Meta Platforms Inc. (NASDAQ:META)

Solvency ratios demonstrate a clear trend of increasing leverage over the five-year period. While initially exhibiting very low levels of debt, the company has progressively taken on more financial obligations. This is reflected across all debt ratios presented, though the magnitude of change varies depending on the specific measure used.

Debt Ratios (Excluding Operating Leases)

The Debt to Equity ratio increased steadily from 0.00 in 2021 to 0.28 in 2025. Similarly, the Debt to Capital ratio rose from 0.00 to 0.22 over the same period. The Debt to Assets ratio also shows a consistent upward trajectory, moving from 0.00 in 2021 to 0.16 in 2025. These increases indicate a growing reliance on debt financing relative to equity and total capital.

Debt Ratios (Including Operating Leases)

The inclusion of operating lease liabilities results in higher debt ratio values. The Debt to Equity ratio, when including these liabilities, increased from 0.12 to 0.39. The Debt to Capital ratio rose from 0.10 to 0.28, and the Debt to Assets ratio increased from 0.09 to 0.23. The impact of operating leases is becoming increasingly significant in assessing the company’s overall debt position.

Leverage and Coverage Ratios

Financial leverage, as measured by total assets to equity, increased from 1.33 in 2021 to 1.68 in 2025, mirroring the increase in debt. However, the Interest Coverage ratio experienced a substantial decline, falling from 3,153.27 to 74.76. This indicates that the company’s ability to cover its interest expense with earnings has diminished significantly as debt levels have risen. The Fixed Charge Coverage ratio shows more stability, initially decreasing from 31.41 to 15.18, then increasing to 22.68 in 2025, suggesting a fluctuating but ultimately improving ability to meet broader fixed financial obligations.

In summary, the company’s solvency position has shifted from a very conservative, low-debt profile to one with increasing leverage. While the company continues to generate sufficient earnings to cover its fixed charges, the declining interest coverage ratio warrants monitoring. The growing importance of operating lease liabilities in the overall debt structure should also be considered when evaluating the company’s financial risk.

The debt to equity ratio exhibits a clear increasing trend over the five-year period. Initially, the ratio was effectively zero in 2021, indicating a very strong equity position relative to debt. However, subsequent years demonstrate a consistent rise in leverage.

Debt to Equity Ratio Trend

In 2022, the debt to equity ratio began to increase, reaching 0.08. This suggests the company started utilizing debt financing to a greater extent. The ratio continued to climb to 0.12 in 2023 and further to 0.16 in 2024, demonstrating a sustained increase in financial leverage.

The most significant change is observed between 2024 and 2025, with the ratio nearly doubling to 0.28. This indicates a substantial increase in debt relative to equity during this period. The company’s capital structure is becoming increasingly reliant on debt financing.

The substantial growth in total debt, alongside increasing stockholders’ equity, drives the observed trend. While equity is also increasing, the rate of debt accumulation is notably higher, resulting in the escalating debt to equity ratio. This shift in capital structure warrants further investigation into the company’s financing strategies and the rationale behind the increased debt levels.

Total Debt

Total debt increased from US$581 million in 2021 to US$59,928 million in 2025. This represents a significant proportional increase, contributing directly to the rising debt to equity ratio.

Stockholders’ Equity

Stockholders’ equity also increased, moving from US$124,879 million in 2021 to US$217,243 million in 2025. However, the growth in equity has not kept pace with the growth in debt, leading to the observed leverage increase.

The increasing debt to equity ratio suggests a potentially higher level of financial risk. While a moderate level of debt can be beneficial, the rapid increase observed here could indicate increased vulnerability to economic downturns or rising interest rates.

The debt to equity ratio, including operating lease liability, demonstrates a clear increasing trend over the five-year period. Total debt, inclusive of operating leases, has risen substantially, while stockholders’ equity has also increased, though at a comparatively slower rate. This has resulted in a progressively higher proportion of debt financing relative to equity.

Debt to Equity Trend

In 2021, the debt to equity ratio stood at 0.12. This figure more than doubled to 0.22 by the end of 2022. The ratio continued to climb, reaching 0.25 in 2023 and 0.27 in 2024. A significant increase is then observed, with the ratio reaching 0.39 in 2025.

Total Debt

Total debt, including operating lease liability, experienced substantial growth throughout the period. From US$14,454 million in 2021, it increased to US$27,278 million in 2022, US$37,924 million in 2023, and US$49,769 million in 2024. The most significant increase occurred between 2024 and 2025, with total debt reaching US$85,081 million.

Stockholders’ Equity

Stockholders’ equity also increased over the period, though at a less dramatic pace than total debt. It rose from US$124,879 million in 2021 to US$125,713 million in 2022, then to US$153,168 million in 2023, and US$182,637 million in 2024. By 2025, stockholders’ equity reached US$217,243 million. While positive, the growth in equity has not kept pace with the growth in debt.

The accelerating increase in the debt to equity ratio, particularly in 2025, suggests a growing reliance on debt financing. This trend warrants further investigation to assess the potential implications for the company’s financial risk and future performance.

The Debt to Capital ratio exhibits a consistent upward trend over the observed five-year period. Initially, the ratio was effectively zero in 2021, indicating a negligible reliance on debt financing relative to capital. However, subsequent years demonstrate a progressive increase in this ratio, suggesting a growing dependence on debt.

Total Debt

Total debt increased substantially from US$581 million in 2021 to US$59,928 million in 2025. The most significant increase occurred between 2022 and 2024, with a jump from US$10,610 million to US$29,535 million. This suggests a period of increased borrowing or debt issuance during those years.

Total Capital

Total capital also increased over the period, rising from US$125,460 million in 2021 to US$277,171 million in 2025. While capital increased in absolute terms, the rate of increase was consistently lower than that of total debt, contributing to the rising Debt to Capital ratio.

Debt to Capital Ratio

The Debt to Capital ratio increased from 0.00 in 2021 to 0.08 in 2022, 0.11 in 2023, 0.14 in 2024, and reached 0.22 in 2025. This indicates that for every dollar of capital, the entity increasingly utilized debt financing. The acceleration in the ratio from 2024 to 2025 is particularly noteworthy, signifying a more pronounced shift towards debt-funded operations or investments.

The observed trend suggests a strategic or operational shift towards greater leverage. While increasing debt can facilitate growth, continued increases in the Debt to Capital ratio warrant monitoring to assess potential financial risk and the entity’s ability to meet its debt obligations.

The Debt to Capital ratio, inclusive of operating lease liabilities, demonstrates a consistent upward trend over the five-year period. This indicates a growing reliance on debt financing relative to the company’s capital structure.

Total Debt (including operating lease liability)

Total debt exhibits a substantial increase throughout the period, rising from US$14,454 million in 2021 to US$85,081 million in 2025. The most significant increase occurs between 2023 and 2025, suggesting accelerated debt accumulation during this timeframe.

Total Capital (including operating lease liability)

Total capital also increases over the period, moving from US$139,333 million in 2021 to US$302,324 million in 2025. However, the rate of increase in total capital is less pronounced than that of total debt, contributing to the rising Debt to Capital ratio.

Debt to Capital (including operating lease liability)

The Debt to Capital ratio begins at 0.10 in 2021 and steadily increases to 0.28 in 2025. This represents a more than doubling of the ratio over the five-year period. The increase from 0.20 in 2023 to 0.28 in 2025 is particularly noteworthy, indicating a considerable shift in the company’s financial leverage. The ratio’s progression suggests the company is increasingly funding its operations and growth through debt rather than equity or retained earnings.

The observed trend warrants further investigation into the reasons behind the increasing debt levels and the company’s ability to service this debt. While increased leverage can amplify returns, it also elevates financial risk.

The Debt to Assets ratio demonstrates a clear increasing trend over the five-year period. Initially, the ratio was effectively zero in 2021, indicating a very conservative capital structure with minimal reliance on debt financing relative to its asset base. However, subsequent years reveal a growing dependence on debt.

Debt to Assets Ratio Trend

In 2022, the ratio rose to 0.06, representing the first notable increase. This suggests a deliberate shift towards incorporating debt into the company’s financial strategy. The ratio continued to climb to 0.08 in 2023, signaling a continued, albeit moderate, increase in financial leverage.

The rate of increase accelerated in 2024, with the ratio reaching 0.11. This indicates a more substantial reliance on debt to finance assets. The most significant change occurred between 2024 and 2025, with the ratio nearly doubling to 0.16. This represents a considerable increase in the proportion of assets financed by debt.

The consistent upward trajectory suggests a strategic decision to utilize debt financing, potentially to fund growth initiatives, acquisitions, or share repurchases. However, the increasing ratio also implies a heightened level of financial risk, as a larger portion of the asset base is now funded by liabilities.

The substantial increase in the Debt to Assets ratio, particularly in the final year of the observed period, warrants further investigation into the specific reasons for the increased debt levels and the company’s ability to service this debt. While not necessarily indicative of financial distress, the trend suggests a changing risk profile.

The relationship between total debt, including operating lease liabilities, and total assets has exhibited a consistent upward trend over the five-year period. This indicates a growing reliance on debt financing relative to the company’s asset base.

Debt to Assets Ratio

In 2021, the debt to assets ratio stood at 0.09. This figure increased to 0.15 by the end of 2022, representing a substantial rise in leverage. The ratio continued to climb, reaching 0.17 in 2023 and 0.18 in 2024. The most significant increase occurred between 2024 and 2025, with the ratio reaching 0.23. This demonstrates an accelerating trend of increasing financial leverage.

The absolute values of both total debt and total assets have increased over the period, but the rate of increase in total debt has consistently outpaced that of total assets. This disparity is the primary driver of the observed upward trend in the debt to assets ratio. The substantial increase in debt between 2024 and 2025 is particularly noteworthy and warrants further investigation into the reasons behind this increased borrowing.

The increasing ratio suggests a potentially higher level of financial risk. While a moderate level of debt can be beneficial, a consistently rising ratio may indicate a greater vulnerability to economic downturns or increases in interest rates. Continued monitoring of this ratio is recommended to assess the company’s long-term financial health.

An examination of the provided financial information reveals a consistent, albeit gradual, increase in financial leverage over the five-year period. This trend is observed alongside growth in total assets and stockholders’ equity.

Financial Leverage

The financial leverage ratio demonstrates an upward trajectory, increasing from 1.33 in 2021 to 1.68 in 2025. The increase from 2021 to 2022 was 0.15, followed by smaller increases of 0.02 in both 2022-2023 and 2023-2024. The largest single-year increase occurred between 2024 and 2025, with a rise of 0.17.

The observed increase in financial leverage suggests a growing reliance on debt financing relative to equity. While the ratio remains relatively stable between 2021 and 2024, the more pronounced increase in 2025 warrants further investigation to determine the underlying reasons and potential implications for the company’s financial risk profile. The concurrent growth in total assets and stockholders’ equity indicates that the increased debt is being utilized to fund expansion and potentially enhance shareholder value, but the escalating leverage should be monitored.

Total Assets & Stockholders’ Equity Context

Total assets increased consistently throughout the period, from US$165,987 million in 2021 to US$366,021 million in 2025. Stockholders’ equity also exhibited growth, rising from US$124,879 million in 2021 to US$217,243 million in 2025. This growth in both asset base and equity provides a context for the increasing financial leverage, suggesting the company is expanding its operations and equity base alongside its debt.

In summary, the company’s financial leverage has been trending upward, with a notable acceleration in the most recent year. This trend is occurring in conjunction with substantial growth in both assets and equity, but continued monitoring of the leverage ratio is recommended to assess potential risks associated with increased debt financing.

The interest coverage ratio demonstrates a significant declining trend over the five-year period. While starting from a very high base, the company’s ability to meet its interest obligations from earnings before interest and tax has decreased substantially.

Earnings Before Interest and Tax (EBIT)

EBIT experienced a decrease from US$47,299 million in 2021 to US$28,995 million in 2022. A substantial recovery was then observed, with EBIT reaching US$47,874 million in 2023, followed by further increases to US$71,378 million in 2024 and US$87,097 million in 2025. Despite these increases, the growth in EBIT has not kept pace with the growth in interest expense.

Interest Expense

Interest expense remained relatively low at US$15 million in 2021, but increased significantly to US$176 million in 2022. This upward trend continued, reaching US$446 million in 2023, US$715 million in 2024, and US$1,165 million in 2025. The consistent rise in interest expense is a key driver of the declining interest coverage ratio.

Interest Coverage Ratio

The interest coverage ratio began at 3,153.27 in 2021, indicating a very strong capacity to cover interest payments. It decreased to 164.74 in 2022, reflecting the initial increase in interest expense and the decrease in EBIT. While remaining above 100, the ratio continued to decline to 107.34 in 2023, 99.83 in 2024, and further to 74.76 in 2025. This consistent decline suggests a weakening ability to comfortably cover interest obligations, despite the overall increase in EBIT from 2022 onwards.

The substantial increase in interest expense, coupled with the initial decrease in EBIT, has had a pronounced effect on the interest coverage ratio. Although EBIT has recovered and grown in subsequent years, the rate of increase in interest expense has outpaced the growth in EBIT, leading to a continued erosion of the company’s interest coverage capacity.

The company’s fixed charge coverage exhibited considerable fluctuation over the five-year period. Earnings before fixed charges and tax, and fixed charges themselves, both experienced changes that influenced the overall coverage ratio.

Earnings Before Fixed Charges and Tax

Earnings before fixed charges and tax decreased significantly from 2021 to 2022, falling from US$48,839 million to US$30,852 million. A subsequent recovery was observed in 2023, reaching US$49,965 million, and continued upward through 2025, culminating in US$89,895 million. This indicates a strengthening of operating profitability in the later years of the period.

Fixed Charges

Fixed charges demonstrated a consistent upward trend throughout the period. Starting at US$1,555 million in 2021, they increased to US$2,033 million in 2022, US$2,537 million in 2023, US$3,074 million in 2024, and reached US$3,963 million in 2025. This suggests a growing level of financial obligations requiring periodic payments.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio mirrored the fluctuations in earnings. It declined substantially from 31.41 in 2021 to 15.18 in 2022, coinciding with the decrease in earnings. The ratio improved to 19.69 in 2023, and continued to rise, reaching 23.99 in 2024, before slightly decreasing to 22.68 in 2025. Despite the slight decrease in 2025, the ratio remained at a healthy level, indicating a strong ability to meet fixed obligations with earnings.

The increasing fixed charges, coupled with the initial decline and subsequent recovery in earnings, resulted in a dynamic fixed charge coverage profile. The company demonstrated an ability to recover from the earnings dip in 2022 and maintain a robust coverage ratio as earnings grew, even with increasing fixed charge obligations.