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
Teradyne Inc., solvency ratios
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).
An analysis of the solvency ratios indicates a significant and consistent reduction in financial leverage and a substantial improvement in the overall solvency position from 2019 through 2023. The company has aggressively reduced its reliance on debt relative to its equity, assets, and total capital, resulting in a highly conservative capital structure.
- Debt Utilization Ratios
- A pronounced downward trend is observed across all debt-relative metrics. The debt-to-equity ratio decreased from 0.27 in 2019 to 0.02 by 2022. When including operating lease liabilities, the ratio followed a similar trajectory, falling from 0.31 in 2019 to 0.03 in 2023. Similarly, the debt-to-assets ratio, including lease liabilities, declined from 0.17 in 2019 to 0.02 in 2023. These trends reflect a systematic reduction in total liabilities relative to the company's resource base.
- Capital Structure and Leverage
- The financial leverage ratio demonstrates a steady decline, moving from 1.88 in 2019 to 1.38 in 2023. This contraction indicates a shift toward a more equity-heavy financing model and a reduction in the use of borrowed funds to acquire assets. The debt-to-capital ratio, inclusive of operating lease liabilities, mirrored this trend, dropping from 0.24 in 2019 to 0.03 in 2023.
- Debt Service Capacity
- The capacity to meet financial obligations has strengthened considerably. The interest coverage ratio experienced exponential growth, rising from 23.72 in 2019 to a peak of 226.97 in 2022, before settling at 139.09 in 2023. This suggests an exceptional ability to service interest expenses from operating profits. The fixed charge coverage ratio also improved from 9.95 in 2019, peaking at 21.36 in 2021, and ending the period at 12.30 in 2023, maintaining a robust cushion for meeting fixed obligations.
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Debt to Equity
Teradyne Inc., 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 debt | —) | 50,115) | 19,182) | 33,343) | —) | |
| Long-term debt | —) | —) | 89,244) | 376,768) | 394,687) | |
| Total debt | —) | 50,115) | 108,426) | 410,111) | 394,687) | |
| Shareholders’ equity | 2,525,897) | 2,451,294) | 2,562,444) | 2,207,018) | 1,480,158) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.00 | 0.02 | 0.04 | 0.19 | 0.27 | |
| 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 ÷ Shareholders’ equity
= 0 ÷ 2,525,897 = 0.00
2 Click competitor name to see calculations.
An analysis of the solvency metrics reveals a significant and consistent reduction in financial leverage between 2019 and 2022. The organization transitioned from a modest debt position to a near-zero reliance on external debt financing, while simultaneously strengthening its equity base.
- Total Debt Trends
- Total debt experienced a slight increase from 394,687 thousand US$ in 2019 to 410,111 thousand US$ in 2020. However, a substantial contraction occurred thereafter, with debt levels falling sharply to 108,426 thousand US$ in 2021 and further decreasing to 50,115 thousand US$ by the end of 2022.
- Shareholders' Equity Growth
- Shareholders' equity demonstrated a strong upward trajectory, increasing from 1,480,158 thousand US$ in 2019 to 2,562,444 thousand US$ in 2021. Despite a marginal dip in 2022, the equity base recovered to 2,525,897 thousand US$ by December 31, 2023, indicating a robust accumulation of retained earnings or capital contributions.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio declined precipitously from 0.27 in 2019 to 0.02 in 2022. This downward trend is the result of the simultaneous reduction in total liabilities and the expansion of equity. The resulting ratio indicates an exceptionally low level of financial risk and a high degree of solvency, as the company's assets are overwhelmingly funded by equity rather than debt.
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Debt to Equity (including Operating Lease Liability)
Teradyne Inc., 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 debt | —) | 50,115) | 19,182) | 33,343) | —) | |
| Long-term debt | —) | —) | 89,244) | 376,768) | 394,687) | |
| Total debt | —) | 50,115) | 108,426) | 410,111) | 394,687) | |
| Current operating lease liabilities | 17,522) | 18,594) | 19,977) | 20,573) | 19,476) | |
| Long-term operating lease liabilities | 65,092) | 64,176) | 56,178) | 42,073) | 45,849) | |
| Total debt (including operating lease liability) | 82,614) | 132,885) | 184,581) | 472,757) | 460,012) | |
| Shareholders’ equity | 2,525,897) | 2,451,294) | 2,562,444) | 2,207,018) | 1,480,158) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.03 | 0.05 | 0.07 | 0.21 | 0.31 | |
| 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) ÷ Shareholders’ equity
= 82,614 ÷ 2,525,897 = 0.03
2 Click competitor name to see calculations.
The financial position of the company reflects a significant strengthening of its solvency profile between 2019 and 2023, characterized by a substantial reduction in leverage and a concurrent expansion of the equity base.
- Total Debt Trends
- Total debt, including operating lease liabilities, peaked in 2020 at 472,757 thousand US dollars. Following this peak, a consistent and sharp decline was observed, with the balance reducing to 82,614 thousand US dollars by the end of 2023. This represents a substantial contraction of the company's total debt obligations over the five-year period.
- Shareholders' Equity Growth
- Shareholders' equity experienced a notable upward trajectory, rising from 1,480,158 thousand US dollars in 2019 to 2,525,897 thousand US dollars in 2023. Although a slight fluctuation occurred in 2022, the overall trend indicates a significant accumulation of net assets, which has enhanced the company's financial stability.
- Debt to Equity Ratio Analysis
- The debt to equity ratio demonstrates a precipitous decline, falling from 0.31 in 2019 to 0.03 in 2023. This downward trend is the result of the dual effect of decreasing liabilities and increasing equity. The resulting ratio indicates a highly conservative capital structure with minimal reliance on borrowed funds relative to shareholder investments, suggesting a very low solvency risk.
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Debt to Capital
Teradyne Inc., 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 debt | —) | 50,115) | 19,182) | 33,343) | —) | |
| Long-term debt | —) | —) | 89,244) | 376,768) | 394,687) | |
| Total debt | —) | 50,115) | 108,426) | 410,111) | 394,687) | |
| Shareholders’ equity | 2,525,897) | 2,451,294) | 2,562,444) | 2,207,018) | 1,480,158) | |
| Total capital | 2,525,897) | 2,501,409) | 2,670,870) | 2,617,129) | 1,874,845) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.00 | 0.02 | 0.04 | 0.16 | 0.21 | |
| 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
= 0 ÷ 2,525,897 = 0.00
2 Click competitor name to see calculations.
An analysis of the solvency metrics reveals a significant deleveraging trend from 2019 through 2022. The company has aggressively reduced its total debt obligations while maintaining a stable capital base, resulting in a substantial decrease in the debt-to-capital ratio. This shift indicates a transition toward a more conservative capital structure with minimal reliance on external borrowing.
- Total Debt Evolution
- Total debt experienced a slight increase between 2019 and 2020, peaking at 410,111 thousand US$. Subsequently, a sharp decline occurred, with debt levels falling to 108,426 thousand US$ in 2021 and further reducing to 50,115 thousand US$ by the end of 2022. This represents a substantial reduction in total liabilities over the observed period.
- Total Capital Stability
- Total capital increased from 1,874,845 thousand US$ in 2019 to 2,617,129 thousand US$ in 2020. From 2020 through 2023, the capital base remained relatively consistent, fluctuating between approximately 2.5 billion and 2.7 billion US$, which suggests a stable foundation of equity and long-term funding.
- Debt to Capital Ratio Trend
- The debt to capital ratio demonstrates a consistent downward trajectory, falling from 0.21 in 2019 to 0.02 in 2022. This decline reflects a strategic reduction in financial leverage, which enhances the solvency position and minimizes the financial risks associated with debt servicing and interest obligations.
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Debt to Capital (including Operating Lease Liability)
Teradyne Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current debt | —) | 50,115) | 19,182) | 33,343) | —) | |
| Long-term debt | —) | —) | 89,244) | 376,768) | 394,687) | |
| Total debt | —) | 50,115) | 108,426) | 410,111) | 394,687) | |
| Current operating lease liabilities | 17,522) | 18,594) | 19,977) | 20,573) | 19,476) | |
| Long-term operating lease liabilities | 65,092) | 64,176) | 56,178) | 42,073) | 45,849) | |
| Total debt (including operating lease liability) | 82,614) | 132,885) | 184,581) | 472,757) | 460,012) | |
| Shareholders’ equity | 2,525,897) | 2,451,294) | 2,562,444) | 2,207,018) | 1,480,158) | |
| Total capital (including operating lease liability) | 2,608,511) | 2,584,179) | 2,747,025) | 2,679,775) | 1,940,170) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.03 | 0.05 | 0.07 | 0.18 | 0.24 | |
| 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)
= 82,614 ÷ 2,608,511 = 0.03
2 Click competitor name to see calculations.
A consistent and significant reduction in financial leverage is evident between 2019 and 2023. The organization has successfully decreased its reliance on borrowed funds, transitioning toward a capital structure predominantly financed by equity and internal reserves.
- Total Debt Trajectory
- Total debt, including operating lease liabilities, experienced a sharp and sustained decline over the five-year period. After reaching a peak of 472.7 million USD in 2020, debt levels dropped precipitously to 184.6 million USD in 2021. This downward trend continued through 2023, ending at 82.6 million USD, which represents a substantial reduction in total liabilities relative to the baseline established in 2019.
- Capital Base Stability
- Total capital remained robust and showed an overall increase, rising from 1.94 billion USD in 2019 to a peak of 2.75 billion USD in 2021. Although slight fluctuations occurred in 2022 and 2023, the capital base stabilized around 2.6 billion USD. The fact that total capital remained stable or grew while total debt plummeted indicates a deliberate strategic shift in the composition of the capital structure.
- Debt to Capital Ratio Analysis
- The debt to capital ratio exhibits a strong downward trend, declining from 0.24 in 2019 to 0.03 in 2023. The most aggressive deleveraging occurred between 2020 and 2021, where the ratio fell from 0.18 to 0.07. By the end of 2023, the ratio reached a negligible level, signifying an extremely low solvency risk and an enhanced capacity for future financial flexibility.
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Debt to Assets
Teradyne Inc., 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 debt | —) | 50,115) | 19,182) | 33,343) | —) | |
| Long-term debt | —) | —) | 89,244) | 376,768) | 394,687) | |
| Total debt | —) | 50,115) | 108,426) | 410,111) | 394,687) | |
| Total assets | 3,486,824) | 3,501,252) | 3,809,425) | 3,652,346) | 2,787,014) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.00 | 0.01 | 0.03 | 0.11 | 0.14 | |
| 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
= 0 ÷ 3,486,824 = 0.00
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2019 to 2022 reveals a consistent and significant reduction in financial leverage. The organization has transitioned from a modest reliance on debt to a nearly debt-free asset structure, substantially strengthening its solvency position.
- Debt to Assets Ratio Trend
- A strong downward trend is observed in the debt to assets ratio, which declined from 0.14 in 2019 to 0.01 by the end of 2022. This indicates that the proportion of assets financed through debt has decreased almost entirely over the period, reflecting a strategic shift toward equity-based financing or the use of internal cash flows to retire liabilities.
- Total Debt Trajectory
- Total debt remained relatively stable between 2019 and 2020, reaching a peak of 410,111 thousand US$. However, a sharp contraction occurred thereafter, with debt falling to 108,426 thousand US$ in 2021 and further decreasing to 50,115 thousand US$ in 2022. This aggressive deleveraging significantly reduced the company's financial risk.
- Asset Base Dynamics
- Total assets experienced growth from 2,787,014 thousand US$ in 2019 to a peak of 3,809,425 thousand US$ in 2021. While assets saw a slight contraction to 3,486,824 thousand US$ by 2023, the overall asset base remained substantially higher than 2019 levels. The combination of an expanding asset base and rapidly declining debt between 2020 and 2022 acted as the primary driver for the improved solvency ratios.
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Debt to Assets (including Operating Lease Liability)
Teradyne Inc., 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 debt | —) | 50,115) | 19,182) | 33,343) | —) | |
| Long-term debt | —) | —) | 89,244) | 376,768) | 394,687) | |
| Total debt | —) | 50,115) | 108,426) | 410,111) | 394,687) | |
| Current operating lease liabilities | 17,522) | 18,594) | 19,977) | 20,573) | 19,476) | |
| Long-term operating lease liabilities | 65,092) | 64,176) | 56,178) | 42,073) | 45,849) | |
| Total debt (including operating lease liability) | 82,614) | 132,885) | 184,581) | 472,757) | 460,012) | |
| Total assets | 3,486,824) | 3,501,252) | 3,809,425) | 3,652,346) | 2,787,014) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.02 | 0.04 | 0.05 | 0.13 | 0.17 | |
| 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
= 82,614 ÷ 3,486,824 = 0.02
2 Click competitor name to see calculations.
A comprehensive analysis of the solvency metrics from 2019 to 2023 reveals a significant and consistent reduction in financial leverage. The company has transitioned from a moderate debt position to a highly conservative capital structure, characterized by a substantial decrease in total liabilities relative to its asset base.
- Total Debt Trajectory
- Total debt, including operating lease liabilities, exhibited a slight increase between 2019 and 2020, peaking at 472,757 thousand US dollars. However, a sharp reversal occurred in 2021, with debt levels falling to 184,581 thousand US dollars. This downward trend persisted through 2023, where total debt reached a period low of 82,614 thousand US dollars, representing a reduction of approximately 82.5% from the 2020 peak.
- Total Asset Evolution
- Total assets experienced significant growth in the early part of the period, rising from 2,787,014 thousand US dollars in 2019 to a peak of 3,809,425 thousand US dollars in 2021. Following this expansion, asset levels stabilized and saw a slight contraction, ending at 3,486,824 thousand US dollars by December 31, 2023.
- Debt to Assets Ratio Analysis
- The debt to assets ratio demonstrates a strong downward trend, moving from 0.17 in 2019 to 0.02 in 2023. The most pronounced decline took place between 2020 and 2021, where the ratio dropped from 0.13 to 0.05. This trajectory indicates that a decreasing proportion of the company's assets is financed through debt, significantly enhancing the overall solvency position and reducing financial risk over the five-year horizon.
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Financial Leverage
Teradyne Inc., 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 | 3,486,824) | 3,501,252) | 3,809,425) | 3,652,346) | 2,787,014) | |
| Shareholders’ equity | 2,525,897) | 2,451,294) | 2,562,444) | 2,207,018) | 1,480,158) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.38 | 1.43 | 1.49 | 1.65 | 1.88 | |
| 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 ÷ Shareholders’ equity
= 3,486,824 ÷ 2,525,897 = 1.38
2 Click competitor name to see calculations.
A consistent reduction in financial leverage is evident from 2019 to 2023, signaling a strategic shift toward a more conservative capital structure. The steady decline in the financial leverage ratio indicates a diminishing reliance on external liabilities to fund assets, thereby enhancing the long-term solvency profile of the organization.
- Financial Leverage Trend
- The financial leverage ratio decreased monotonically over the five-year period, moving from 1.88 in 2019 to 1.38 in 2023. This downward trajectory reflects a reduction in the multiplier effect of debt, suggesting a lower risk profile regarding interest obligations and debt repayment.
- Growth in Shareholders' Equity
- Shareholders' equity grew substantially from 1.48 billion USD in 2019 to 2.53 billion USD in 2023. This expansion of the equity base indicates strong retention of earnings or capital contributions, which has served as the primary driver for the decreasing leverage ratio.
- Asset Base Dynamics
- Total assets increased from 2.79 billion USD in 2019 to a peak of 3.81 billion USD in 2021, followed by a slight contraction to 3.49 billion USD by the end of 2023. The fact that the leverage ratio continued to fall even while assets remained relatively stable demonstrates that the growth in equity outperformed the growth in total assets.
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Interest Coverage
Teradyne Inc., 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 | 448,752) | 715,501) | 1,014,589) | 784,147) | 467,468) | |
| Add: Income tax expense | 76,820) | 124,884) | 146,366) | 116,868) | 58,304) | |
| Add: Interest expense | 3,806) | 3,719) | 17,820) | 24,182) | 23,145) | |
| Earnings before interest and tax (EBIT) | 529,378) | 844,104) | 1,178,775) | 925,197) | 548,917) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 139.09 | 226.97 | 66.15 | 38.26 | 23.72 | |
| 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
= 529,378 ÷ 3,806 = 139.09
2 Click competitor name to see calculations.
The solvency profile from 2019 to 2023 demonstrates a significant strengthening of the interest coverage ratio, indicating a substantially increased capacity to service debt obligations despite volatility in operating earnings.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating earnings experienced a period of strong growth between 2019 and 2021, peaking at 1,178,775 thousand US dollars. This growth was followed by a contraction in 2022 and 2023, with EBIT declining to 529,378 thousand US dollars by the end of the period, returning to levels similar to those observed in 2019.
- Interest Expense Analysis
- Interest expenses were relatively stable from 2019 through 2021, fluctuating between 17,820 and 24,182 thousand US dollars. A sharp decline occurred in 2022, with expenses dropping to 3,719 thousand US dollars and remaining nearly constant at 3,806 thousand US dollars in 2023. This suggests a significant reduction in total debt or a strategic restructuring of liabilities.
- Interest Coverage Ratio Interpretation
- The interest coverage ratio rose consistently from 23.72 in 2019 to a peak of 226.97 in 2022. Although the ratio decreased to 139.09 in 2023, the overall trend reflects a massive improvement in solvency. The surge in the ratio during 2022 and 2023, occurring even as EBIT declined, is primarily driven by the drastic reduction in interest expenses, which far outweighed the decrease in operating income.
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Fixed Charge Coverage
Teradyne Inc., 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 | 448,752) | 715,501) | 1,014,589) | 784,147) | 467,468) | |
| Add: Income tax expense | 76,820) | 124,884) | 146,366) | 116,868) | 58,304) | |
| Add: Interest expense | 3,806) | 3,719) | 17,820) | 24,182) | 23,145) | |
| Earnings before interest and tax (EBIT) | 529,378) | 844,104) | 1,178,775) | 925,197) | 548,917) | |
| Add: Lease expense | 42,700) | 40,100) | 39,200) | 38,500) | 35,600) | |
| Earnings before fixed charges and tax | 572,078) | 884,204) | 1,217,975) | 963,697) | 584,517) | |
| Interest expense | 3,806) | 3,719) | 17,820) | 24,182) | 23,145) | |
| Lease expense | 42,700) | 40,100) | 39,200) | 38,500) | 35,600) | |
| Fixed charges | 46,506) | 43,819) | 57,020) | 62,682) | 58,745) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 12.30 | 20.18 | 21.36 | 15.37 | 9.95 | |
| 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
= 572,078 ÷ 46,506 = 12.30
2 Click competitor name to see calculations.
The fixed charge coverage ratio exhibits a cyclical trend over the five-year period, characterized by a significant expansion reaching a peak in 2021, followed by a contraction through 2023. Despite the recent decline, the ratio remains substantially above 1.0, indicating a strong capacity to meet fixed financial obligations from operational earnings.
- Earnings before fixed charges and tax
- A bell-shaped trajectory is observed in earnings, which rose from 584,517 thousand US$ in 2019 to a peak of 1,217,975 thousand US$ in 2021. This growth was followed by a downward trend, with earnings decreasing to 572,078 thousand US$ by December 31, 2023, effectively returning to the baseline levels seen at the start of the period.
- Fixed charges
- Fixed obligations remained relatively stable with a slight overall decrease. After peaking at 62,682 thousand US$ in 2020, fixed charges declined to 46,506 thousand US$ by 2023. This relative stability indicates that the fluctuations in the coverage ratio are driven primarily by operational performance rather than changes in the debt or lease structure.
- Fixed charge coverage ratio
- The ratio increased from 9.95 in 2019 to a maximum of 21.36 in 2021, reflecting a period of heightened solvency and efficiency. The decline to 12.30 by the end of 2023 correlates directly with the reduction in earnings before fixed charges and tax. Nevertheless, the maintenance of a double-digit ratio through 2023 suggests a conservative solvency profile with ample headroom to cover fixed costs.
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