Dell Technologies Inc. (NYSE:DELL)

An analysis of the provided solvency ratios reveals fluctuating, yet generally stabilizing, financial leverage over the observed period. Several ratios indicate a moderate level of debt relative to equity, capital, and assets, with some variation year to year. Coverage ratios demonstrate an improving ability to meet fixed and interest obligations towards the later years of the period.

Debt Levels

The Debt to Capital ratio increased from 0.95 in 2021 to 1.12 in 2023, before stabilizing around 1.10 in 2024 and decreasing slightly to 1.09 in 2026. A similar pattern is observed in the Debt to Capital ratio including operating lease liability, moving from 0.95 to 1.11 and then stabilizing. The Debt to Assets ratio decreased from 0.39 in 2021 to 0.32 in 2025, remaining at that level through 2026. Inclusion of operating lease liabilities results in slightly higher ratios, consistently around 0.01-0.02 higher than the standard Debt to Assets calculation.

Leverage Ratios

Financial Leverage, reported only in 2021, stood at 49.78. The absence of subsequent values prevents trend analysis for this specific metric. However, the Debt to Equity ratios, while incomplete, show a high initial value of 19.36 in 2021 and 20.25 including operating lease liability, with no further values available for comparison.

Coverage Ratios

Interest Coverage improved significantly from 2.54 in 2021 to 4.84 in 2022, then decreased to 3.64 in 2023 and 3.59 in 2024. A positive trend resumes in the later years, increasing to 4.62 in 2025 and 5.66 in 2026. Fixed Charge Coverage follows a similar trajectory, rising from 2.26 in 2021 to 4.16 in 2022, declining to 3.14 and 3.17, and then increasing to 3.99 in 2025 and 5.04 in 2026. This indicates a strengthening capacity to cover both interest and fixed charges as the period progresses.

Overall, the solvency position appears to be stabilizing with improving coverage ratios. While debt levels remain consistent, the ability to service that debt is demonstrably increasing in the later years of the observed timeframe.

The Debt to Equity ratio exhibits significant fluctuation over the observed period. Initially, the ratio is reported as 19.36 in January 2021. Subsequent years show a pattern of negative equity, complicating the interpretation of this ratio. The ratio is not calculated for 2022, 2023, 2024, and 2025 due to the negative stockholders’ equity. In January 2026, the ratio is again calculable, reaching a value of approximately 12.79, reflecting an increase in total debt alongside continued negative equity.

Total Debt

Total debt decreased substantially from US$47,984 million in January 2021 to US$26,954 million in January 2022. It then experienced a moderate increase to US$29,588 million in February 2023, followed by a decrease to US$25,994 million in February 2024. A further decrease to US$24,567 million is observed in January 2025, before rising to US$31,503 million in January 2026. This indicates a generally decreasing trend in debt levels, with a recent increase in the latest reported period.

Total Stockholders’ Equity

Total stockholders’ equity transitioned from a positive value of US$2,479 million in January 2021 to a negative value of US$-1,685 million in January 2022. This negative equity position worsened over time, reaching US$-3,122 million in February 2023, US$-2,404 million in February 2024, and US$-1,482 million in January 2025. The equity remained negative in January 2026, reported as US$-2,470 million. The consistent negative equity significantly impacts the Debt to Equity ratio calculation.

Debt to Equity Ratio Interpretation

The initial high Debt to Equity ratio in 2021 suggests a substantial reliance on debt financing relative to equity. The subsequent negative equity values render the ratio less meaningful as a standard solvency measure. While the ratio is calculable again in 2026, the continued negative equity indicates a precarious financial position. The increase in the ratio from an uncalculated value to approximately 12.79 in 2026, despite a decrease in debt from 2025, is driven by the continued negative equity position.

The combination of fluctuating debt levels and consistently negative equity presents a complex solvency picture. Further investigation into the reasons for the negative equity and the company’s ability to service its debt is warranted.

The information presents a review of the debt to equity ratio, including operating lease liabilities, over a five-year period. A significant fluctuation in both total debt and stockholders’ equity is observed, resulting in a highly volatile debt to equity ratio.

Total Debt (including operating lease liability)

Total debt decreased substantially from $50.207 billion in 2021 to $27.961 billion in 2022. It then increased to $30.478 billion in 2023 before declining again to $26.823 billion in 2024 and further to $25.325 billion in 2025. A subsequent increase to $32.230 billion is projected for 2026.

Total Stockholders’ Equity (deficit)

Stockholders’ equity transitioned from a positive value of $2.479 billion in 2021 to a negative value of -$1.685 billion in 2022. This negative equity position continued to worsen, reaching -$3.122 billion in 2023 and -$2.404 billion in 2024. A slight improvement is indicated in 2025 with a deficit of -$1.482 billion, but a further decline to -$2.470 billion is anticipated in 2026.

Debt to Equity Ratio (including operating lease liability)

In 2021, the debt to equity ratio was 20.25. The ratio is not calculated for 2022 through 2026, likely due to the negative stockholders’ equity. The presence of negative equity makes the interpretation of the debt to equity ratio unreliable, as it indicates the company is financed more by debt than by owner investment, and the ratio becomes mathematically unstable. The shift to negative equity suggests a substantial erosion of the company’s financial cushion and increased reliance on debt financing.

The trend indicates a growing financial risk profile, characterized by increasing debt levels and diminishing equity. The projected increase in debt coupled with continued negative equity in 2026 suggests a potential for further financial strain.

The Debt to Capital ratio exhibits a fluctuating pattern over the observed period. Initially, the ratio decreased from 0.95 in January 2021 to 1.07 in January 2022, before increasing to a peak of 1.12 in February 2023. A slight decrease to 1.10 was noted in February 2024, followed by a further reduction to 1.06 in January 2025. The most recent observation, in January 2026, indicates an increase to 1.09.

Overall Trend

While the ratio fluctuates, it generally remains above 1.0 for the majority of the period. This suggests that, for most of the observed years, the company finances a greater proportion of its assets with debt than with equity. The ratio does not demonstrate a consistent upward or downward trajectory, indicating a dynamic capital structure.

Peak and Trough

The highest Debt to Capital ratio of 1.12 occurred in February 2023. This represents the period of highest financial leverage. Conversely, the lowest ratio of 0.95 was recorded in January 2021, indicating the lowest level of financial leverage during the analyzed timeframe.

Recent Developments

The ratio decreased from 1.10 in February 2024 to 1.06 in January 2025, suggesting a reduction in reliance on debt financing. However, the subsequent increase to 1.09 in January 2026 indicates a renewed, albeit modest, increase in leverage.

Capital and Debt Movements

Total debt decreased significantly between 2021 and 2022, coinciding with the initial decrease in the Debt to Capital ratio. While debt levels fluctuated in subsequent years, total capital also experienced a similar pattern of decline and modest recovery. The interplay between these two components drives the observed ratio movements.

The Debt to Capital ratio, inclusive of operating lease liabilities, exhibits a fluctuating pattern over the observed period. Initially, the ratio decreased from 0.95 in January 2021 to 1.06 in January 2022, before increasing to a peak of 1.11 in February 2023. Subsequent years show a slight decline to 1.10 in February 2024 and 1.06 in January 2025, followed by a modest increase to 1.08 in January 2026.

Total Debt (including operating lease liability)

Total debt decreased significantly from US$50,207 million in January 2021 to US$27,961 million in January 2022. It then experienced a slight increase to US$30,478 million in February 2023, followed by a decrease to US$26,823 million in February 2024 and US$25,325 million in January 2025. A notable increase is observed in January 2026, reaching US$32,230 million.

Total Capital (including operating lease liability)

Total capital mirrored the trend in total debt, decreasing substantially from US$52,686 million in January 2021 to US$26,276 million in January 2022. It then rose to US$27,356 million in February 2023, before declining to US$24,419 million in February 2024 and US$23,843 million in January 2025. Similar to debt, capital increased to US$29,760 million in January 2026.

Debt to Capital Ratio Trend

The initial decrease in the Debt to Capital ratio in 2022 suggests an improvement in the company’s capital structure, with capital decreasing at a faster rate than debt. However, the subsequent increases in 2023 and 2024 indicate a growing reliance on debt relative to capital. The slight decrease in 2025 is followed by a further increase in 2026, suggesting a renewed trend towards increased leverage. The ratio consistently remains above 1.00 after 2021, indicating that debt financing exceeds equity financing within the capital structure.

Overall, the observed fluctuations suggest a dynamic capital structure management strategy. The increases in both debt and capital in the later years of the period warrant further investigation to understand the underlying drivers and potential implications for the company’s financial risk profile.

The debt-to-assets ratio demonstrates a fluctuating, yet generally decreasing, trend over the observed period. Initially, the ratio decreased significantly before stabilizing in recent years. This suggests a shifting capital structure and evolving risk profile.

Overall Trend

The debt-to-assets ratio began at 0.39 in January 2021 and experienced a substantial decline to 0.29 in January 2022. Following this decrease, the ratio exhibited relative stability, ranging between 0.31 and 0.33 from February 2023 through January 2025. A slight increase to 0.31 is observed in January 2026.

Initial Decline (2021-2022)

The most significant change occurred between January 2021 and January 2022, with a decrease of 0.10 in the debt-to-assets ratio. This indicates a considerable reduction in relative debt levels, potentially through debt repayment or an increase in asset value relative to debt.

Period of Stability (2023-2025)

From February 2023 to January 2025, the ratio remained within a narrow range, suggesting a period of consistent financial leverage. This stability could reflect a deliberate strategy to maintain a specific capital structure or limited opportunities for significant debt reduction or asset growth.

Recent Change (2025-2026)

The ratio increased slightly from 0.31 in January 2025 to 0.31 in January 2026. While minimal, this change warrants monitoring to determine if it signals a shift towards increased reliance on debt financing.

Underlying Values

Total debt decreased from US$47,984 million in January 2021 to US$26,954 million in January 2022, contributing to the initial ratio decline. Total assets also decreased over the period, from US$123,415 million in January 2021 to US$79,746 million in January 2025, before increasing to US$101,286 million in January 2026. The interplay between these changes in debt and asset values drives the observed ratio fluctuations.

The Debt to Assets ratio, including operating lease liability, demonstrates a fluctuating pattern over the observed period. Initially, a significant decrease is noted, followed by relative stability and a projected increase towards the end of the forecast.

Overall Trend

The ratio begins at 0.41 in January 2021 and declines substantially to 0.30 in January 2022. It then experiences a moderate increase to 0.34 in February 2023, followed by a slight decrease to 0.33 in February 2024. The ratio remains stable at 0.32 in January 2025 and is projected to increase to 0.32 in January 2026.

Initial Decline (2021-2022)

The most pronounced change occurs between January 2021 and January 2022, with a decrease of 0.11. This suggests a considerable reduction in debt relative to assets during this period. This could be attributed to debt repayment, asset growth, or a combination of both.

Subsequent Stability (2023-2026)

From February 2023 through January 2026, the ratio exhibits limited fluctuation, remaining within a narrow range of 0.32 to 0.34. This indicates a period of relatively stable capital structure. The projected increase to 0.32 in January 2026, while small, warrants monitoring.

Debt and Asset Movements

The decrease in the ratio from 2021 to 2022 aligns with a decrease in both total debt and total assets. However, the subsequent stabilization of the ratio, despite continued declines in total assets from 2023 to 2025, suggests that debt reduction has largely kept pace with asset reduction. The projected increase in total assets in 2026, coupled with a corresponding increase in total debt, contributes to the slight rise in the ratio.

In summary, the company has demonstrated a trend of decreasing leverage, followed by a period of stabilization. The projected figures suggest a potential, albeit modest, increase in leverage towards the end of the analyzed period.

An examination of the financial information reveals a significant shift in the company’s financial leverage position over the observed period. Total assets decreased from January 2021 to February 2024, before increasing substantially by the end of the forecast period in January 2026. Stockholders’ equity transitioned from a positive value to a consistent deficit throughout the period, deepening over time before a slight improvement in the most recent forecast year.

Financial Leverage

The financial leverage ratio, initially reported at 49.78 in January 2021, is not available for subsequent years until the forecast period. The absence of this ratio for 2022, 2023, and 2024 hinders a complete understanding of the company’s leverage trends during those years. However, the initial value indicates a high degree of financial leverage, suggesting a substantial reliance on debt financing relative to equity. The lack of subsequent values prevents assessment of whether this leverage was managed or altered in the intervening years.

The consistent negative stockholders’ equity throughout the period is a notable observation. This indicates that the company’s liabilities exceed its assets, which is a potential concern. The increasing magnitude of the deficit from 2022 through 2025 suggests a worsening equity position. The slight reduction in the deficit by January 2026 may indicate a potential stabilization or improvement, but further investigation is needed to understand the underlying causes.

The decrease in total assets from 2021 to 2024, followed by a significant increase in 2026, warrants further scrutiny. Understanding the drivers behind these changes – such as asset sales, acquisitions, or depreciation – is crucial for a comprehensive assessment of the company’s financial health. The interplay between declining assets and negative equity contributes to the elevated financial leverage implied by the 2021 ratio.

Without the financial leverage ratio for the years 2022 through 2025, it is difficult to determine if the company actively managed its debt levels in response to the changes in assets and equity. The available information suggests a potentially precarious financial position, characterized by high leverage and a deteriorating equity base, although the forecast for 2026 offers a glimmer of potential improvement.

The interest coverage ratio exhibits fluctuations over the observed period, generally indicating a strengthening ability to meet interest obligations towards the later years. Initial values demonstrate a substantial improvement followed by a period of relative stability and then further gains.

Earnings Before Interest and Tax (EBIT)

EBIT increased from US$6,059 million in 2021 to US$7,465 million in 2022, representing a significant rise in operating profitability. A subsequent decrease to US$4,447 million occurred in 2023, before recovering to US$5,388 million in 2024. Further increases are observed in 2025 and 2026, reaching US$6,442 million and US$8,823 million respectively. This suggests a volatile but ultimately positive trend in core earnings.

Interest Expense

Interest expense decreased considerably from US$2,389 million in 2021 to US$1,542 million in 2022. It continued to decline to US$1,222 million in 2023, before increasing to US$1,501 million in 2024. The expense remains relatively stable in subsequent years, at US$1,394 million in 2025 and US$1,560 million in 2026. The initial decline in interest expense likely contributed to the initial improvement in the interest coverage ratio.

Interest Coverage Ratio

The interest coverage ratio began at 2.54 in 2021, then rose sharply to 4.84 in 2022, reflecting the combined effect of increased EBIT and decreased interest expense. The ratio decreased to 3.64 in 2023, coinciding with the decline in EBIT. It remained relatively stable at 3.59 in 2024. A positive trend resumes in 2025, with the ratio increasing to 4.62, and continues into 2026, reaching 5.66. This indicates an improving capacity to cover interest payments with earnings, particularly in the later periods analyzed.

Overall, the trend in the interest coverage ratio suggests a strengthening financial position regarding debt servicing capabilities. While a dip occurred in 2023, the ratio demonstrates a recovery and continued improvement through 2026, driven by increasing earnings and relatively stable interest expenses.

The fixed charge coverage ratio demonstrates a fluctuating, yet generally improving, trend over the observed period. Earnings before fixed charges and tax, and fixed charges themselves, both exhibit variability, influencing the overall coverage ratio.

Overall Trend

The fixed charge coverage ratio began at 2.26 in January 2021. It increased significantly to 4.16 in January 2022, before declining to 3.14 in February 2023. A slight increase to 3.17 was noted in February 2024, followed by a more substantial rise to 3.99 in January 2025. The ratio culminated at 5.04 in January 2026, representing the highest value within the analyzed timeframe.

Earnings Before Fixed Charges and Tax

Earnings before fixed charges and tax increased from US$6,594 million in January 2021 to US$7,800 million in January 2022. A considerable decrease to US$4,730 million occurred in February 2023. Subsequent years show recovery, with values of US$5,679 million, US$6,735 million, and US$9,062 million in February 2024, January 2025, and January 2026, respectively. This pattern directly impacts the fixed charge coverage ratio.

Fixed Charges

Fixed charges decreased from US$2,924 million in January 2021 to US$1,877 million in January 2022. They continued to decline to US$1,505 million in February 2023, before increasing to US$1,792 million in February 2024 and US$1,687 million in January 2025. A final increase to US$1,799 million was observed in January 2026. While fluctuating, the overall level of fixed charges remained relatively stable compared to the earnings component.

Ratio Dynamics

The largest single-year increase in the fixed charge coverage ratio occurred between January 2021 and January 2022, coinciding with an increase in earnings and a decrease in fixed charges. The subsequent decline in earnings in February 2023 led to a corresponding decrease in the ratio. The final two years demonstrate a positive correlation between increasing earnings and a strengthening fixed charge coverage position.

The observed trend suggests an improving ability to meet fixed financial obligations, particularly in the later years of the period. However, the volatility in earnings before fixed charges and tax warrants continued monitoring.