total debt decreased to 1,141 million USD. By the end of 2020, debt levels remained relatively stable at 1,184 million USD, reflecting a successful deleveraging effort following the 2018 peak.
- Stockholders' Equity Growth
- A consistent and linear upward trajectory is observed in total stockholders' equity, which increased from 2,197 million USD in 2016 to 4,694 million USD in 2020. This steady growth suggests a strong accumulation of capital, which has served to dilute the impact of debt on the overall capital structure.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio demonstrates a clear downward trend in financial leverage. After starting at 0.58 in 2016, the ratio fluctuated slightly in 2017 and 2018 before dropping precipitously to 0.25 in 2019. This level was maintained through 2020, indicating that the company has effectively reduced its financial risk and increased its solvency margin over the five-year period.
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Debt to Equity (including Operating Lease Liability)
Illumina Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Build-to-suit lease liability | —) | —) | —) | 144) | 223) | |
| Long-term debt, current portion | 511) | —) | 1,107) | 10) | 1) | |
| Long-term debt, excluding current portion | 673) | 1,141) | 890) | 1,182) | 1,048) | |
| Total debt | 1,184) | 1,141) | 1,997) | 1,336) | 1,272) | |
| Operating lease liabilities, current portion | 51) | 45) | —) | —) | —) | |
| Operating lease liabilities, excluding current portion | 671) | 695) | —) | —) | —) | |
| Total debt (including operating lease liability) | 1,906) | 1,881) | 1,997) | 1,336) | 1,272) | |
| Total Illumina stockholders’ equity | 4,694) | 4,613) | 3,758) | 2,749) | 2,197) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.41 | 0.41 | 0.53 | 0.49 | 0.58 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Illumina stockholders’ equity
= 1,906 ÷ 4,694 = 0.41
2 Click competitor name to see calculations.
Between 2016 and 2020, the solvency profile demonstrated a strengthening trend, characterized by a significant expansion of the equity base that outpaced the growth of total debt obligations.
- Total Debt Trends
- Total debt, including operating lease liabilities, increased from US$ 1,272 million in 2016 to a peak of US$ 1,997 million in 2018. Following this period of growth, debt levels stabilized and slightly contracted, ending the period at US$ 1,906 million in 2020.
- Stockholders' Equity Growth
- A consistent upward trajectory is observed in stockholders' equity, which grew from US$ 2,197 million in 2016 to US$ 4,694 million in 2020. This sustained increase indicates a substantial accumulation of net assets over the five-year duration.
- Debt to Equity Ratio Analysis
- The debt to equity ratio generally declined from 0.58 in 2016 to 0.41 in 2020. While a marginal increase to 0.53 occurred in 2018 due to the spike in total debt, the ratio subsequently dropped to 0.41 in 2019 and remained constant through 2020. This pattern reflects a reduction in financial leverage and an improved balance between debt and equity financing.
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Debt to Capital
Illumina Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Build-to-suit lease liability | —) | —) | —) | 144) | 223) | |
| Long-term debt, current portion | 511) | —) | 1,107) | 10) | 1) | |
| Long-term debt, excluding current portion | 673) | 1,141) | 890) | 1,182) | 1,048) | |
| Total debt | 1,184) | 1,141) | 1,997) | 1,336) | 1,272) | |
| Total Illumina stockholders’ equity | 4,694) | 4,613) | 3,758) | 2,749) | 2,197) | |
| Total capital | 5,878) | 5,754) | 5,755) | 4,085) | 3,469) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.20 | 0.20 | 0.35 | 0.33 | 0.37 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= 1,184 ÷ 5,878 = 0.20
2 Click competitor name to see calculations.
The solvency profile demonstrates a significant reduction in financial leverage over the five-year period ending December 31, 2020. A transition is observed from a moderately leveraged position in 2016 to a more conservative capital structure by 2020, characterized by a substantial decrease in the reliance on debt relative to total capital.
- Total Debt Trends
- Total debt exhibited volatility, increasing from 1,272 million US$ in 2016 to a peak of 1,997 million US$ in 2018. Following this peak, a sharp contraction occurred in 2019, with debt falling to 1,141 million US$, before stabilizing at 1,184 million US$ in 2020.
- Total Capital Expansion
- Total capital showed a consistent upward trajectory, rising from 3,469 million US$ in 2016 to 5,878 million US$ in 2020. The most pronounced growth occurred between 2017 and 2018, during which total capital increased by approximately 41%.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained relatively stable between 0.33 and 0.37 from 2016 to 2018. A significant structural shift occurred in 2019, where the ratio declined to 0.20. This level was maintained through 2020, representing a marked improvement in solvency and a reduction in financial risk.
The overall trend indicates that while total capital expanded significantly, the company aggressively reduced its debt load after 2018. This divergence resulted in a strengthened balance sheet and a lower debt-to-capital ratio, suggesting a strategic shift toward lower financial leverage.
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Debt to Capital (including Operating Lease Liability)
Illumina Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Build-to-suit lease liability | —) | —) | —) | 144) | 223) | |
| Long-term debt, current portion | 511) | —) | 1,107) | 10) | 1) | |
| Long-term debt, excluding current portion | 673) | 1,141) | 890) | 1,182) | 1,048) | |
| Total debt | 1,184) | 1,141) | 1,997) | 1,336) | 1,272) | |
| Operating lease liabilities, current portion | 51) | 45) | —) | —) | —) | |
| Operating lease liabilities, excluding current portion | 671) | 695) | —) | —) | —) | |
| Total debt (including operating lease liability) | 1,906) | 1,881) | 1,997) | 1,336) | 1,272) | |
| Total Illumina stockholders’ equity | 4,694) | 4,613) | 3,758) | 2,749) | 2,197) | |
| Total capital (including operating lease liability) | 6,600) | 6,494) | 5,755) | 4,085) | 3,469) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.29 | 0.29 | 0.35 | 0.33 | 0.37 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 1,906 ÷ 6,600 = 0.29
2 Click competitor name to see calculations.
The solvency profile between 2016 and 2020 demonstrates a strategic expansion of the capital base that outpaced the growth of debt obligations, resulting in an overall improvement in the debt-to-capital ratio.
- Total Debt Trends
- Total debt, including operating lease liabilities, experienced a notable increase over the analyzed period. A significant surge occurred between 2017 and 2018, where obligations rose from US$ 1,336 million to US$ 1,997 million. Following this peak, debt levels remained relatively stable, ending 2020 at US$ 1,906 million.
- Total Capital Expansion
- Total capital exhibited consistent and substantial growth throughout the five-year period. Starting at US$ 3,469 million in 2016, the capital base expanded steadily to reach US$ 6,600 million by December 31, 2020. This continuous upward trajectory indicates a significant increase in the total financing available to the organization.
- Debt to Capital Ratio Analysis
- The debt to capital ratio reflects a general downward trend, declining from 0.37 in 2016 to 0.29 in 2020. Although there was a slight uptick to 0.35 in 2018 coinciding with the increase in total debt, the ratio subsequently dropped and stabilized at 0.29 for both 2019 and 2020. This indicates that the growth in equity or other non-debt capital components significantly outweighed the increase in debt, thereby enhancing the organization's solvency position and reducing its relative reliance on borrowed funds.
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Debt to Assets
Illumina Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Build-to-suit lease liability | —) | —) | —) | 144) | 223) | |
| Long-term debt, current portion | 511) | —) | 1,107) | 10) | 1) | |
| Long-term debt, excluding current portion | 673) | 1,141) | 890) | 1,182) | 1,048) | |
| Total debt | 1,184) | 1,141) | 1,997) | 1,336) | 1,272) | |
| Total assets | 7,585) | 7,316) | 6,959) | 5,257) | 4,281) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.16 | 0.16 | 0.29 | 0.25 | 0.30 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to assets = Total debt ÷ Total assets
= 1,184 ÷ 7,585 = 0.16
2 Click competitor name to see calculations.
The solvency profile from 2016 to 2020 exhibits a general trend toward reduced financial leverage and increased asset accumulation. While there was a temporary increase in borrowing during 2018, the subsequent years show a marked improvement in the company's ability to cover its liabilities with its asset base.
- Total Assets Growth
- A consistent upward trajectory in total assets is observed, growing from 4,281 million US dollars in 2016 to 7,585 million US dollars by 2020. This steady expansion indicates a significant growth in the company's resource base over the five-year period.
- Total Debt Fluctuations
- Debt levels remained relatively stable between 2016 and 2017, followed by a substantial peak in 2018 at 1,997 million US dollars. However, a sharp reduction occurred in 2019, with debt falling to 1,141 million US dollars, remaining relatively stable through 2020 at 1,184 million US dollars.
- Debt to Assets Ratio Analysis
- The debt to assets ratio experienced volatility in the first three years, fluctuating between 0.25 and 0.30. A significant structural shift occurred between 2018 and 2019, where the ratio dropped from 0.29 to 0.16. This lower ratio was maintained through 2020, reflecting a decreased reliance on debt financing and a stronger solvency position relative to the start of the period.
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Debt to Assets (including Operating Lease Liability)
Illumina Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Build-to-suit lease liability | —) | —) | —) | 144) | 223) | |
| Long-term debt, current portion | 511) | —) | 1,107) | 10) | 1) | |
| Long-term debt, excluding current portion | 673) | 1,141) | 890) | 1,182) | 1,048) | |
| Total debt | 1,184) | 1,141) | 1,997) | 1,336) | 1,272) | |
| Operating lease liabilities, current portion | 51) | 45) | —) | —) | —) | |
| Operating lease liabilities, excluding current portion | 671) | 695) | —) | —) | —) | |
| Total debt (including operating lease liability) | 1,906) | 1,881) | 1,997) | 1,336) | 1,272) | |
| Total assets | 7,585) | 7,316) | 6,959) | 5,257) | 4,281) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.25 | 0.26 | 0.29 | 0.25 | 0.30 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 1,906 ÷ 7,585 = 0.25
2 Click competitor name to see calculations.
The analysis of solvency indicators from 2016 to 2020 reveals a period of asset expansion accompanied by controlled leveraging. While absolute debt levels increased over the five-year duration, the proportion of total assets financed through debt remained stable, indicating that asset growth effectively mitigated the impact of increased liabilities on the overall solvency profile.
- Total Debt Dynamics
- Total debt, inclusive of operating lease liabilities, rose from 1,272 million US dollars in 2016 to 1,336 million US dollars in 2017, followed by a significant increase to 1,997 million US dollars in 2018. In the following two years, debt levels plateaued, ending at 1,906 million US dollars by December 31, 2020.
- Asset Base Expansion
- A consistent upward trend is observed in total assets, which grew steadily from 4,281 million US dollars in 2016 to 7,585 million US dollars in 2020. This continuous expansion of the asset base provided a buffer that prevented significant spikes in the debt-to-asset ratio despite the increase in total borrowing.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained within a tight corridor between 0.25 and 0.30. After starting at 0.30 in 2016 and dropping to 0.25 in 2017, the ratio experienced a slight increase to 0.29 in 2018, coinciding with the peak in total debt. However, the ratio subsequently declined and stabilized at 0.25 by 2020, suggesting a disciplined approach to maintaining solvency and a balanced capital structure during a period of growth.
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Financial Leverage
Illumina Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 7,585) | 7,316) | 6,959) | 5,257) | 4,281) | |
| Total Illumina stockholders’ equity | 4,694) | 4,613) | 3,758) | 2,749) | 2,197) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.62 | 1.59 | 1.85 | 1.91 | 1.95 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Financial leverage = Total assets ÷ Total Illumina stockholders’ equity
= 7,585 ÷ 4,694 = 1.62
2 Click competitor name to see calculations.
Between 2016 and 2020, the financial position was characterized by a consistent expansion of the asset base and a simultaneous strengthening of stockholders' equity, which collectively led to a reduction in overall financial leverage.
- Asset and Equity Growth
- Total assets demonstrated a steady upward trajectory, increasing from US$ 4,281 million in 2016 to US$ 7,585 million by December 31, 2020. Parallel to this, total stockholders' equity grew from US$ 2,197 million to US$ 4,694 million over the same period. The growth in equity was particularly aggressive between 2018 and 2019, contributing to a more robust capital base.
- Financial Leverage Analysis
- A general decline in the financial leverage ratio is observed, moving from 1.95 in 2016 to 1.62 in 2020. The most significant contraction occurred between 2018 and 2019, when the ratio decreased from 1.85 to 1.59. This trend indicates a strategic shift toward a more conservative financing structure, reducing the proportion of debt relative to equity used to fund assets. A marginal increase to 1.62 was recorded in 2020, though the ratio remained significantly lower than the levels observed at the start of the analyzed period.
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Interest Coverage
Illumina Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Illumina stockholders | 656) | 1,002) | 826) | 726) | 463) | |
| Add: Net income attributable to noncontrolling interest | —) | (12) | (44) | (48) | (35) | |
| Add: Income tax expense | 200) | 128) | 112) | 365) | 133) | |
| Add: Interest expense | 49) | 52) | 57) | 37) | 33) | |
| Earnings before interest and tax (EBIT) | 905) | 1,170) | 951) | 1,080) | 594) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 18.47 | 22.50 | 16.68 | 29.19 | 17.91 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Interest coverage = EBIT ÷ Interest expense
= 905 ÷ 49 = 18.47
2 Click competitor name to see calculations.
Between 2016 and 2020, the company maintained a strong capacity to service its interest obligations, although the efficiency of this coverage fluctuated in response to shifts in operating income and financing costs.
- Earnings Before Interest and Tax (EBIT)
- Operating performance exhibited a general upward trend from 2016 to 2019, rising from $594 million to a peak of $1,170 million. A contraction occurred in 2020, with EBIT decreasing to $905 million, reflecting a period of volatility in operating profitability.
- Interest Expense
- Interest costs remained relatively stable in 2016 and 2017 at $33 million and $37 million, respectively. A significant increase was recorded in 2018, where expenses climbed to $57 million. This figure moderated slightly in the subsequent years, ending at $49 million in 2020.
- Interest Coverage Ratio
- The interest coverage ratio experienced notable volatility, peaking at 29.19 in 2017 before falling to a period low of 16.68 in 2018. This sharp decline was the result of a simultaneous decrease in EBIT and an increase in interest expenses. While the ratio recovered to 22.50 in 2019 before declining to 18.47 in 2020, it consistently remained at a high level. This indicates that operating earnings were more than sufficient to cover interest payments throughout the five-year period, providing a substantial margin of safety.
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Fixed Charge Coverage
Illumina Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 29, 2019 | Dec 30, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Illumina stockholders | 656) | 1,002) | 826) | 726) | 463) | |
| Add: Net income attributable to noncontrolling interest | —) | (12) | (44) | (48) | (35) | |
| Add: Income tax expense | 200) | 128) | 112) | 365) | 133) | |
| Add: Interest expense | 49) | 52) | 57) | 37) | 33) | |
| Earnings before interest and tax (EBIT) | 905) | 1,170) | 951) | 1,080) | 594) | |
| Add: Operating lease costs | 84) | 84) | 55) | 46) | 46) | |
| Earnings before fixed charges and tax | 989) | 1,254) | 1,006) | 1,126) | 640) | |
| Interest expense | 49) | 52) | 57) | 37) | 33) | |
| Operating lease costs | 84) | 84) | 55) | 46) | 46) | |
| Fixed charges | 133) | 136) | 112) | 83) | 79) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 7.44 | 9.22 | 8.98 | 13.57 | 8.11 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-29), 10-K (reporting date: 2018-12-30), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 989 ÷ 133 = 7.44
2 Click competitor name to see calculations.
The solvency profile from 2016 to 2020 exhibits a period of volatility in earnings and a steady increase in fixed obligations, resulting in a fluctuating capacity to cover fixed charges.
- Earnings before fixed charges and tax
- Earnings experienced a significant increase from 640 million US$ in 2016 to 1,126 million US$ in 2017. Following a slight retraction in 2018, a peak was reached in 2019 at 1,254 million US$, before declining to 989 million US$ by the end of 2020.
- Fixed charges
- A consistent upward trend in fixed charges is observed between 2016 and 2019, rising from 79 million US$ to 136 million US$. This growth represents an expansion of fixed financial obligations, which stabilized at 133 million US$ in 2020.
- Fixed charge coverage ratio
- The coverage ratio peaked in 2017 at 13.57, driven by a sharp rise in earnings relative to stable charges. A subsequent downward trend is noted, with the ratio reaching its lowest point of 7.44 in 2020. This deterioration in the coverage margin is attributed to the combination of higher fixed charges and a contraction in earnings during the final year of the analysis period.
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