Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
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- Price to Sales (P/S) since 2005
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Solvency Ratios (Summary)
EMC Corp., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
- Debt to Equity
- The ratio remained stable and very low around 0.07 to 0.08 during 2012, then it increased sharply to approximately 0.32 by mid-2013. It subsequently decreased moderately, fluctuating between 0.24 and 0.37 through the rest of 2013 to mid-2016, showing a trend toward lower leverage but still significantly higher than the initial period.
- Debt to Capital
- This ratio followed a pattern similar to the debt to equity ratio. It was consistently low at around 0.07 throughout 2012, rising sharply to about 0.24 by mid-2013, then gradually declining to approximately 0.22 by mid-2016. The increase in leverage seen in mid-2013 was partially reversed in the following years.
- Debt to Assets
- The debt to assets ratio showed a steady, low level near 0.04 to 0.05 in 2012. It then experienced a sharp increase to around 0.16 in mid-2013, followed by a gradual decline to about 0.13 by mid-2016. This indicates a moderate increase in asset financing through debt in 2013, with some reductions thereafter.
- Financial Leverage
- Financial leverage increased from about 1.69 in early 2012 to over 2 by late 2013, peaking at around 2.23 in mid-2015. Afterward, it showed a slight downward trend but remained elevated near 2.1 through mid-2016. This consistent increase and relatively high leverage ratio reflect a growing use of debt in the company's capital structure.
- Interest Coverage
- Interest coverage ratio started very high at nearly 25 at the beginning of 2012 and peaked around 49 at the end of that year. There was a notable decline from 2013 onward, dropping steadily to values around 18 to 19 by mid-2016. This declining trend suggests decreasing ability to cover interest expenses from operating earnings over time, potentially due to increased debt levels or reduced earnings.
Overall, the financial data indicate that the company substantially increased its leverage ratios starting in mid-2013, followed by a gradual reduction but not returning to the low 2012 levels. Concurrently, the interest coverage ratio declined markedly over the period after peaking in 2012, implying a decreasing margin of safety regarding interest obligations. Financial leverage remained elevated, reflecting sustained higher debt use compared to early periods.
Debt Ratios
Coverage Ratios
Debt to Equity
EMC Corp., debt to equity calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Notes converted and payable | ||||||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||||||
| Current portion of convertible debt | ||||||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Total EMC Corporation’s shareholders’ equity | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | ||||||||||||||||||||||||
| Analog Devices Inc. | ||||||||||||||||||||||||
| Applied Materials Inc. | ||||||||||||||||||||||||
| Broadcom Inc. | ||||||||||||||||||||||||
| Intel Corp. | ||||||||||||||||||||||||
| KLA Corp. | ||||||||||||||||||||||||
| Lam Research Corp. | ||||||||||||||||||||||||
| Micron Technology Inc. | ||||||||||||||||||||||||
| NVIDIA Corp. | ||||||||||||||||||||||||
| Qualcomm Inc. | ||||||||||||||||||||||||
| Texas Instruments Inc. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Debt to equity = Total debt ÷ Total EMC Corporation’s shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the company's leverage and equity base over the observed periods.
- Total Debt
- Total debt increased gradually from March 2012 to March 2013, remaining relatively stable around $1.6 billion. However, a significant and abrupt increase occurred by June 2013, where the total debt surged to approximately $7.16 billion. This elevated debt level persisted through the end of 2013, followed by a decline starting in March 2014 to about $5.49 billion, which remained stable for the rest of that year. Another jump in debt is observed starting March 2015, peaking near $7.44 billion in September 2015, before decreasing steadily to around $6.28 billion by June 2016.
- Total Shareholders’ Equity
- The equity base demonstrated a steady upward trend from March 2012 through to March 2013, growing from approximately $20.1 billion to $22.7 billion. Subsequently, equity fluctuated mildly but remained relatively stable around the $22 billion mark through 2013 and most of 2014. Beginning in early 2015, equity showed a gradual decline, bottoming around $20.1 billion in June 2015, before recovering and rising steadily again to about $22.1 billion by mid-2016.
- Debt to Equity Ratio
- The debt to equity ratio was consistently low and stable at around 0.07 to 0.08 through March 2013, reflecting a conservative leverage posture. Following the sharp increase in debt in mid-2013, the ratio correspondingly jumped to approximately 0.32 and remained at this elevated level for the remainder of 2013. During 2014, the ratio decreased to the 0.24 to 0.25 range, tracking the reduction in total debt. In 2015, the ratio increased again, reaching roughly 0.37 in June, then gradually declined into 2016, ending near 0.28 by June 2016.
In summary, the data indicates periods of significant debt accumulation, particularly mid-2013 and mid-2015, possibly reflecting major financing activities or acquisitions. The shareholders’ equity showed resilience, maintaining a generally stable level with moderate fluctuations. The concomitant changes in debt to equity ratios highlight varying leverage strategies over time, transitioning from a low-leverage position to higher leverage in certain periods before partial deleveraging toward mid-2016.
Debt to Capital
EMC Corp., debt to capital calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Notes converted and payable | ||||||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||||||
| Current portion of convertible debt | ||||||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Total EMC Corporation’s shareholders’ equity | ||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | ||||||||||||||||||||||||
| Analog Devices Inc. | ||||||||||||||||||||||||
| Applied Materials Inc. | ||||||||||||||||||||||||
| Broadcom Inc. | ||||||||||||||||||||||||
| Intel Corp. | ||||||||||||||||||||||||
| KLA Corp. | ||||||||||||||||||||||||
| Lam Research Corp. | ||||||||||||||||||||||||
| Micron Technology Inc. | ||||||||||||||||||||||||
| NVIDIA Corp. | ||||||||||||||||||||||||
| Qualcomm Inc. | ||||||||||||||||||||||||
| Texas Instruments Inc. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the debt structure and capital base of the company over the periods examined.
- Total Debt
- Total debt remained relatively stable at around US$1.6 billion from March 2012 through March 2013. However, a significant increase occurred in the following quarter ending June 2013, with debt rising sharply to over US$7.1 billion. This elevated level was maintained throughout the rest of 2013, before declining substantially in 2014 to approximately US$5.5 billion and remaining steady through early 2015. Another increase was observed starting in mid-2015, peaking near US$7.4 billion by June 2015, but subsequently decreasing again to just below US$6.3 billion by mid-2016.
- Total Capital
- Total capital showed a consistent upward trend from about US$21.7 billion in March 2012 to nearly US$24.3 billion in March 2013. Following this, capital increased more sharply to around US$29.7 billion by June 2013, then generally fluctuated around the US$27–28 billion range through mid-2016, with minor peaks and troughs but no extended upward or downward momentum.
- Debt to Capital Ratio
- The debt to capital ratio was stable at approximately 0.07 during the first year of observation. This ratio rose dramatically to 0.24 in June 2013, coinciding with the spike in debt, indicating a significant increase in leverage. The ratio then decreased slightly but stayed near 0.20 through 2014, reflecting somewhat lower leverage compared to the mid-2013 peak. From 2015 onward, the ratio increased again, reaching a high of 0.27 around mid-2015, before gradually declining to 0.22 by mid-2016. This pattern underscores fluctuating leverage levels with periods of increased debt relative to capital, followed by moderate deleveraging.
Overall, the company exhibited a notable increase in leverage beginning in mid-2013, with total debt rising sharply and the debt to capital ratio tripling. While the capital base expanded steadily, the variability in debt levels led to significant changes in the leverage profile. Periods of higher leverage were followed by partial reductions in debt, indicating strategic adjustments in financial structure. The sustained elevated levels of debt relative to the earlier period suggest shifts in financing strategy or investment activity beginning in 2013, warranting further scrutiny into the underlying causes and implications for risk and financial flexibility.
Debt to Assets
EMC Corp., debt to assets calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Notes converted and payable | ||||||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||||||
| Current portion of convertible debt | ||||||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | ||||||||||||||||||||||||
| Analog Devices Inc. | ||||||||||||||||||||||||
| Applied Materials Inc. | ||||||||||||||||||||||||
| Broadcom Inc. | ||||||||||||||||||||||||
| Intel Corp. | ||||||||||||||||||||||||
| KLA Corp. | ||||||||||||||||||||||||
| Lam Research Corp. | ||||||||||||||||||||||||
| Micron Technology Inc. | ||||||||||||||||||||||||
| NVIDIA Corp. | ||||||||||||||||||||||||
| Qualcomm Inc. | ||||||||||||||||||||||||
| Texas Instruments Inc. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends regarding the company's debt structure and asset base over the analyzed periods. The total debt exhibits a generally fluctuating pattern with a significant increase observed in mid-2013, followed by a gradual decline towards mid-2016. In contrast, total assets show a steady upward trajectory over the entire period, reflecting overall asset growth despite some minor fluctuations.
- Total Debt
- Total debt remained relatively stable from the first quarter of 2012 through the first quarter of 2013, maintaining levels around 1,600 to 1,650 million US dollars. A substantial increase occurs between March 2013 and June 2013, where total debt surged to over 7,100 million US dollars. This elevated debt level remained consistent through late 2013 and early 2014, before decreasing modestly to approximately 5,495 million US dollars. The end of 2014 to 2015 saw another increase, peaking again near 7,420 million US dollars in mid-2015. Subsequently, total debt steadily declined toward 6,279 million US dollars by June 2016.
- Total Assets
- Total assets displayed consistent growth over the analyzed timeframe, rising from approximately 33,985 million US dollars in early 2012 to over 46,700 million US dollars by mid-2016. The asset base increased incrementally each quarter, with occasional minor dips, such as between the end of 2013 and early 2014, and again in early 2015. However, the overall trend remained robust, indicating expansion or asset accumulation throughout the period.
- Debt to Assets Ratio
- The debt to assets ratio was very low and stable, around 0.04 to 0.05, in the early periods up to the first quarter of 2013. Following the significant rise in total debt mid-2013, the ratio surged to approximately 0.16 and remained near this elevated level through late 2013 and early 2014. Later, the ratio decreased moderately to around 0.12 by early 2014, only to increase again to about 0.17 in mid-2015 correlating with the debt peak. By mid-2016, the ratio had decreased to near 0.13, reflecting the decline in total debt relative to total assets.
In summary, the company’s liability profile underwent significant changes during the reviewed period, with total debt increasing sharply in mid-2013 and mid-2015 before tapering off. Despite fluctuations in debt, the total asset base exhibited strong, steady growth. Consequently, the debt to assets ratio experienced corresponding volatility but generally remained moderate, suggesting an increased reliance on debt financing during specific intervals while maintaining a generally conservative overall capital structure relative to the asset size.
Financial Leverage
EMC Corp., financial leverage calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Total EMC Corporation’s shareholders’ equity | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | ||||||||||||||||||||||||
| Analog Devices Inc. | ||||||||||||||||||||||||
| Applied Materials Inc. | ||||||||||||||||||||||||
| Broadcom Inc. | ||||||||||||||||||||||||
| Intel Corp. | ||||||||||||||||||||||||
| KLA Corp. | ||||||||||||||||||||||||
| Lam Research Corp. | ||||||||||||||||||||||||
| Micron Technology Inc. | ||||||||||||||||||||||||
| NVIDIA Corp. | ||||||||||||||||||||||||
| Qualcomm Inc. | ||||||||||||||||||||||||
| Texas Instruments Inc. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Financial leverage = Total assets ÷ Total EMC Corporation’s shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several key trends related to the company’s total assets, total shareholders’ equity, and financial leverage.
- Total Assets
- The total assets show a general upward trend from March 2012 through June 2016, starting at approximately 33,985 million US dollars and increasing to 46,745 million by the end of the period. There are minor fluctuations, for instance, a slight decline observed around the end of the first quarter of 2014 and again at the first quarter of 2015. However, the overall trajectory indicates steady asset growth over the four-year span, suggesting ongoing investment or asset acquisition.
- Total Shareholders’ Equity
- Shareholders’ equity also demonstrates a general increase from 20,055 million US dollars in March 2012 to 22,138 million US dollars in June 2016. Notably, equity peaked around the first quarter to third quarter of 2014 but then experienced a decline from late 2014 into 2015, dropping as low as approximately 20,077 million US dollars in June 2015 before rebounding towards mid-2016. This variation may reflect changes in retained earnings, dividends, share repurchases, or other equity adjustments.
- Financial Leverage
- Financial leverage has predominantly increased over the analyzed period. Starting at a ratio of about 1.69 in March 2012, it rose steadily, peaking at 2.23 in September 2015. Post this peak, leverage shows a modest decline but remains elevated above 2.1 through June 2016. The upward trend in leverage indicates an increasing reliance on debt or liabilities relative to equity to finance the company’s assets.
Overall, the company exhibits growth in asset size coupled with moderate volatility in shareholders’ equity and a noticeable increase in financial leverage. The rise in leverage suggests a strategic shift toward greater use of debt financing, which may enhance return on equity but could also elevate financial risk. The decline and recovery pattern in equity during 2014-2015 warrants further investigation to understand underlying causes such as operational performance, capital transactions, or external market influences.
Interest Coverage
EMC Corp., interest coverage calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Net income attributable to EMC Corporation | ||||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||
| Add: Interest expense | ||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||
| Advanced Micro Devices Inc. | ||||||||||||||||||||||||
| Analog Devices Inc. | ||||||||||||||||||||||||
| Applied Materials Inc. | ||||||||||||||||||||||||
| Broadcom Inc. | ||||||||||||||||||||||||
| KLA Corp. | ||||||||||||||||||||||||
| Micron Technology Inc. | ||||||||||||||||||||||||
| NVIDIA Corp. | ||||||||||||||||||||||||
| Qualcomm Inc. | ||||||||||||||||||||||||
| Texas Instruments Inc. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Interest coverage
= (EBITQ2 2016
+ EBITQ1 2016
+ EBITQ4 2015
+ EBITQ3 2015)
÷ (Interest expenseQ2 2016
+ Interest expenseQ1 2016
+ Interest expenseQ4 2015
+ Interest expenseQ3 2015)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The quarterly financial data reveals notable fluctuations and trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratio over the observed periods.
- Earnings Before Interest and Tax (EBIT)
- EBIT exhibits a cyclical pattern with significant variations each quarter. Initially, from March 2012 to December 2012, EBIT shows an overall increasing trend, peaking at 1,260 million US dollars in the last quarter of 2012. However, this is followed by considerable declines and recoveries in the subsequent years. For example, the first quarter of 2013 starts with a sharp decrease to 712 million US dollars, then recovers moderately through the end of 2013, reaching 1,434 million US dollars in December 2013. In 2014 and 2015, EBIT experiences a general downward trend with intermittent modest rebounds, reaching a low of 413 million US dollars in the first quarter of 2015 before rising again toward the end of that year. The data for 2016 shows a slight improvement again, ending at 894 million US dollars by June 2016. Overall, EBIT demonstrates volatility with repetitive peaks and troughs but without a clear long-term upward or downward trajectory.
- Interest Expense
- The interest expense shows a gradual increase over the examined quarters, with some quarter-to-quarter variability. Starting at 18 million US dollars in the first quarter of 2012, interest expense rises steadily, reaching a peak of 58 million US dollars in the third quarter of 2013. After this peak, the interest expense fluctuates moderately, stabilizing around the low 40 million US dollar range in 2014 and 2015, with a slight increase to approximately 42 million US dollars by mid-2016. The trend indicates growing borrowing costs or increased debt levels during the early part of the period, followed by relative stabilization.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the company's ability to meet interest obligations from operating earnings, generally declines over the period, indicating a decreasing margin of safety for interest payments. The ratio starts strong at nearly 25 times in early 2012 and peaks at about 49 times by the end of 2012, reflecting very comfortable coverage. After this peak, the ratio trends downward with fluctuations but a discernible negative slope, falling to below 20 times by 2016. This decline is largely attributable to the combination of fluctuating EBIT and increasing interest expenses, signaling that while earnings capacity varies, interest burdens have become relatively more significant over time.
In summary, the data reflects a company with volatile operating profitability, a gradually increasing cost of debt service, and a waning ability to cover interest expenses comfortably. The interplay of these factors suggests pressure on financial performance and prudence in managing debt or improving profitability to maintain healthy financial stability.