Take-Two Interactive Software Inc. (NASDAQ:TTWO)

The financial data reveals several notable trends in the company’s leverage and ability to cover interest and fixed charges over the observed periods.

Leverage Ratios

The debt to equity ratio (including operating lease liability) remained very low and stable from 2020 to 2022, fluctuating between 0.05 and 0.07, but showed a marked increase from 2023 onwards, reaching 1.92 by 2025. The standard debt to equity ratio measurements also reflect this upward trend from 0.34 in 2023 to a significantly higher 1.71 by 2025.

Similarly, the debt to capital ratios, both standard and including operating lease liability, demonstrated low and steady levels until 2022, after which they increased progressively through 2025. The standard debt to capital ratio rose from 0.25 in 2023 to 0.63 in 2025, while the ratio including operating leases moved from 0.28 to 0.66 in the same period.

Debt to assets ratios also followed this increasing pattern, suggesting a growing proportion of debt relative to total assets. The ratio including operating leases advanced from 0.04-0.03 range before 2023 to 0.45 by 2025.

Financial leverage remained relatively stable from 2020 to 2023, between approximately 1.7 and 1.95, before sharply rising to 4.29 by 2025, indicating an increased reliance on debt financing relative to equity.

Coverage Ratios

The interest coverage ratio shows a significant decline over time. Initial levels were very high, 174.85 in 2020 and 110.2 in 2021, indicating robust capacity to cover interest expenses. The ratio then dropped steeply to 25.98 in 2022 and turned negative from 2023 onwards, with values deteriorating to -25.85 by 2025. This suggests the company is experiencing earnings insufficient to meet interest obligations in later years.

Fixed charge coverage ratios depict a similar trajectory. The metric was healthy through 2021, above 15, then declined steadily to negative territory from 2023, reaching -16.81 in 2025. This confirms increased difficulty in covering fixed financial obligations with available earnings.

In summary, the company exhibits a clear increase in leverage ratios starting in 2023, with rising debt relative to equity, capital, and assets, accompanied by higher financial leverage. Concurrently, coverage ratios plummet, turning negative, which signals deteriorating earnings relative to both interest and fixed financial charges. These trends indicate growing financial risk and potential challenges in meeting debt-related commitments in the most recent periods.

Total debt

The total debt values are only available from March 31, 2024, onwards. There is a slight increase from 3,079,800 thousand USD in 2024 to 3,082,900 thousand USD in 2025, followed by a more significant increase to 3,661,100 thousand USD in 2026. This indicates a rising trend in the company's debt levels over the most recent periods.

Stockholders’ equity

Stockholders’ equity shows a strong upward trajectory from 2,539,244 thousand USD in March 2020 to a peak of 9,042,500 thousand USD in March 2023. However, subsequent periods reflect a sharp decline to 5,667,900 thousand USD in 2024 and further down to 2,137,700 thousand USD in 2025. This suggests some volatility and potentially significant changes in the company’s equity base after the 2023 peak.

Debt to equity ratio

The debt to equity ratio data, available only from March 31, 2024, shows an increasing trend. It rose from 0.34 in 2024 to 0.54 in 2025 and further to 1.71 in 2026. This points to a growing reliance on debt financing relative to equity, with the ratio more than tripling in the most recent period, indicating a substantial shift in the company’s capital structure towards higher leverage.

Total Debt (including operating lease liability)

The total debt exhibited a gradual increase from 177,246 thousand US dollars in 2020 to 250,218 thousand US dollars in 2022. Subsequently, a significant surge in debt occurred in 2023, reaching 3,487,000 thousand US dollars, followed by continued growth to 3,534,000 thousand in 2024, and further to 4,105,900 thousand in 2025. This indicates a marked escalation in indebtedness over the most recent three years.

Stockholders’ Equity

Stockholders’ equity rose steadily from 2,539,244 thousand US dollars in 2020 to a peak of 9,042,500 thousand in 2023. However, the equity level sharply declined thereafter, falling to 5,667,900 thousand in 2024 and continuing downward to 2,137,700 thousand in 2025. This pattern suggests a significant reduction in equity following the peak year.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio remained relatively low and stable from 2020 through 2022, fluctuating slightly between 0.06 and 0.07. Starting in 2023, this ratio increased substantially, rising to 0.39, then accelerating to 0.62 in 2024, and sharply increasing to 1.92 by 2025. This trend reflects a growing reliance on debt relative to equity, with the leverage level reaching a notably high point in the final observed year.

Total Debt

The total debt data is only available starting from the fiscal year ending March 31, 2024. The amount shows a moderate increase from US$3,079,800 thousand in 2024 to US$3,082,900 thousand in 2025, followed by a more significant rise to US$3,661,100 thousand in 2026. This suggests a growing reliance on debt financing in the most recent periods.

Total Capital

Total capital rose consistently from approximately US$2,539,244 thousand in 2020 to a peak of US$12,122,300 thousand in 2023, indicating a substantial increase in overall financial resources or equity base during this period. However, after 2023, total capital declined sharply to US$8,750,800 thousand in 2024 and further to US$5,798,800 thousand in 2025. This decline may reflect changes such as capital withdrawals, asset write-downs, or increased liabilities.

Debt to Capital Ratio

The debt to capital ratio was not reported until 2024. For the fiscal years with data, the ratio increased from 0.25 in 2024 to 0.35 in 2025, and then significantly to 0.63 in 2026. This upward trend indicates that debt is comprising a larger proportion of the company's capital structure over time, highlighting a shift towards increased leverage and financial risk.

Summary of Trends

The available data reveal an overall trend of increasing debt levels beginning in the most recent periods, accompanied by a fluctuating capital base with a major peak followed by a notable decline post-2023. Correspondingly, the debt to capital ratio’s upward movement signifies enhanced leverage, which could imply greater financial risk or strategic borrowing to fund growth or operations. The absence of earlier debt and ratio data limits the ability to analyze longer-term leverage trends.

Total Debt (including operating lease liability)

The total debt remained relatively stable with a mild increase from 177,246 thousand US dollars in March 2020 to 250,218 thousand in March 2022. However, there is a significant surge from March 2023 onwards, with debt escalating sharply to 3,487,000 thousand US dollars, further increasing to 4,105,900 thousand by March 2025. This indicates a notable rise in leverage or borrowing during the latter periods.

Total Capital (including operating lease liability)

Total capital followed an upward trend from 2,716,490 thousand in March 2020, reaching a peak of 12,529,500 thousand in March 2023. Nevertheless, this was followed by a pronounced decline, dropping to 6,243,600 thousand by March 2025. The data suggests an expansion phase up to 2023, with a subsequent contraction in capital base over the next two years.

Debt to Capital Ratio (including operating lease liability)

This ratio was very low and stable between March 2020 and March 2022, fluctuating from 0.07 to 0.06, indicating a conservative capital structure with low leverage. Starting from March 2023, the debt to capital ratio increases markedly, climbing from 0.28 to 0.66 by March 2025. This trend denotes a substantial increase in the proportion of debt relative to total capital, which implies a shift towards higher financial risk and potentially greater reliance on debt financing.

Total Debt

The total debt figures are available starting from the fiscal year ending March 31, 2023, showing an initial amount of approximately 3.08 billion US dollars. This slightly increased to about 3.08 billion US dollars in 2024, followed by a more significant rise to approximately 3.66 billion US dollars in 2025. This indicates a growing reliance on debt financing over the most recent years under review.

Total Assets

Total assets demonstrate a strong upward trend initially, increasing from roughly 4.95 billion US dollars in 2020 to a peak of around 15.86 billion US dollars in 2023. However, this is followed by a considerable decline to approximately 12.22 billion US dollars in 2024 and a further reduction to about 9.18 billion US dollars in 2025. The pattern suggests substantial asset growth over the early years with a contraction in asset base over the last two reported years.

Debt to Assets Ratio

The debt to assets ratio data is present for the last three years, showing an increasing trend: 0.19 in 2023, 0.25 in 2024, and 0.40 in 2025. This signifies that the proportion of debt relative to assets has steadily risen, indicating a higher leverage ratio and potentially greater financial risk exposure during the latter periods.

Overall Analysis

The financial data reflects a period of notable asset expansion up to 2023, followed by a contraction in the subsequent two years. In parallel, total debt has increased, especially marked by a sharp rise in the final year observed. Consequently, the rising debt to assets ratio highlights an increasing dependence on debt relative to the asset base. These trends suggest a shift in the company's capital structure toward higher leverage, which may imply increased financial risk and potential challenges in managing obligations if the asset base continues to shrink while debt grows.

The data reveals significant changes in the financial position over the periods presented. Total debt, including operating lease liability, generally increased steadily from 2020 through 2022, then experienced a dramatic escalation starting in 2023, continuing to rise sharply through 2025. Specifically, total debt jumped from approximately 250 million US dollars in 2022 to over 3.4 billion by 2023 and continued growing to more than 4.1 billion by 2025.

Total assets showed growth from 2020 through 2023, peaking at nearly 15.9 billion US dollars in 2023. However, after that peak, total assets declined notably in the subsequent years, dropping to about 12.2 billion in 2024 and further to roughly 9.2 billion in 2025.

The debt to assets ratio remained relatively low and stable between 0.03 and 0.04 from 2020 to 2022, indicating a conservative leverage position during those years. Starting in 2023, the ratio increased substantially, reflecting the surge in total debt relative to total assets. The ratio doubled from 0.22 in 2023 to 0.29 in 2024 and then increased further to 0.45 in 2025, indicating a significant increase in leverage and financial risk.

Summary of Trends

The data suggests an aggressive increase in borrowing and financial leverage beginning in 2023, coinciding with a peak and then substantial decline in total assets. This shift implies increasing dependency on debt financing amidst a contracting asset base, which may point to strategic investments, potential write-downs, or other financial restructuring activities during the latest years covered.

The marked rise in the debt to assets ratio from a historically low level to nearly half indicates a notable change in the company's capital structure and risk profile. This evolution warrants close attention to cash flow management and debt servicing capacity in future periods.

Total Assets

Total assets demonstrated a consistent upward trajectory from March 31, 2020, through March 31, 2023, increasing from approximately $4.95 billion to $15.86 billion. This marked growth indicates significant asset accumulation, more than tripling over three years. However, from March 31, 2023, total assets declined to $12.22 billion in 2024 and further to $9.18 billion in 2025, signaling a contraction phase following the earlier expansion.

Stockholders' Equity

Stockholders' equity showed a steady increase from $2.54 billion in 2020 to $9.04 billion in 2023, closely mirroring the asset growth trend and suggesting strong equity capital formation over this period. Post-2023, equity decreased substantially to $5.67 billion in 2024 and further sharply to $2.14 billion in 2025. This significant reduction in equity indicates a possible retraction in retained earnings, potential dividend payments, share buybacks, or losses impacting equity value during these years.

Financial Leverage

Financial leverage, measured as a ratio, declined gradually from 1.95 in 2020 to 1.72 in 2022, indicating a modest reduction in reliance on debt relative to equity. It then slightly increased to 1.75 in 2023 before rising significantly to 2.16 in 2024 and sharply to 4.29 in 2025. The pronounced increase in leverage over the last two years suggests a substantial rise in debt levels or a reduction in equity, leading to increased financial risk and potential solvency concerns.

Earnings before interest and tax (EBIT)

The EBIT showed significant fluctuations over the analyzed periods. Initially, from March 31, 2020, to March 31, 2021, there was a strong increase from approximately 461 million to 684 million US dollars, reflecting improved operational profitability. However, this was followed by a sharp decline in the subsequent years. By March 31, 2022, EBIT decreased to around 484 million US dollars, marking a notable reduction. The trend worsened considerably in the periods following, with EBIT turning negative by March 31, 2023, reaching a loss of about 1.2 billion US dollars, and further declining to negative 3.56 billion and 4.32 billion US dollars in March 31, 2024 and March 31, 2025, respectively. This downward trajectory demonstrates a severe deterioration in operating performance in recent years.

Interest expense

The interest expense rose steadily across the examined time frame. Starting from a relatively low amount of approximately 2.6 million US dollars in March 31, 2020, it more than doubled to about 6.2 million US dollars in the following year. The increase accelerated over the subsequent periods, reaching roughly 18.6 million US dollars by March 31, 2022, and then surged dramatically to 129.6 million US dollars in March 31, 2023. The upward trend continued, culminating in interest expenses of approximately 140.6 million and 167.3 million US dollars in March 31, 2024 and March 31, 2025, respectively. This pattern reflects growing financial costs, likely linked to increased debt levels or higher interest rates.

Interest coverage ratio

The interest coverage ratio, which measures a company's ability to meet interest obligations from operating earnings, demonstrated a strong negative trend over the reported periods. Initially, it was very high at about 174.85 in March 31, 2020, indicating excellent coverage and low risk regarding servicing interest. Nevertheless, this ratio declined considerably over time: it dropped to 110.2 in March 31, 2021 and further to 25.98 by March 31, 2022, signaling a weakening capacity to cover interest expenses. Beginning from March 31, 2023, the ratio became negative (-9.32) and further deteriorated to -25.34 and -25.85 in the final two periods. Negative coverage ratios suggest that EBIT was insufficient to cover interest expenses, indicating operational losses and potential liquidity or solvency concerns.

Earnings before fixed charges and tax

From March 31, 2020 to March 31, 2021, earnings before fixed charges and tax showed a significant increase, rising from approximately 490 million to 721 million US dollars. However, the following year saw a notable decline to about 530 million US dollars. Starting March 31, 2023, the earnings turned negative, with figures worsening substantially over the subsequent years, reaching an estimated negative 4.24 billion US dollars by March 31, 2025. This demonstrates a marked deterioration in profitability and operational efficiency.

Fixed charges

Fixed charges exhibited a rising trend over the entire period. Beginning at around 32 million US dollars in 2020, these charges increased steadily, accelerating markedly from 2022 onwards. By March 31, 2023, fixed charges surged to approximately 239 million US dollars, and this level remained elevated through to 2025, reaching an estimated 252 million US dollars. This significant increase in fixed obligations may have contributed to the negative earnings observed in later years.

Fixed charge coverage ratio

The fixed charge coverage ratio started strong, with values well above 15 in 2020 and 2021, indicating ample earnings relative to fixed charges. However, the ratio dropped sharply in 2022 to just above 8, reflecting reduced income coverage. In 2023, the ratio turned negative at approximately -4.6, signifying earnings insufficient to cover fixed charges. This negative trend intensified through 2024 and 2025, with ratios reaching approximately -15.8 and -16.8 respectively, highlighting severe financial stress and inability to meet fixed financial obligations from operating earnings.