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
Western Digital Corp., solvency ratios
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
An analysis of the solvency profile reveals a general trend of deleveraging and a reduction in long-term financial risk regarding capital structure, contrasted by significant volatility and a recent deterioration in short-term debt service capabilities.
- Capital Structure and Leverage
- A consistent downward trend is observed in leverage ratios from 2019 through 2023. The debt-to-equity ratio peaked at 1.06 in 2019 before declining to 0.60 by June 2023. Similarly, the debt-to-capital ratio decreased from a high of 0.51 in 2019 to 0.38 in 2023. This indicates a strategic shift toward a more equity-heavy capital structure, reducing the relative reliance on borrowed funds. This trend is further supported by the financial leverage ratio, which declined steadily from 2.65 in 2019 to 2.08 in 2023.
- Asset-Based Solvency
- The debt-to-assets ratio shows a mirrored decline, falling from 0.40 in 2019 to 0.29 in 2023. The inclusion of operating lease liabilities results in only a marginal increase in these ratios, suggesting that lease obligations do not significantly alter the overall solvency risk profile. The reduction in the debt-to-assets ratio suggests that a smaller proportion of the company's total assets are financed through debt over the analyzed period.
- Debt Service Coverage
- In contrast to the improving leverage ratios, the coverage ratios exhibit extreme volatility and a severe downturn in the most recent period. The interest coverage ratio fluctuated significantly, dropping from 4.08 in 2018 to 0.39 in 2019, recovering to a peak of 7.98 in 2022, before falling to -4.00 in 2023. The fixed charge coverage ratio followed an identical pattern, ending at -2.98 in 2023. These negative values indicate that earnings were insufficient to cover interest and fixed charges during the 2023 fiscal year, signaling a critical short-term solvency challenge despite the overall lower debt levels.
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?
Debt to Equity
Western Digital Corp., debt to equity calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current portion of long-term debt | 1,213) | —) | 251) | 286) | 276) | 179) | |
| Long-term debt, less current portion | 5,857) | 7,022) | 8,474) | 9,289) | 10,246) | 10,993) | |
| Total debt | 7,070) | 7,022) | 8,725) | 9,575) | 10,522) | 11,172) | |
| Shareholders’ equity | 11,723) | 12,221) | 10,721) | 9,551) | 9,967) | 11,531) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.60 | 0.57 | 0.81 | 1.00 | 1.06 | 0.97 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Apple Inc. | 1.80 | 2.39 | 1.99 | — | — | — | |
| Arista Networks Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| Cisco Systems Inc. | 0.19 | 0.24 | 0.28 | — | — | — | |
| Dell Technologies Inc. | — | — | 19.36 | — | — | — | |
| Lumentum Holdings Inc. | 2.07 | 1.00 | 0.60 | — | — | — | |
| Super Micro Computer Inc. | 0.15 | 0.42 | 0.09 | — | — | — | |
| Debt to Equity, Sector | |||||||
| Technology Hardware & Equipment | 1.34 | 1.65 | 1.64 | — | — | — | |
| Debt to Equity, Industry | |||||||
| Information Technology | 0.66 | 0.70 | 0.83 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 7,070 ÷ 11,723 = 0.60
2 Click competitor name to see calculations.
An analysis of the solvency ratios reveals a significant improvement in financial leverage over the six-year period ending June 30, 2023. The trajectory indicates a strategic shift toward a more conservative capital structure, characterized by a sustained reduction in total debt and a general recovery in shareholders' equity.
- Total Debt Trend
- A consistent downward trend in total debt is observed from June 29, 2018, to July 1, 2022, with obligations decreasing from US$ 11,172 million to US$ 7,022 million. A marginal increase to US$ 7,070 million occurred by June 30, 2023, though the overall debt load remains substantially lower than at the start of the period.
- Shareholders' Equity Fluctuations
- Shareholders' equity exhibited volatility between 2018 and 2020, declining from US$ 11,531 million to a low of US$ 9,551 million. A recovery followed, with equity peaking at US$ 12,221 million in 2022 before a slight correction to US$ 11,723 million in 2023.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio peaked at 1.06 in June 28, 2019, indicating a period where liabilities exceeded equity. Subsequently, a steady decline was recorded, reaching a low of 0.57 in July 1, 2022. The ratio ended at 0.60 in June 30, 2023, signifying a strengthened solvency position and a reduced reliance on borrowed capital to fund assets.
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?
Debt to Equity (including Operating Lease Liability)
Western Digital Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current portion of long-term debt | 1,213) | —) | 251) | 286) | 276) | 179) | |
| Long-term debt, less current portion | 5,857) | 7,022) | 8,474) | 9,289) | 10,246) | 10,993) | |
| Total debt | 7,070) | 7,022) | 8,725) | 9,575) | 10,522) | 11,172) | |
| Current portion of operating lease liabilities (included in Accrued expenses) | 40) | 40) | 33) | 36) | —) | —) | |
| Long-term operating lease liabilities (included in Other liabilities) | 244) | 277) | 204) | 209) | —) | —) | |
| Total debt (including operating lease liability) | 7,354) | 7,339) | 8,962) | 9,820) | 10,522) | 11,172) | |
| Shareholders’ equity | 11,723) | 12,221) | 10,721) | 9,551) | 9,967) | 11,531) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 0.63 | 0.60 | 0.84 | 1.03 | 1.06 | 0.97 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Apple Inc. | 1.99 | 2.61 | 2.16 | — | — | — | |
| Arista Networks Inc. | 0.01 | 0.01 | 0.02 | — | — | — | |
| Cisco Systems Inc. | 0.21 | 0.27 | 0.31 | — | — | — | |
| Dell Technologies Inc. | — | — | 20.25 | — | — | — | |
| Lumentum Holdings Inc. | 2.12 | 1.03 | 0.63 | — | — | — | |
| Super Micro Computer Inc. | 0.16 | 0.44 | 0.11 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Technology Hardware & Equipment | 1.47 | 1.79 | 1.76 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.72 | 0.76 | 0.90 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Shareholders’ equity
= 7,354 ÷ 11,723 = 0.63
2 Click competitor name to see calculations.
The analysis of solvency ratios from 2018 to 2023 reveals a consistent strengthening of the financial position, characterized by a sustained reduction in total leverage and an overall improvement in the equity cushion.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a steady downward trajectory for most of the analyzed period. From a peak of US$ 11,172 million in June 2018, debt levels decreased annually, reaching US$ 7,339 million by July 2022. A marginal increase to US$ 7,354 million was observed in June 2023, indicating a stabilization of total liabilities after four years of consistent reduction.
- Shareholders' Equity Fluctuations
- Shareholders' equity experienced a period of contraction between 2018 and 2020, falling from US$ 11,531 million to a low of US$ 9,551 million. A subsequent recovery trend was observed from 2021 through 2022, with equity peaking at US$ 12,221 million. This was followed by a slight contraction to US$ 11,723 million in June 2023.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio peaked at 1.06 in June 2019, signifying a period where total liabilities exceeded shareholders' equity. Following this peak, a significant downward trend occurred, with the ratio dropping to 0.84 in 2021 and reaching a low of 0.60 in July 2022. The final ratio of 0.63 in June 2023 confirms a structural shift toward a less leveraged capital structure, reducing the company's long-term financial risk relative to its earlier solvency profile.
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?
Debt to Capital
Western Digital Corp., debt to capital calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current portion of long-term debt | 1,213) | —) | 251) | 286) | 276) | 179) | |
| Long-term debt, less current portion | 5,857) | 7,022) | 8,474) | 9,289) | 10,246) | 10,993) | |
| Total debt | 7,070) | 7,022) | 8,725) | 9,575) | 10,522) | 11,172) | |
| Shareholders’ equity | 11,723) | 12,221) | 10,721) | 9,551) | 9,967) | 11,531) | |
| Total capital | 18,793) | 19,243) | 19,446) | 19,126) | 20,489) | 22,703) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.38 | 0.36 | 0.45 | 0.50 | 0.51 | 0.49 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Apple Inc. | 0.64 | 0.70 | 0.67 | — | — | — | |
| Arista Networks Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| Cisco Systems Inc. | 0.16 | 0.19 | 0.22 | — | — | — | |
| Dell Technologies Inc. | 1.12 | 1.07 | 0.95 | — | — | — | |
| Lumentum Holdings Inc. | 0.67 | 0.50 | 0.37 | — | — | — | |
| Super Micro Computer Inc. | 0.13 | 0.30 | 0.08 | — | — | — | |
| Debt to Capital, Sector | |||||||
| Technology Hardware & Equipment | 0.57 | 0.62 | 0.62 | — | — | — | |
| Debt to Capital, Industry | |||||||
| Information Technology | 0.40 | 0.41 | 0.45 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 7,070 ÷ 18,793 = 0.38
2 Click competitor name to see calculations.
The analysis of solvency indicators from June 2018 to June 2023 reveals a consistent trajectory toward deleveraging. There is a clear trend of reducing the organization's reliance on borrowed funds relative to its total capital base, signaling an improvement in long-term solvency and a reduction in financial risk.
- Total Debt Trends
- Total debt experienced a sustained decline for the majority of the analyzed period, decreasing from US$ 11,172 million in 2018 to a low of US$ 7,022 million in 2022. This represents a significant reduction in absolute liabilities over five years. A slight reversal occurred in 2023, with total debt increasing marginally to US$ 7,070 million, though this remains substantially lower than the 2018 baseline.
- Total Capital Dynamics
- Total capital exhibited a general downward trend, moving from US$ 22,703 million in 2018 to US$ 18,793 million in 2023. While total capital decreased, the rate of decline was less aggressive than that of total debt, particularly between 2020 and 2022, where capital levels remained relatively stable between US$ 19,126 million and US$ 19,446 million.
- Debt to Capital Ratio Interpretation
- The debt to capital ratio remained stagnant around the 0.50 mark between 2018 and 2020. A pivot occurred in 2021, with the ratio dropping to 0.45, followed by a sharp decline to a period minimum of 0.36 in 2022. The ratio ended the period at 0.38 in 2023. This contraction indicates that debt is comprising a smaller proportion of the overall capital structure, reflecting a strategic shift toward a more conservative financial 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?
Debt to Capital (including Operating Lease Liability)
Western Digital Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current portion of long-term debt | 1,213) | —) | 251) | 286) | 276) | 179) | |
| Long-term debt, less current portion | 5,857) | 7,022) | 8,474) | 9,289) | 10,246) | 10,993) | |
| Total debt | 7,070) | 7,022) | 8,725) | 9,575) | 10,522) | 11,172) | |
| Current portion of operating lease liabilities (included in Accrued expenses) | 40) | 40) | 33) | 36) | —) | —) | |
| Long-term operating lease liabilities (included in Other liabilities) | 244) | 277) | 204) | 209) | —) | —) | |
| Total debt (including operating lease liability) | 7,354) | 7,339) | 8,962) | 9,820) | 10,522) | 11,172) | |
| Shareholders’ equity | 11,723) | 12,221) | 10,721) | 9,551) | 9,967) | 11,531) | |
| Total capital (including operating lease liability) | 19,077) | 19,560) | 19,683) | 19,371) | 20,489) | 22,703) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.39 | 0.38 | 0.46 | 0.51 | 0.51 | 0.49 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Apple Inc. | 0.67 | 0.72 | 0.68 | — | — | — | |
| Arista Networks Inc. | 0.01 | 0.01 | 0.02 | — | — | — | |
| Cisco Systems Inc. | 0.18 | 0.21 | 0.24 | — | — | — | |
| Dell Technologies Inc. | 1.11 | 1.06 | 0.95 | — | — | — | |
| Lumentum Holdings Inc. | 0.68 | 0.51 | 0.39 | — | — | — | |
| Super Micro Computer Inc. | 0.14 | 0.30 | 0.10 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Technology Hardware & Equipment | 0.59 | 0.64 | 0.64 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.42 | 0.43 | 0.47 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 7,354 ÷ 19,077 = 0.39
2 Click competitor name to see calculations.
Between June 2018 and June 2023, a consistent improvement in the solvency profile is evident, characterized by a systematic reduction in leverage relative to the total capital structure.
- Total Debt Trends
- Total debt, inclusive of operating lease liabilities, exhibited a continuous downward trajectory for the majority of the observed period. From a high of US$ 11,172 million in June 2018, obligations were reduced to US$ 7,354 million by June 2023. This represents a significant contraction in total liabilities, with the most pronounced decrease occurring between July 2021 and July 2022.
- Total Capital Trends
- Total capital experienced a general decline from US$ 22,703 million in 2018 to US$ 19,077 million in 2023. While the decline in total capital was less aggressive than the reduction in total debt, the overall contraction suggests a tightening of the financial structure coinciding with the deleveraging process.
- Debt to Capital Ratio Interpretation
- The debt to capital ratio remained relatively stable between 0.49 and 0.51 from 2018 through 2020, indicating a consistent leverage position. A meaningful shift occurred after July 2020, as the ratio declined to 0.46 in 2021 and reached a low of 0.38 in 2022. The ratio concluded the period at 0.39 in 2023, signaling a substantial reduction in the reliance on debt to fund the total capital base.
The observed patterns indicate a strategic shift toward a lower-leverage capital structure. Because the reduction in total debt outpaced the reduction in total capital, the overall solvency position strengthened significantly over the five-year period.
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?
Debt to Assets
Western Digital Corp., debt to assets calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current portion of long-term debt | 1,213) | —) | 251) | 286) | 276) | 179) | |
| Long-term debt, less current portion | 5,857) | 7,022) | 8,474) | 9,289) | 10,246) | 10,993) | |
| Total debt | 7,070) | 7,022) | 8,725) | 9,575) | 10,522) | 11,172) | |
| Total assets | 24,429) | 26,259) | 26,132) | 25,662) | 26,370) | 29,235) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.29 | 0.27 | 0.33 | 0.37 | 0.40 | 0.38 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Apple Inc. | 0.32 | 0.34 | 0.36 | — | — | — | |
| Arista Networks Inc. | 0.00 | 0.00 | 0.00 | — | — | — | |
| Cisco Systems Inc. | 0.08 | 0.10 | 0.12 | — | — | — | |
| Dell Technologies Inc. | 0.33 | 0.29 | 0.39 | — | — | — | |
| Lumentum Holdings Inc. | 0.61 | 0.45 | 0.33 | — | — | — | |
| Super Micro Computer Inc. | 0.08 | 0.19 | 0.04 | — | — | — | |
| Debt to Assets, Sector | |||||||
| Technology Hardware & Equipment | 0.27 | 0.29 | 0.32 | — | — | — | |
| Debt to Assets, Industry | |||||||
| Information Technology | 0.26 | 0.26 | 0.29 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 7,070 ÷ 24,429 = 0.29
2 Click competitor name to see calculations.
The financial trajectory from June 2018 to June 2023 indicates a strategic reduction in leverage and an overall improvement in the solvency position. A consistent deleveraging process is evident, as the company significantly reduced its total debt obligations relative to its total asset base over the analyzed period.
- Total Debt Trends
- A sustained downward trend in total debt is observed, decreasing from US$ 11,172 million in June 2018 to US$ 7,070 million by June 2023. This represents a substantial reduction in absolute liabilities. The most significant decline occurred between July 2021 and July 2022, where debt fell from US$ 8,725 million to US$ 7,022 million, before remaining relatively stable into 2023.
- Total Asset Fluctuations
- The total asset base experienced a general contraction over the six-year window, moving from US$ 29,235 million in 2018 to US$ 24,429 million in 2023. While there was a period of relative stability between 2020 and 2022, the overall decline in assets suggests a shrinking balance sheet, which typically would increase the debt-to-assets ratio if debt remained constant.
- Debt to Assets Ratio Analysis
- Despite the reduction in total assets, the debt to assets ratio improved overall, falling from 0.38 in 2018 to 0.29 in 2023. After a slight peak of 0.40 in 2019, the ratio declined consistently for three consecutive years, reaching a low of 0.27 in July 2022. This indicates that the pace of debt repayment exceeded the pace of asset depreciation or divestment. The marginal increase to 0.29 in June 2023 is attributed to a combination of a slight increase in total debt and a more pronounced decrease in total assets during that fiscal year.
In summary, the solvency profile has strengthened. The reduction in the debt to assets ratio suggests a lower risk profile and a decreased reliance on borrowed capital to fund the asset base, reflecting a more conservative financial structure as of June 2023 compared to June 2018.
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?
Debt to Assets (including Operating Lease Liability)
Western Digital Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current portion of long-term debt | 1,213) | —) | 251) | 286) | 276) | 179) | |
| Long-term debt, less current portion | 5,857) | 7,022) | 8,474) | 9,289) | 10,246) | 10,993) | |
| Total debt | 7,070) | 7,022) | 8,725) | 9,575) | 10,522) | 11,172) | |
| Current portion of operating lease liabilities (included in Accrued expenses) | 40) | 40) | 33) | 36) | —) | —) | |
| Long-term operating lease liabilities (included in Other liabilities) | 244) | 277) | 204) | 209) | —) | —) | |
| Total debt (including operating lease liability) | 7,354) | 7,339) | 8,962) | 9,820) | 10,522) | 11,172) | |
| Total assets | 24,429) | 26,259) | 26,132) | 25,662) | 26,370) | 29,235) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.30 | 0.28 | 0.34 | 0.38 | 0.40 | 0.38 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Apple Inc. | 0.35 | 0.38 | 0.39 | — | — | — | |
| Arista Networks Inc. | 0.01 | 0.01 | 0.01 | — | — | — | |
| Cisco Systems Inc. | 0.09 | 0.11 | 0.13 | — | — | — | |
| Dell Technologies Inc. | 0.34 | 0.30 | 0.41 | — | — | — | |
| Lumentum Holdings Inc. | 0.62 | 0.47 | 0.35 | — | — | — | |
| Super Micro Computer Inc. | 0.08 | 0.19 | 0.05 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Technology Hardware & Equipment | 0.30 | 0.31 | 0.34 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Information Technology | 0.28 | 0.29 | 0.31 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 7,354 ÷ 24,429 = 0.30
2 Click competitor name to see calculations.
The analysis of the solvency position from June 2018 through June 2023 reveals a general trajectory of deleveraging. While both total assets and total debt decreased over the observed period, the reduction in debt was more pronounced, contributing to an overall improvement in the company's solvency profile.
- Total Debt Trends
- A consistent downward trend in total debt, including operating lease liabilities, is observed between 2018 and 2022. Total debt decreased from US$ 11,172 million in June 2018 to US$ 7,339 million in July 2022. This reduction suggests a strategic effort to lower financial leverage, although the trend stabilized in 2023 with a marginal increase to US$ 7,354 million.
- Total Asset Variations
- Total assets experienced a contraction from US$ 29,235 million in 2018 to US$ 25,662 million by July 2020. After a period of relative stability between 2020 and 2022, where assets remained around US$ 26 billion, a further decrease to US$ 24,429 million was recorded by June 2023.
- Debt to Assets Ratio Analysis
- The debt to assets ratio peaked at 0.40 in June 2019, indicating that 40% of the asset base was funded by debt. A steady decline followed, reaching a minimum of 0.28 in July 2022. The slight increase to 0.30 in June 2023 is attributable to the simultaneous decline in total assets and the stabilization of total debt levels. Despite this final uptick, the ratio remains significantly lower than the levels observed between 2018 and 2020, reflecting a reduction in financial risk and an increased proportion of asset financing through 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?
Financial Leverage
Western Digital Corp., financial leverage calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 24,429) | 26,259) | 26,132) | 25,662) | 26,370) | 29,235) | |
| Shareholders’ equity | 11,723) | 12,221) | 10,721) | 9,551) | 9,967) | 11,531) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 2.08 | 2.15 | 2.44 | 2.69 | 2.65 | 2.54 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Apple Inc. | 5.67 | 6.96 | 5.56 | — | — | — | |
| Arista Networks Inc. | 1.38 | 1.39 | 1.44 | — | — | — | |
| Cisco Systems Inc. | 2.30 | 2.36 | 2.36 | — | — | — | |
| Dell Technologies Inc. | — | — | 49.78 | — | — | — | |
| Lumentum Holdings Inc. | 3.42 | 2.22 | 1.80 | — | — | — | |
| Super Micro Computer Inc. | 1.86 | 2.25 | 2.05 | — | — | — | |
| Financial Leverage, Sector | |||||||
| Technology Hardware & Equipment | 4.94 | 5.71 | 5.12 | — | — | — | |
| Financial Leverage, Industry | |||||||
| Information Technology | 2.53 | 2.65 | 2.87 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 24,429 ÷ 11,723 = 2.08
2 Click competitor name to see calculations.
An analysis of the solvency ratios from June 2018 to June 2023 reveals a strategic shift in capital structure, characterized by an initial period of increasing leverage followed by a sustained reduction in financial risk.
- Financial Leverage Trend
- The financial leverage ratio exhibited a gradual increase during the first three years of the period, rising from 2.54 in 2018 to a peak of 2.69 in 2020. Following this peak, a consistent downward trajectory is observed, with the ratio declining to 2.44 in 2021, 2.15 in 2022, and reaching a low of 2.08 by June 2023. This trend indicates a systematic reduction in the proportion of debt used to finance the company's assets.
- Total Assets Evolution
- Total assets experienced an overall contraction over the six-year period. From a starting value of 29,235 million USD in 2018, assets declined to 25,662 million USD by 2020. Despite a modest recovery between 2021 and 2022, the asset base ultimately decreased to 24,429 million USD in 2023, representing a total reduction of approximately 16.4% compared to 2018 levels.
- Shareholders' Equity Dynamics
- Shareholders' equity demonstrated significant volatility, initially declining from 11,531 million USD in 2018 to a minimum of 9,551 million USD in 2020. A subsequent recovery phase saw equity grow to a peak of 12,221 million USD in 2022, before adjusting to 11,723 million USD in 2023. The expansion of the equity base from 2021 onward acted as a primary driver in lowering the overall financial leverage ratio.
The combination of a contracting asset base and a strengthened equity position has resulted in a lower financial leverage ratio, suggesting a transition toward a more conservative balance sheet and an improved solvency profile by the end of the analyzed period.
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?
Interest Coverage
Western Digital Corp., interest coverage calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income (loss) | (1,706) | 1,500) | 821) | (250) | (754) | 675) | |
| Add: Income tax expense | 146) | 623) | 106) | 204) | 467) | 1,410) | |
| Add: Interest expense | 312) | 304) | 326) | 413) | 469) | 676) | |
| Earnings before interest and tax (EBIT) | (1,248) | 2,427) | 1,253) | 367) | 182) | 2,761) | |
| Solvency Ratio | |||||||
| Interest coverage1 | -4.00 | 7.98 | 3.84 | 0.89 | 0.39 | 4.08 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Apple Inc. | 29.92 | 41.64 | 42.29 | — | — | — | |
| Arista Networks Inc. | — | — | — | — | — | — | |
| Cisco Systems Inc. | 36.87 | 41.21 | 31.56 | — | — | — | |
| Dell Technologies Inc. | 3.64 | 4.84 | 2.54 | — | — | — | |
| Lumentum Holdings Inc. | -1.88 | 3.93 | 7.94 | — | — | — | |
| Super Micro Computer Inc. | 72.55 | 53.71 | 48.81 | — | — | — | |
| Interest Coverage, Sector | |||||||
| Technology Hardware & Equipment | 25.05 | 29.79 | 24.05 | — | — | — | |
| Interest Coverage, Industry | |||||||
| Information Technology | 17.37 | 22.18 | 19.66 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= -1,248 ÷ 312 = -4.00
2 Click competitor name to see calculations.
The solvency profile of the organization over the six-year period analyzed is characterized by extreme volatility in operating performance, which has directly impacted the ability to service debt obligations. While interest expenses have generally trended downward, the erratic nature of earnings before interest and tax has led to significant fluctuations in the interest coverage ratio, culminating in a critical deficit in the most recent fiscal year.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating earnings exhibited severe instability. Following a strong performance in 2018, EBIT collapsed to 182 million in 2019. A recovery phase occurred between 2020 and 2022, peaking at 2,427 million. However, this trend reversed sharply in 2023, with EBIT falling to a negative 1,248 million, indicating a transition from profitability to a significant operating loss.
- Interest Expense Management
- Interest expenditures demonstrated a consistent downward trajectory for the majority of the period. Expenses decreased from 676 million in 2018 to a low of 304 million in 2022. This reduction suggests a successful effort to lower the cost of debt or reduce total borrowings. The expense remained relatively stable in 2023 at 312 million, indicating that the current solvency crisis is driven by revenue and cost failures rather than an increase in debt servicing costs.
- Interest Coverage Ratio Analysis
- The interest coverage ratio reflects the high volatility of the EBIT. A healthy ratio of 4.08 in 2018 plummeted to 0.39 in 2019, signaling that operating profits were insufficient to cover interest payments. The ratio recovered strongly to 3.84 in 2021 and reached a peak of 7.98 in 2022, representing a period of high financial safety. This stability was erased in 2023, as the ratio dropped to -4.00, confirming that the organization is currently unable to meet its interest obligations through operating income.
In summary, the financial data reveals a pattern of cyclical instability. The organization shifted from a position of solvency and strength in 2022 to a state of financial distress in 2023, where negative operating earnings have rendered the interest coverage ratio negative, necessitating alternative funding sources or capital restructuring to manage debt obligations.
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?
Fixed Charge Coverage
Western Digital Corp., fixed charge coverage calculation, comparison to benchmarks
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | ||
|---|---|---|---|---|---|---|---|
| U.S. Federal statutory tax rate | 21.00% | 21.00% | 21.00% | 21.00% | 21.00% | 28.00% | |
| Selected Financial Data (US$ in millions) | |||||||
| Net income (loss) | (1,706) | 1,500) | 821) | (250) | (754) | 675) | |
| Add: Income tax expense | 146) | 623) | 106) | 204) | 467) | 1,410) | |
| Add: Interest expense | 312) | 304) | 326) | 413) | 469) | 676) | |
| Earnings before interest and tax (EBIT) | (1,248) | 2,427) | 1,253) | 367) | 182) | 2,761) | |
| Add: Cost of operating leases | 57) | 58) | 50) | 55) | 47) | 49) | |
| Earnings before fixed charges and tax | (1,191) | 2,485) | 1,303) | 422) | 229) | 2,810) | |
| Interest expense | 312) | 304) | 326) | 413) | 469) | 676) | |
| Cost of operating leases | 57) | 58) | 50) | 55) | 47) | 49) | |
| Cumulative dividends allocated to preferred shareholders | 24) | —) | —) | —) | —) | —) | |
| Cumulative dividends allocated to preferred shareholders, tax adjustment1 | 6) | —) | —) | —) | —) | —) | |
| Cumulative dividends allocated to preferred shareholders, after tax adjustment | 30) | —) | —) | —) | —) | —) | |
| Fixed charges | 399) | 362) | 376) | 468) | 516) | 725) | |
| Solvency Ratio | |||||||
| Fixed charge coverage2 | -2.98 | 6.86 | 3.47 | 0.90 | 0.44 | 3.88 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors3 | |||||||
| Apple Inc. | 20.17 | 25.65 | 26.13 | — | — | — | |
| Arista Networks Inc. | 73.83 | 49.20 | 31.02 | — | — | — | |
| Cisco Systems Inc. | 18.98 | 20.30 | 16.92 | — | — | — | |
| Dell Technologies Inc. | 3.14 | 4.16 | 2.26 | — | — | — | |
| Lumentum Holdings Inc. | -1.05 | 3.52 | 6.73 | — | — | — | |
| Super Micro Computer Inc. | 40.95 | 24.03 | 12.52 | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Technology Hardware & Equipment | 17.13 | 19.64 | 16.52 | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Information Technology | 11.23 | 13.28 | 12.13 | — | — | — | |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Cumulative dividends allocated to preferred shareholders, tax adjustment = (Cumulative dividends allocated to preferred shareholders × U.S. Federal statutory tax rate) ÷ (1 − U.S. Federal statutory tax rate)
= (24 × 21.00%) ÷ (1 − 21.00%) = 6
2 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= -1,191 ÷ 399 = -2.98
3 Click competitor name to see calculations.
The solvency profile over the six-year period is characterized by extreme volatility in earnings and a corresponding fluctuation in the ability to service fixed financial obligations. While fixed charges remained relatively stable or trended downward for the majority of the period, the coverage ratio experienced severe swings driven by significant fluctuations in operational profitability.
- Earnings before fixed charges and tax
- Earnings experienced a precipitous decline between 2018 and 2019, falling from 2,810 million USD to 229 million USD. A consistent recovery followed, peaking in 2022 at 2,485 million USD. However, this upward trajectory reversed sharply in 2023, resulting in a negative value of -1,191 million USD, indicating a substantial operational loss.
- Fixed charge obligations
- Fixed charges demonstrated a general downward trend from 2018 through 2022, decreasing from 725 million USD to a low of 362 million USD. This suggests a successful reduction in fixed financial burdens over that timeframe. A slight increase was observed in 2023, with charges rising to 399 million USD.
- Fixed charge coverage ratio
- The coverage ratio mirrored the volatility of earnings. After starting at a healthy 3.88 in 2018, the ratio collapsed to 0.44 in 2019 and 0.90 in 2020, signaling an inability to cover fixed charges from current earnings during those years. Stability returned in 2021 and 2022, with the ratio reaching a period high of 6.86. This solvency position was completely erased in 2023, where the ratio fell to -2.98 due to the shift into negative earnings.
The transition from a peak coverage ratio of 6.86 in 2022 to -2.98 in 2023 represents a severe deterioration in solvency. This suggests that the organization is currently unable to meet its fixed charges through its operational earnings, marking a critical shift in financial stability compared to the recovery seen between 2020 and 2022.
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?