ON Semiconductor Corp. (NASDAQ:ON)

Coverage Ratios

ON Semiconductor Corp., solvency ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Debt Ratios
Debt to equity	0.43	0.52	0.68	0.99	1.09
Debt to equity (including operating lease liability)	0.47	0.57	0.71	1.03	1.13
Debt to capital	0.30	0.34	0.40	0.50	0.52
Debt to capital (including operating lease liability)	0.32	0.36	0.42	0.51	0.53
Debt to assets	0.25	0.27	0.32	0.40	0.43
Debt to assets (including operating lease liability)	0.27	0.29	0.34	0.42	0.44
Financial leverage	1.70	1.94	2.10	2.45	2.55
Coverage Ratios
Interest coverage	34.90	25.89	9.88	2.05	2.87
Fixed charge coverage	20.57	16.23	7.58	1.82	2.46

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

A consistent improvement in solvency and a systematic reduction in financial risk are observed from 2019 through 2023. The organization has transitioned toward a significantly more conservative capital structure, characterized by a steady decline in debt reliance and a substantial increase in the capacity to service financial obligations.

Leverage and Capital Structure: A sustained downward trend is evident across all debt-to-equity, debt-to-capital, and debt-to-asset ratios. The debt-to-equity ratio decreased from 1.09 in 2019 to 0.43 in 2023, while the debt-to-assets ratio fell from 0.43 to 0.25 over the same period. These trends remain consistent even when operating lease liabilities are included, indicating a fundamental shift in the financing mix toward equity.; The debt-to-capital ratio exhibited a similar decline, moving from 0.52 in 2019 to 0.30 in 2023, further confirming the reduction of debt as a primary source of funding for the organization's capital needs.
Financial Leverage: Financial leverage has contracted steadily over the five-year period, decreasing from 2.55 in 2019 to 1.70 in 2023. This reduction suggests a lower risk profile and a decrease in the use of borrowed funds to amplify returns on assets.
Debt Service Capacity: Coverage ratios demonstrate a dramatic improvement in the ability to meet fixed financial commitments. Following a slight decline in 2020, the interest coverage ratio grew exponentially from 2.05 in 2020 to 34.90 by the end of 2023.; Similarly, the fixed charge coverage ratio rose from a low of 1.82 in 2020 to 20.57 in 2023. This trajectory indicates that earnings have grown significantly relative to interest and fixed costs, providing a substantial cushion against potential financial distress.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., debt to equity calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Total debt	3,359,800)	3,230,700)	3,097,500)	3,491,300)	3,612,500)

Total ON Semiconductor Corporation stockholders’ equity	7,782,600)	6,188,500)	4,585,400)	3,538,500)	3,301,700)
Solvency Ratio
Debt to equity¹	0.43	0.52	0.68	0.99	1.09
Benchmarks
Debt to Equity, Competitors²
Advanced Micro Devices Inc.	0.04	0.05	0.04	—	—
Analog Devices Inc.	0.20	0.18	0.18	0.43	—
Applied Materials Inc.	0.35	0.45	0.45	0.52	—
Broadcom Inc.	1.64	1.74	1.59	1.72	—
Intel Corp.	0.47	0.41	0.40	—	—
KLA Corp.	2.02	4.75	1.02	—	—
Lam Research Corp.	0.61	0.80	0.83	—	—
Marvell Technology Inc.	0.29	0.29	0.14	—	—
Micron Technology Inc.	0.30	0.14	0.15	—	—
NVIDIA Corp.	0.50	0.41	0.41	—	—
Qualcomm Inc.	0.71	0.86	1.58	2.59	—
Texas Instruments Inc.	0.66	0.60	0.58	—	—
Debt to Equity, Sector
Semiconductors & Semiconductor Equipment	0.46	0.43	0.49	—	—
Debt to Equity, Industry
Information Technology	0.66	0.70	0.83	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Debt to equity = Total debt ÷ Total ON Semiconductor Corporation stockholders’ equity
= 3,359,800 ÷ 7,782,600 = 0.43

² Click competitor name to see calculations.

A significant improvement in the solvency profile is evident between 2019 and 2023, characterized by a consistent reduction in financial leverage. This trend is driven by a substantial increase in shareholders' equity relative to a relatively stable total debt load, resulting in a strengthened balance sheet and reduced financial risk.

Debt to Equity Ratio Trend: The debt to equity ratio exhibited a continuous downward trajectory over the five-year period, falling from 1.09 in 2019 to 0.43 by December 31, 2023. This represents a transition from a capital structure where debt exceeded equity to one where equity is more than double the total debt, indicating a marked shift toward a more conservative financing strategy.
Equity Growth Analysis: Total stockholders' equity experienced aggressive and uninterrupted growth, increasing from 3,301,700 thousand US dollars in 2019 to 7,782,600 thousand US dollars in 2023. This expansion in the equity base provided the primary mechanism for the reduction in the solvency ratio, suggesting strong retained earnings or capital injections.
Debt Level Stability: Total debt remained relatively stable throughout the period. After an initial decline from 3,612,500 thousand US dollars in 2019 to a low of 3,097,500 thousand US dollars in 2021, debt levels saw a modest increase to 3,359,800 thousand US dollars by 2023. Despite these slight fluctuations, the total debt remained well below the 2019 peak, failing to keep pace with the rapid growth of equity.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Total debt	3,359,800)	3,230,700)	3,097,500)	3,491,300)	3,612,500)
Operating lease liabilities (included in Accrued expenses and other current liabilities)	33,000)	35,200)	32,500)	32,200)	26,100)
Operating lease liabilities (included in Other long-term liabilities)	231,000)	246,500)	142,400)	115,700)	87,900)
Total debt (including operating lease liability)	3,623,800)	3,512,400)	3,272,400)	3,639,200)	3,726,500)

Total ON Semiconductor Corporation stockholders’ equity	7,782,600)	6,188,500)	4,585,400)	3,538,500)	3,301,700)
Solvency Ratio
Debt to equity (including operating lease liability)¹	0.47	0.57	0.71	1.03	1.13
Benchmarks
Debt to Equity (including Operating Lease Liability), Competitors²
Advanced Micro Devices Inc.	0.06	0.05	0.10	—	—
Analog Devices Inc.	0.21	0.19	0.19	0.46	—
Applied Materials Inc.	0.37	0.48	0.47	0.54	—
Broadcom Inc.	1.65	1.76	1.61	1.75	—
Intel Corp.	0.47	0.42	0.40	—	—
KLA Corp.	2.08	4.83	1.05	—	—
Lam Research Corp.	0.64	0.83	0.86	—	—
Marvell Technology Inc.	0.30	0.30	0.16	—	—
NVIDIA Corp.	0.54	0.44	0.46	—	—
Qualcomm Inc.	0.74	0.90	1.64	2.67	—
Texas Instruments Inc.	0.70	0.63	0.62	—	—
Debt to Equity (including Operating Lease Liability), Sector
Semiconductors & Semiconductor Equipment	0.47	0.44	0.51	—	—
Debt to Equity (including Operating Lease Liability), Industry
Information Technology	0.72	0.76	0.90	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total ON Semiconductor Corporation stockholders’ equity
= 3,623,800 ÷ 7,782,600 = 0.47

² Click competitor name to see calculations.

A comprehensive analysis of the solvency position reveals a consistent strengthening of the balance sheet from 2019 through 2023. The primary driver of this improvement is a substantial increase in stockholders' equity, which has significantly outpaced changes in total debt obligations.

Debt to Equity Ratio Trend: The debt to equity ratio exhibits a steady downward trajectory, declining from 1.13 in 2019 to 0.47 by the end of 2023. This trend indicates a transition from a capital structure where debt exceeded equity to one where equity is the dominant source of funding, thereby reducing financial leverage and overall solvency risk.
Growth in Stockholders' Equity: Total stockholders' equity grew consistently and aggressively over the five-year period, rising from US$ 3.3 billion in 2019 to US$ 7.8 billion in 2023. This substantial expansion of the equity base has fundamentally altered the company's solvency profile, providing a larger capital cushion.
Total Debt Stability: Total debt, including operating lease liabilities, remained relatively stable throughout the period. Values fluctuated within a narrow range, starting at US$ 3.7 billion in 2019, dipping to US$ 3.3 billion in 2021, and ending at US$ 3.6 billion in 2023. The relative constancy of debt levels in the face of rapidly growing equity explains the sharp decline in the debt to equity ratio.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., debt to capital calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Total debt	3,359,800)	3,230,700)	3,097,500)	3,491,300)	3,612,500)
Total ON Semiconductor Corporation stockholders’ equity	7,782,600)	6,188,500)	4,585,400)	3,538,500)	3,301,700)
Total capital	11,142,400)	9,419,200)	7,682,900)	7,029,800)	6,914,200)
Solvency Ratio
Debt to capital¹	0.30	0.34	0.40	0.50	0.52
Benchmarks
Debt to Capital, Competitors²
Advanced Micro Devices Inc.	0.04	0.04	0.04	—	—
Analog Devices Inc.	0.16	0.15	0.15	0.30	—
Applied Materials Inc.	0.26	0.31	0.31	0.34	—
Broadcom Inc.	0.62	0.64	0.61	0.63	—
Intel Corp.	0.32	0.29	0.29	—	—
KLA Corp.	0.67	0.83	0.50	—	—
Lam Research Corp.	0.38	0.44	0.45	—	—
Marvell Technology Inc.	0.22	0.22	0.12	—	—
Micron Technology Inc.	0.23	0.12	0.13	—	—
NVIDIA Corp.	0.33	0.29	0.29	—	—
Qualcomm Inc.	0.42	0.46	0.61	0.72	—
Texas Instruments Inc.	0.40	0.37	0.37	—	—
Debt to Capital, Sector
Semiconductors & Semiconductor Equipment	0.32	0.30	0.33	—	—
Debt to Capital, Industry
Information Technology	0.40	0.41	0.45	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,359,800 ÷ 11,142,400 = 0.30

² Click competitor name to see calculations.

Analysis of the solvency ratios indicates a consistent improvement in the capital structure between 2019 and 2023. The overall trend reflects a strategic reduction in the proportion of debt relative to total capital, which enhances the long-term financial stability of the entity.

Debt to Capital Ratio Trend: A sustained downward trajectory is observed, with the ratio declining from 0.52 in 2019 to 0.30 by December 31, 2023. This continuous decrease indicates a significant reduction in financial leverage, signifying that the reliance on borrowed funds to finance assets and operations has diminished over the five-year period.
Total Capital Expansion: Total capital grew consistently and acceleratively, rising from US$ 6,914,200 thousand in 2019 to US$ 11,142,400 thousand in 2023. The substantial growth in the capital base, particularly between 2021 and 2023, served as the primary driver for the improvement in the debt-to-capital ratio.
Total Debt Dynamics: Total debt remained relatively stable with minor fluctuations. A decline from US$ 3,612,500 thousand in 2019 to a low of US$ 3,097,500 thousand in 2021 was followed by a moderate increase to US$ 3,359,800 thousand by 2023. Despite the recent uptick in absolute debt levels, the rate of increase was significantly lower than the rate of growth in total capital, resulting in a net strengthening of the solvency position.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Total debt	3,359,800)	3,230,700)	3,097,500)	3,491,300)	3,612,500)
Operating lease liabilities (included in Accrued expenses and other current liabilities)	33,000)	35,200)	32,500)	32,200)	26,100)
Operating lease liabilities (included in Other long-term liabilities)	231,000)	246,500)	142,400)	115,700)	87,900)
Total debt (including operating lease liability)	3,623,800)	3,512,400)	3,272,400)	3,639,200)	3,726,500)
Total ON Semiconductor Corporation stockholders’ equity	7,782,600)	6,188,500)	4,585,400)	3,538,500)	3,301,700)
Total capital (including operating lease liability)	11,406,400)	9,700,900)	7,857,800)	7,177,700)	7,028,200)
Solvency Ratio
Debt to capital (including operating lease liability)¹	0.32	0.36	0.42	0.51	0.53
Benchmarks
Debt to Capital (including Operating Lease Liability), Competitors²
Advanced Micro Devices Inc.	0.05	0.05	0.09	—	—
Analog Devices Inc.	0.17	0.16	0.16	0.31	—
Applied Materials Inc.	0.27	0.32	0.32	0.35	—
Broadcom Inc.	0.62	0.64	0.62	0.64	—
Intel Corp.	0.32	0.30	0.29	—	—
KLA Corp.	0.67	0.83	0.51	—	—
Lam Research Corp.	0.39	0.45	0.46	—	—
Marvell Technology Inc.	0.23	0.23	0.14	—	—
NVIDIA Corp.	0.35	0.31	0.31	—	—
Qualcomm Inc.	0.43	0.47	0.62	0.73	—
Texas Instruments Inc.	0.41	0.39	0.38	—	—
Debt to Capital (including Operating Lease Liability), Sector
Semiconductors & Semiconductor Equipment	0.32	0.31	0.34	—	—
Debt to Capital (including Operating Lease Liability), Industry
Information Technology	0.42	0.43	0.47	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 3,623,800 ÷ 11,406,400 = 0.32

² Click competitor name to see calculations.

The organization's solvency profile demonstrates a consistent improvement over the five-year period ending December 31, 2023. A sustained reduction in financial leverage is evident, characterized by a steady decline in the debt-to-capital ratio, which decreased from 0.53 in 2019 to 0.32 in 2023.

Total Capital Expansion: A significant and uninterrupted growth trend is observed in total capital, which increased from US$ 7,028,200 thousand in 2019 to US$ 11,406,400 thousand by 2023. This expansion of the capital base is the primary driver behind the improving solvency metrics.
Debt Level Stability: Total debt, including operating lease liabilities, remained relatively stable throughout the period. After a gradual decline from US$ 3,726,500 thousand in 2019 to a low of US$ 3,272,400 thousand in 2021, debt levels saw a moderate increase to US$ 3,623,800 thousand by 2023. Despite this recent uptick, total debt remained below 2019 levels.
Debt to Capital Ratio Analysis: The debt-to-capital ratio exhibited a continuous downward trajectory, falling every year from 2019 through 2023. The most pronounced compression occurred between 2020 and 2022, where the ratio dropped from 0.51 to 0.36. The final ratio of 0.32 indicates a strengthened balance sheet with a lower proportion of debt relative to the total capital structure.

The divergence between the rapidly growing total capital and the relatively stagnant total debt suggests a strategic shift toward equity-funded growth or significant retained earnings accumulation. This trend has effectively lowered the company's financial risk and enhanced its long-term solvency position.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., debt to assets calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Total debt	3,359,800)	3,230,700)	3,097,500)	3,491,300)	3,612,500)

Total assets	13,215,200)	11,978,500)	9,626,000)	8,668,000)	8,425,500)
Solvency Ratio
Debt to assets¹	0.25	0.27	0.32	0.40	0.43
Benchmarks
Debt to Assets, Competitors²
Advanced Micro Devices Inc.	0.04	0.04	0.03	—	—
Analog Devices Inc.	0.14	0.13	0.13	0.24	—
Applied Materials Inc.	0.18	0.20	0.21	0.24	—
Broadcom Inc.	0.54	0.54	0.53	0.54	—
Intel Corp.	0.26	0.23	0.23	—	—
KLA Corp.	0.42	0.53	0.34	—	—
Lam Research Corp.	0.27	0.29	0.31	—	—
Marvell Technology Inc.	0.20	0.21	0.11	—	—
Micron Technology Inc.	0.21	0.10	0.12	—	—
NVIDIA Corp.	0.27	0.25	0.24	—	—
Qualcomm Inc.	0.30	0.32	0.38	0.44	—
Texas Instruments Inc.	0.35	0.32	0.31	—	—
Debt to Assets, Sector
Semiconductors & Semiconductor Equipment	0.26	0.24	0.26	—	—
Debt to Assets, Industry
Information Technology	0.26	0.26	0.29	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,359,800 ÷ 13,215,200 = 0.25

² Click competitor name to see calculations.

A consistent improvement in the solvency profile is observed between 2019 and 2023. The overarching trend indicates a steady reduction in the proportion of assets financed by debt, reflecting a strengthening overall financial position.

Total Asset Expansion: Total assets grew continuously each year, rising from 8,425,500 thousand US$ in 2019 to 13,215,200 thousand US$ in 2023. This steady growth indicates a significant expansion of the company's resource base over the five-year period.
Debt Level Fluctuations: Total debt experienced a downward trend from 2019 to 2021, decreasing from 3,612,500 thousand US$ to a period low of 3,097,500 thousand US$. A slight reversal occurred in 2022 and 2023, with debt rising to 3,359,800 thousand US$, although it remained below the 2019 initial level.
Solvency Ratio Trajectory: The debt to assets ratio declined consistently from 0.43 in 2019 to 0.25 in 2023. This trend demonstrates that asset accumulation significantly outpaced debt acquisition, effectively reducing the company's financial leverage and enhancing its long-term solvency.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Current portion of financing lease liabilities	800)	14,200)	12,700)	—)	—)
Current portion of long-term debt	794,000)	147,800)	160,700)	531,600)	736,000)
Long-term debt, excluding current portion	2,542,600)	3,045,700)	2,913,900)	2,959,700)	2,876,500)
Long-term financing lease liabilities	22,400)	23,000)	10,200)	—)	—)
Total debt	3,359,800)	3,230,700)	3,097,500)	3,491,300)	3,612,500)
Operating lease liabilities (included in Accrued expenses and other current liabilities)	33,000)	35,200)	32,500)	32,200)	26,100)
Operating lease liabilities (included in Other long-term liabilities)	231,000)	246,500)	142,400)	115,700)	87,900)
Total debt (including operating lease liability)	3,623,800)	3,512,400)	3,272,400)	3,639,200)	3,726,500)

Total assets	13,215,200)	11,978,500)	9,626,000)	8,668,000)	8,425,500)
Solvency Ratio
Debt to assets (including operating lease liability)¹	0.27	0.29	0.34	0.42	0.44
Benchmarks
Debt to Assets (including Operating Lease Liability), Competitors²
Advanced Micro Devices Inc.	0.05	0.04	0.06	—	—
Analog Devices Inc.	0.15	0.14	0.14	0.25	—
Applied Materials Inc.	0.20	0.22	0.22	0.26	—
Broadcom Inc.	0.54	0.55	0.53	0.55	—
Intel Corp.	0.26	0.23	0.23	—	—
KLA Corp.	0.43	0.54	0.35	—	—
Lam Research Corp.	0.28	0.30	0.33	—	—
Marvell Technology Inc.	0.21	0.21	0.12	—	—
NVIDIA Corp.	0.29	0.27	0.27	—	—
Qualcomm Inc.	0.31	0.33	0.40	0.46	—
Texas Instruments Inc.	0.36	0.34	0.33	—	—
Debt to Assets (including Operating Lease Liability), Sector
Semiconductors & Semiconductor Equipment	0.27	0.25	0.27	—	—
Debt to Assets (including Operating Lease Liability), Industry
Information Technology	0.28	0.29	0.31	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 3,623,800 ÷ 13,215,200 = 0.27

² Click competitor name to see calculations.

An analysis of the solvency position from 2019 to 2023 reveals a steady improvement in the company's financial leverage. The most prominent trend is the consistent decline in the debt-to-assets ratio, indicating a strengthening balance sheet and a reduced reliance on borrowed capital relative to the size of the asset base.

Asset Expansion: Total assets experienced substantial growth over the five-year period, increasing from US$ 8,425,500 thousand in 2019 to US$ 13,215,200 thousand in 2023. The most significant acceleration in asset accumulation occurred between 2021 and 2023, which contributed heavily to the overall improvement in solvency metrics.
Debt Stability: Total debt, including operating lease liabilities, remained relatively stable throughout the analyzed period. After a decrease from US$ 3,726,500 thousand in 2019 to a low of US$ 3,272,400 thousand in 2021, debt levels rose modestly to US$ 3,623,800 thousand by the end of 2023. Notably, the total debt remained within a narrow range despite the significant expansion of total assets.
Debt to Assets Ratio Trend: The debt-to-assets ratio exhibited a continuous downward trajectory, falling from 0.44 in 2019 to 0.27 in 2023. This trend confirms that asset growth outpaced the growth of liabilities. The reduction in this ratio suggests a lower financial risk profile and an increased capacity to cover total obligations using the company's asset base.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., financial leverage calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Total assets	13,215,200)	11,978,500)	9,626,000)	8,668,000)	8,425,500)
Total ON Semiconductor Corporation stockholders’ equity	7,782,600)	6,188,500)	4,585,400)	3,538,500)	3,301,700)
Solvency Ratio
Financial leverage¹	1.70	1.94	2.10	2.45	2.55
Benchmarks
Financial Leverage, Competitors²
Advanced Micro Devices Inc.	1.21	1.23	1.66	—	—
Analog Devices Inc.	1.37	1.38	1.38	1.79	—
Applied Materials Inc.	1.88	2.19	2.11	2.11	—
Broadcom Inc.	3.04	3.23	3.03	3.18	—
Intel Corp.	1.81	1.80	1.77	—	—
KLA Corp.	4.82	8.99	3.04	—	—
Lam Research Corp.	2.29	2.74	2.64	—	—
Marvell Technology Inc.	1.44	1.41	1.28	—	—
Micron Technology Inc.	1.46	1.33	1.34	—	—
NVIDIA Corp.	1.86	1.66	1.70	—	—
Qualcomm Inc.	2.37	2.72	4.14	5.86	—
Texas Instruments Inc.	1.91	1.87	1.85	—	—
Financial Leverage, Sector
Semiconductors & Semiconductor Equipment	1.78	1.77	1.87	—	—
Financial Leverage, Industry
Information Technology	2.53	2.65	2.87	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Financial leverage = Total assets ÷ Total ON Semiconductor Corporation stockholders’ equity
= 13,215,200 ÷ 7,782,600 = 1.70

² Click competitor name to see calculations.

A consistent expansion of the balance sheet is evident between 2019 and 2023. Total assets increased from US$ 8,425,500 thousand to US$ 13,215,200 thousand, reflecting a steady growth in the company's resource base. During the same period, stockholders' equity grew more aggressively, rising from US$ 3,301,700 thousand to US$ 7,782,600 thousand. The growth rate of equity significantly outpaced the growth rate of assets, particularly from 2021 onward, indicating a strengthening of the internal capital base.

Financial Leverage Trend: A persistent downward trend in the financial leverage ratio is observed, with values decreasing every year from 2.55 in 2019 to 1.70 in 2023. This decline signifies a systematic reduction in the reliance on borrowed funds to finance assets.
Solvency and Risk Profile: The reduction in financial leverage indicates an improvement in the company's solvency position. The transition to a lower ratio suggests a diminished risk of insolvency and a greater capacity to absorb potential losses, as a larger proportion of assets are now funded by equity rather than liabilities.
Capital Structure Analysis: The data reveals a strategic shift toward a more conservative capital structure. The decrease from a leverage ratio of 2.55 to 1.70 over five years demonstrates that the company has successfully deleveraged its balance sheet while simultaneously expanding its overall asset scale.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., interest coverage calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Net income attributable to ON Semiconductor Corporation	2,183,700)	1,902,200)	1,009,600)	234,200)	211,700)
Add: Net income attributable to noncontrolling interest	1,900)	1,600)	1,600)	2,200)	2,200)
Add: Income tax expense	350,200)	458,400)	146,600)	(59,800)	62,700)
Add: Interest expense	74,800)	94,900)	130,400)	168,400)	148,300)
Earnings before interest and tax (EBIT)	2,610,600)	2,457,100)	1,288,200)	345,000)	424,900)
Solvency Ratio
Interest coverage¹	34.90	25.89	9.88	2.05	2.87
Benchmarks
Interest Coverage, Competitors²
Advanced Micro Devices Inc.	5.79	14.61	109.09	—	—
Analog Devices Inc.	14.63	16.46	8.19	7.79	—
Applied Materials Inc.	33.42	34.33	29.69	18.36	—
Broadcom Inc.	10.31	8.16	4.59	2.37	—
Intel Corp.	1.87	16.66	37.35	—	—
KLA Corp.	13.76	22.76	16.00	—	—
Lam Research Corp.	28.40	29.11	21.95	—	—
Marvell Technology Inc.	1.50	-2.47	-3.65	—	—
Micron Technology Inc.	-13.58	51.66	35.18	—	—
NVIDIA Corp.	16.96	43.12	24.96	—	—
Qualcomm Inc.	11.72	31.61	19.38	10.50	—
Texas Instruments Inc.	22.01	47.88	49.47	—	—
Interest Coverage, Sector
Semiconductors & Semiconductor Equipment	10.17	20.45	18.07	—	—
Interest Coverage, Industry
Information Technology	17.37	22.18	19.66	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,610,600 ÷ 74,800 = 34.90

² Click competitor name to see calculations.

An analysis of the solvency metrics between 2019 and 2023 reveals a substantial strengthening of the company's ability to service its debt obligations. The financial trajectory is marked by a period of relative instability through 2020, followed by an aggressive upward trend in both operating profitability and debt coverage efficiency.

Earnings Before Interest and Tax (EBIT): Operating performance experienced a slight decline in 2020, dropping to 345,000 thousand US dollars. However, a significant expansion occurred starting in 2021, with EBIT rising to 1,288,200 thousand US dollars. This growth accelerated through 2022 and 2023, reaching a peak of 2,610,600 thousand US dollars, representing a total increase of approximately 514% from the 2019 baseline.
Interest Expense: Interest obligations peaked in 2020 at 168,400 thousand US dollars. Following this peak, a consistent downward trend is observed, with expenses decreasing annually to 74,800 thousand US dollars by December 31, 2023. This reduction suggests either a decrease in total debt principal or a restructuring of debt into lower-interest obligations.
Interest Coverage Ratio: The interest coverage ratio demonstrates a dramatic improvement in solvency. The ratio reached a low of 2.05 in 2020, indicating a tighter margin for debt servicing. From 2021 onward, the ratio surged to 9.88, 25.89, and finally 34.90 in 2023. This exponential increase is the result of the dual effect of rapidly growing operating earnings and simultaneously declining interest costs.

The convergence of expanding EBIT and reducing interest expenses has fundamentally altered the company's risk profile. The transition from a coverage ratio of 2.05 to 34.90 indicates that the company has moved from a position of moderate solvency to one of exceptional financial flexibility and minimal default risk regarding its interest payments.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

ON Semiconductor Corp., fixed charge coverage calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Net income attributable to ON Semiconductor Corporation	2,183,700)	1,902,200)	1,009,600)	234,200)	211,700)
Add: Net income attributable to noncontrolling interest	1,900)	1,600)	1,600)	2,200)	2,200)
Add: Income tax expense	350,200)	458,400)	146,600)	(59,800)	62,700)
Add: Interest expense	74,800)	94,900)	130,400)	168,400)	148,300)
Earnings before interest and tax (EBIT)	2,610,600)	2,457,100)	1,288,200)	345,000)	424,900)
Add: Operating lease expense	54,800)	60,200)	45,500)	46,500)	41,600)
Earnings before fixed charges and tax	2,665,400)	2,517,300)	1,333,700)	391,500)	466,500)

Interest expense	74,800)	94,900)	130,400)	168,400)	148,300)
Operating lease expense	54,800)	60,200)	45,500)	46,500)	41,600)
Fixed charges	129,600)	155,100)	175,900)	214,900)	189,900)
Solvency Ratio
Fixed charge coverage¹	20.57	16.23	7.58	1.82	2.46
Benchmarks
Fixed Charge Coverage, Competitors²
Advanced Micro Devices Inc.	3.18	6.82	36.00	—	—
Analog Devices Inc.	11.89	12.87	6.64	6.48	—
Applied Materials Inc.	23.69	24.67	22.50	14.48	—
Broadcom Inc.	9.81	6.55	3.70	1.92	—
Intel Corp.	1.59	7.34	16.56	—	—
KLA Corp.	12.19	18.72	13.03	—	—
Lam Research Corp.	20.49	21.44	17.80	—	—
Marvell Technology Inc.	1.39	-1.40	-1.75	—	—
NVIDIA Corp.	10.19	25.61	14.40	—	—
Qualcomm Inc.	9.29	22.52	14.48	8.30	—
Texas Instruments Inc.	18.41	36.70	36.25	—	—
Fixed Charge Coverage, Sector
Semiconductors & Semiconductor Equipment	8.27	14.17	12.68	—	—
Fixed Charge Coverage, Industry
Information Technology	11.23	13.28	12.13	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,665,400 ÷ 129,600 = 20.57

² Click competitor name to see calculations.

The analysis of solvency metrics from 2019 to 2023 reveals a substantial improvement in the capacity to meet fixed financial obligations. The period is characterized by a transition from a relatively tight coverage position to a high degree of financial flexibility, driven by a combination of significant operational growth and a strategic reduction in fixed costs.

Earnings Capacity: Earnings before fixed charges and tax experienced exponential growth following a brief decline in 2020. After reaching a low of US$ 391.5 million in 2020, these earnings rose sharply to US$ 1.33 billion in 2021 and continued to climb, reaching US$ 2.67 billion by the end of 2023. This trajectory indicates a marked increase in the cash flow available to service fixed liabilities.
Fixed Charge Obligations: Fixed charges have trended downward since 2020. After peaking at US$ 214.9 million in 2020, there has been a consistent year-over-year reduction, ending the period at US$ 129.6 million in 2023. The reduction in these obligations, occurring simultaneously with rising earnings, has significantly accelerated the improvement in the solvency profile.
Fixed Charge Coverage Ratio: The fixed charge coverage ratio demonstrates a stark upward trend, moving from 2.46 in 2019 to a peak of 20.57 in 2023. The most critical inflection point occurred between 2020 and 2021, where the ratio jumped from 1.82 to 7.58. This rapid expansion suggests a dramatic increase in the margin of safety, indicating that fixed charges are now covered more than twenty times over by earnings before interest and taxes.

AI Ask an analyst for more