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
Hewlett Packard Enterprise Co., solvency ratios
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
The solvency profile exhibits a distinct cyclical pattern characterized by a peak in leverage and a temporary decline in coverage capacity around 2020, followed by a steady recovery toward baseline levels by 2023.
- Leverage and Capital Structure
- A consistent trend is observed across debt-to-equity, debt-to-capital, and debt-to-asset ratios, all of which peaked in 2020. The debt-to-equity ratio rose from 0.57 in 2018 to a high of 0.99 in 2020, before receding to 0.58 by 2023. Similarly, the debt-to-assets ratio reached a maximum of 0.30 in 2020 and returned to 0.22 by the end of the period. The inclusion of operating lease liabilities consistently elevates these ratios, though the overall trajectory remains identical, suggesting that the primary drivers of leverage were related to core debt rather than lease obligations.
- Debt Coverage and Serviceability
- Coverage ratios demonstrate significant volatility. The interest coverage ratio experienced a severe contraction in 2020, falling to -0.30, indicating an inability to cover interest expenses from operating profits during that period. This was followed by a sharp rebound to a peak of 13.44 in 2021. The fixed charge coverage ratio mirrored this volatility, dropping to 0.24 in 2020 before recovering to 5.26 by 2023. This pattern suggests a period of acute financial stress in 2020 followed by a substantial improvement in operational profitability relative to fixed obligations.
- Financial Leverage
- The financial leverage ratio correlates closely with the debt ratios, increasing from 2.61 in 2018 to a peak of 3.37 in 2020. A subsequent downward trend brought this figure to 2.70 by 2023, indicating a reduction in the proportion of assets financed by debt and a return to a more conservative capital structure.
Overall, the data indicates that the period of increased financial risk centered in 2020 has been mitigated. By 2023, the solvency metrics have largely normalized, reflecting a restored balance between debt and equity and a stabilized capacity to service fixed financial obligations.
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Debt to Equity
Hewlett Packard Enterprise Co., debt to equity calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Notes payable and short-term borrowings | 4,868) | 4,612) | 3,552) | 3,755) | 4,425) | 2,005) | |
| Long-term debt | 7,487) | 7,853) | 9,896) | 12,186) | 9,395) | 10,136) | |
| Total debt | 12,355) | 12,465) | 13,448) | 15,941) | 13,820) | 12,141) | |
| Total HPE stockholders’ equity | 21,182) | 19,864) | 19,971) | 16,049) | 17,098) | 21,239) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.58 | 0.63 | 0.67 | 0.99 | 0.81 | 0.57 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Apple Inc. | 1.80 | 2.39 | 1.99 | 1.73 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Debt to equity = Total debt ÷ Total HPE stockholders’ equity
= 12,355 ÷ 21,182 = 0.58
2 Click competitor name to see calculations.
The analysis of solvency ratios over the period from October 31, 2018, to October 31, 2023, reveals a cyclical trend in leverage, characterized by a period of increased financial risk followed by a sustained deleveraging phase.
- Leverage Expansion (2018–2020)
- Between 2018 and 2020, a significant increase in the debt-to-equity ratio is observed, rising from 0.57 to a peak of 0.99. This trend was driven by a simultaneous increase in total debt, which grew from US$ 12,141 million to US$ 15,941 million, and a contraction in total stockholders' equity, which declined from US$ 21,239 million to US$ 16,049 million. This period represents the highest level of financial leverage within the analyzed timeframe.
- Capital Structure Correction (2021–2023)
- A corrective trend began in 2021, marked by a steady reduction in total debt and a recovery of equity. Total debt declined for three consecutive years, falling to US$ 12,355 million by October 31, 2023. Concurrently, stockholders' equity increased to US$ 21,182 million. These movements resulted in a consistent decline in the debt-to-equity ratio, which dropped to 0.67 in 2021, 0.63 in 2022, and 0.58 in 2023.
- Long-term Solvency Trend
- By the end of the reporting period on October 31, 2023, the company's solvency position had effectively returned to its 2018 levels. The debt-to-equity ratio of 0.58 is nearly identical to the 0.57 recorded at the start of the period, indicating a successful restoration of the previous capital structure and a reduction in long-term financial risk.
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Debt to Equity (including Operating Lease Liability)
Hewlett Packard Enterprise Co., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Notes payable and short-term borrowings | 4,868) | 4,612) | 3,552) | 3,755) | 4,425) | 2,005) | |
| Long-term debt | 7,487) | 7,853) | 9,896) | 12,186) | 9,395) | 10,136) | |
| Total debt | 12,355) | 12,465) | 13,448) | 15,941) | 13,820) | 12,141) | |
| Current operating lease liabilities | 194) | 168) | 192) | 188) | —) | —) | |
| Non-current operating lease liabilities | 966) | 851) | 938) | 898) | —) | —) | |
| Total debt (including operating lease liability) | 13,515) | 13,484) | 14,578) | 17,027) | 13,820) | 12,141) | |
| Total HPE stockholders’ equity | 21,182) | 19,864) | 19,971) | 16,049) | 17,098) | 21,239) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 0.64 | 0.68 | 0.73 | 1.06 | 0.81 | 0.57 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Apple Inc. | 1.99 | 2.61 | 2.16 | 1.87 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total HPE stockholders’ equity
= 13,515 ÷ 21,182 = 0.64
2 Click competitor name to see calculations.
The analysis of solvency metrics from 2018 to 2023 reveals a cyclical pattern characterized by a period of increasing financial leverage followed by a sustained deleveraging phase.
- Debt to Equity Ratio Trends
- The debt to equity ratio experienced a significant increase between 2018 and 2020, rising from 0.57 to a peak of 1.06. This trend indicates a shift toward higher financial leverage and a greater reliance on debt relative to shareholders' funds. Following the 2020 peak, the ratio entered a consistent downward trajectory, declining to 0.73 in 2021, 0.68 in 2022, and 0.64 in 2023, signaling an improvement in the company's solvency position.
- Total Debt Analysis
- Total debt, including operating lease liabilities, showed a sharp increase from US$ 12,141 million in 2018 to US$ 17,027 million in 2020. A subsequent reduction phase is observed from 2021 onwards, with debt levels falling to US$ 13,484 million in 2022 and remaining relatively stable at US$ 13,515 million in 2023.
- Stockholders' Equity Fluctuations
- Total stockholders' equity underwent a contraction during the first three years of the period, dropping from US$ 21,239 million in 2018 to a low of US$ 16,049 million in 2020. A robust recovery followed this trough, with equity increasing to US$ 19,971 million in 2021 and reaching US$ 21,182 million by 2023, effectively returning to near-2018 levels.
The overall trend demonstrates that the spike in financial leverage observed in 2020 was temporary. The simultaneous reduction in total debt and the restoration of stockholders' equity have contributed to a more balanced capital structure and a reduced solvency risk profile as of October 31, 2023.
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Debt to Capital
Hewlett Packard Enterprise Co., debt to capital calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Notes payable and short-term borrowings | 4,868) | 4,612) | 3,552) | 3,755) | 4,425) | 2,005) | |
| Long-term debt | 7,487) | 7,853) | 9,896) | 12,186) | 9,395) | 10,136) | |
| Total debt | 12,355) | 12,465) | 13,448) | 15,941) | 13,820) | 12,141) | |
| Total HPE stockholders’ equity | 21,182) | 19,864) | 19,971) | 16,049) | 17,098) | 21,239) | |
| Total capital | 33,537) | 32,329) | 33,419) | 31,990) | 30,918) | 33,380) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.37 | 0.39 | 0.40 | 0.50 | 0.45 | 0.36 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Apple Inc. | 0.64 | 0.70 | 0.67 | 0.63 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 12,355 ÷ 33,537 = 0.37
2 Click competitor name to see calculations.
Analysis of the solvency metrics between 2018 and 2023 reveals a cyclical trend in the company's capital structure. An initial period of increasing leverage reached its peak in 2020, followed by a consistent deleveraging phase that returned the solvency position to levels nearly identical to those recorded at the start of the analyzed period.
- Total Debt Trends
- Total debt experienced a notable increase from US$ 12,141 million in 2018 to a peak of US$ 15,941 million in 2020. Following this peak, a sustained downward trend is observed, with debt levels decreasing to US$ 13,448 million in 2021 and further declining to US$ 12,355 million by October 31, 2023.
- Total Capital Stability
- The total capital base remained relatively stable over the six-year period, oscillating between a minimum of US$ 30,918 million in 2019 and a maximum of US$ 33,537 million in 2023. The limited variance in total capital suggests that fluctuations in the solvency ratio were driven primarily by changes in total debt rather than significant expansions or contractions of the capital base.
- Debt to Capital Ratio Dynamics
- The debt to capital ratio rose from 0.36 in 2018 to a maximum of 0.50 in 2020, signifying an increased reliance on debt financing. Subsequently, the ratio entered a period of steady decline, falling to 0.40 in 2021, 0.39 in 2022, and concluding at 0.37 in 2023. This progression indicates a successful reduction in financial leverage and an overall improvement in the company's long-term solvency profile.
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Debt to Capital (including Operating Lease Liability)
Hewlett Packard Enterprise Co., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Notes payable and short-term borrowings | 4,868) | 4,612) | 3,552) | 3,755) | 4,425) | 2,005) | |
| Long-term debt | 7,487) | 7,853) | 9,896) | 12,186) | 9,395) | 10,136) | |
| Total debt | 12,355) | 12,465) | 13,448) | 15,941) | 13,820) | 12,141) | |
| Current operating lease liabilities | 194) | 168) | 192) | 188) | —) | —) | |
| Non-current operating lease liabilities | 966) | 851) | 938) | 898) | —) | —) | |
| Total debt (including operating lease liability) | 13,515) | 13,484) | 14,578) | 17,027) | 13,820) | 12,141) | |
| Total HPE stockholders’ equity | 21,182) | 19,864) | 19,971) | 16,049) | 17,098) | 21,239) | |
| Total capital (including operating lease liability) | 34,697) | 33,348) | 34,549) | 33,076) | 30,918) | 33,380) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.39 | 0.40 | 0.42 | 0.51 | 0.45 | 0.36 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Apple Inc. | 0.67 | 0.72 | 0.68 | 0.65 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 13,515 ÷ 34,697 = 0.39
2 Click competitor name to see calculations.
The analysis of the solvency position reveals a period of increased leverage between 2018 and 2020, followed by a consistent trend of deleveraging through 2023. The capital structure exhibits a cyclical movement in debt levels while the total capital base remained relatively stable over the six-year period.
- Debt to Capital Ratio Trend
- The debt to capital ratio increased from 0.36 in 2018 to a peak of 0.51 in 2020. This upward trajectory represents a significant expansion of the company's reliance on debt relative to its total capital. However, starting in 2021, the ratio entered a period of steady decline, falling to 0.42 in 2021, 0.40 in 2022, and settling at 0.39 by October 31, 2023.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, rose from 12,141 million USD in 2018 to a high of 17,027 million USD in 2020. This represents a peak in total liabilities during the analyzed timeframe. Subsequent years show a reduction in total debt, which declined to 13,484 million USD in 2022 and remained nearly flat at 13,515 million USD in 2023, indicating a concerted effort to reduce overall leverage.
- Total Capital Stability
- Total capital remained within a consistent range, fluctuating between 30,918 million USD and 34,697 million USD. Because total capital stayed relatively stable, the volatility observed in the debt to capital ratio is primarily attributable to the fluctuations in total debt rather than significant changes in the broader capital base.
- Solvency Implications
- The return of the debt to capital ratio to 0.39 suggests a restoration of a more conservative solvency profile compared to the peak observed in 2020. The current trajectory indicates a stabilized capital structure with a lower risk profile regarding long-term debt obligations.
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Debt to Assets
Hewlett Packard Enterprise Co., debt to assets calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Notes payable and short-term borrowings | 4,868) | 4,612) | 3,552) | 3,755) | 4,425) | 2,005) | |
| Long-term debt | 7,487) | 7,853) | 9,896) | 12,186) | 9,395) | 10,136) | |
| Total debt | 12,355) | 12,465) | 13,448) | 15,941) | 13,820) | 12,141) | |
| Total assets | 57,153) | 57,123) | 57,699) | 54,015) | 51,803) | 55,493) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.22 | 0.22 | 0.23 | 0.30 | 0.27 | 0.22 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Apple Inc. | 0.32 | 0.34 | 0.36 | 0.35 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 12,355 ÷ 57,153 = 0.22
2 Click competitor name to see calculations.
The analysis of solvency ratios between October 2018 and October 2023 reveals a period of increasing leverage followed by a consistent deleveraging trend, ultimately returning the company to its baseline solvency position.
- Debt Accumulation and Peak Leverage
- From 2018 to 2020, an upward trend in the debt-to-assets ratio is observed, rising from 0.22 to a peak of 0.30. This escalation was primarily driven by a substantial increase in total debt, which grew from US$ 12,141 million to US$ 15,941 million. During this window, the proportion of assets financed by debt increased, indicating a period of higher financial leverage.
- Deleveraging Phase and Stabilization
- A reversal in the leverage trend occurred starting in 2021, with the debt-to-assets ratio dropping to 0.23 and further declining to 0.22 by 2022. This improvement is attributed to a concerted reduction in total debt, which decreased to US$ 12,355 million by October 2023. Simultaneously, the total asset base expanded from 2019 levels and stabilized at approximately US$ 57,153 million by the end of the period.
- Long-term Solvency Trajectory
- The overall financial trajectory exhibits a cyclical pattern, as the debt-to-assets ratio returned to its initial 2018 level of 0.22 by 2022 and remained constant through 2023. This return to baseline suggests a restoration of the previous solvency profile and a stabilized capital structure relative to the company's total asset holdings.
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Debt to Assets (including Operating Lease Liability)
Hewlett Packard Enterprise Co., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Notes payable and short-term borrowings | 4,868) | 4,612) | 3,552) | 3,755) | 4,425) | 2,005) | |
| Long-term debt | 7,487) | 7,853) | 9,896) | 12,186) | 9,395) | 10,136) | |
| Total debt | 12,355) | 12,465) | 13,448) | 15,941) | 13,820) | 12,141) | |
| Current operating lease liabilities | 194) | 168) | 192) | 188) | —) | —) | |
| Non-current operating lease liabilities | 966) | 851) | 938) | 898) | —) | —) | |
| Total debt (including operating lease liability) | 13,515) | 13,484) | 14,578) | 17,027) | 13,820) | 12,141) | |
| Total assets | 57,153) | 57,123) | 57,699) | 54,015) | 51,803) | 55,493) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.24 | 0.24 | 0.25 | 0.32 | 0.27 | 0.22 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Apple Inc. | 0.35 | 0.38 | 0.39 | 0.38 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 13,515 ÷ 57,153 = 0.24
2 Click competitor name to see calculations.
A review of the solvency position from October 2018 to October 2023 reveals a cyclical trend in leverage, characterized by a notable increase in debt obligations followed by a period of deleveraging and stabilization. The company's reliance on debt to finance its asset base peaked in 2020 before returning to levels comparable to the initial baseline.
- Total Debt Trajectory
- Total debt, including operating lease liabilities, exhibited a steady climb from US$ 12,141 million in 2018 to a peak of US$ 17,027 million in 2020. Following this peak, a downward trend occurred, with liabilities decreasing to US$ 14,578 million in 2021 and further to US$ 13,484 million in 2022. The period ended with total debt remaining relatively flat at US$ 13,515 million in 2023.
- Asset Base Stability
- Total assets remained relatively consistent throughout the analyzed period, fluctuating between a low of US$ 51,803 million in 2019 and a high of US$ 57,699 million in 2021. By October 2023, the total asset value stood at US$ 57,153 million, indicating a stable scale of resources despite the volatility in debt levels.
- Debt to Assets Ratio Analysis
- The debt to assets ratio mirrored the movements in total debt, increasing from 0.22 in 2018 to a maximum of 0.32 in 2020. This indicates that at the peak of the cycle, approximately 32% of assets were financed through debt. From 2021 onward, the ratio shifted downward, reaching 0.25 in 2021 and stabilizing at 0.24 in both 2022 and 2023. This stabilization suggests a successful effort to reduce financial leverage and maintain a consistent solvency profile.
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Financial Leverage
Hewlett Packard Enterprise Co., financial leverage calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 57,153) | 57,123) | 57,699) | 54,015) | 51,803) | 55,493) | |
| Total HPE stockholders’ equity | 21,182) | 19,864) | 19,971) | 16,049) | 17,098) | 21,239) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 2.70 | 2.88 | 2.89 | 3.37 | 3.03 | 2.61 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Apple Inc. | 5.67 | 6.96 | 5.56 | 4.96 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Financial leverage = Total assets ÷ Total HPE stockholders’ equity
= 57,153 ÷ 21,182 = 2.70
2 Click competitor name to see calculations.
An analysis of the solvency profile between October 31, 2018, and October 31, 2023, reveals a period of fluctuating financial leverage characterized by an initial increase in risk followed by a steady deleveraging process. The total asset base remained relatively stable over the six-year period, moving from US$ 55,493 million in 2018 to US$ 57,153 million in 2023, despite a temporary contraction in 2019.
- Financial Leverage Trajectory
- The financial leverage ratio exhibited a bell-shaped trend, starting at 2.61 in 2018 and peaking at 3.37 in 2020. This upward movement indicates a period of increased reliance on debt or a reduction in the equity cushion relative to total assets. Following the 2020 peak, the ratio declined consistently, reaching 2.70 by October 31, 2023, suggesting a strategic shift toward strengthening the balance sheet.
- Stockholders' Equity Dynamics
- The fluctuations in leverage were primarily driven by changes in total stockholders' equity rather than asset volatility. Equity experienced a notable decline from US$ 21,239 million in 2018 to a low of US$ 16,049 million in 2020. This contraction in equity directly contributed to the peak leverage ratio observed in 2020. Subsequently, equity recovered significantly, climbing back to US$ 21,182 million by 2023, effectively returning to 2018 levels.
- Solvency Correlation
- There is a clear inverse correlation between the levels of stockholders' equity and the financial leverage ratio. The period from 2021 to 2023 demonstrates a stabilization of the company's solvency position, as the increase in equity from US$ 19,971 million to US$ 21,182 million successfully lowered the leverage ratio from 2.89 to 2.70, reducing the overall financial risk profile.
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Interest Coverage
Hewlett Packard Enterprise Co., interest coverage calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings (loss) attributable to HPE | 2,025) | 868) | 3,427) | (322) | 1,049) | 1,908) | |
| Add: Net income attributable to noncontrolling interest | 11) | 5) | 9) | 11) | 16) | (4) | |
| Less: Net loss from discontinued operations | —) | —) | —) | —) | —) | (104) | |
| Add: Income tax expense | 205) | 8) | 160) | (120) | 504) | (1,744) | |
| Add: Interest expense | 326) | 260) | 289) | 332) | 311) | 353) | |
| Earnings before interest and tax (EBIT) | 2,567) | 1,141) | 3,885) | (99) | 1,880) | 617) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 7.87 | 4.39 | 13.44 | -0.30 | 6.05 | 1.75 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Apple Inc. | 29.92 | 41.64 | 42.29 | 24.35 | — | — | |
| 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: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,567 ÷ 326 = 7.87
2 Click competitor name to see calculations.
The interest coverage profile between 2018 and 2023 is characterized by significant volatility, primarily driven by fluctuations in operating performance rather than changes in debt servicing costs. While interest expenses remained relatively stable over the six-year period, earnings before interest and tax (EBIT) experienced substantial swings, leading to a highly inconsistent ability to cover interest obligations.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating earnings exhibited extreme variance, starting at 617 million USD in 2018 and peaking at 3,885 million USD in 2021. A critical downturn occurred in 2020, where EBIT fell to a negative 99 million USD. Subsequent years showed continued instability, with a decline to 1,141 million USD in 2022 before recovering to 2,567 million USD by 2023.
- Interest Expense Stability
- Interest expenses demonstrated a narrow range of fluctuation compared to operating income. Costs shifted from 353 million USD in 2018 to a low of 260 million USD in 2022, before increasing to 326 million USD in 2023. This relative stability suggests a consistent debt structure or steady interest rate environment during the period analyzed.
- Interest Coverage Ratio Analysis
- The interest coverage ratio mirrored the volatility of the EBIT. A precarious position was noted in 2018 with a ratio of 1.75, which improved to 6.05 in 2019. The ratio reached a critical low of -0.30 in 2020, indicating that operating profits were insufficient to meet interest obligations. A sharp recovery followed in 2021, reaching a peak of 13.44, before stabilizing at 7.87 by 2023. This final figure indicates a strong current capacity to service interest payments from operating profits.
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Fixed Charge Coverage
Hewlett Packard Enterprise Co., fixed charge coverage calculation, comparison to benchmarks
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net earnings (loss) attributable to HPE | 2,025) | 868) | 3,427) | (322) | 1,049) | 1,908) | |
| Add: Net income attributable to noncontrolling interest | 11) | 5) | 9) | 11) | 16) | (4) | |
| Less: Net loss from discontinued operations | —) | —) | —) | —) | —) | (104) | |
| Add: Income tax expense | 205) | 8) | 160) | (120) | 504) | (1,744) | |
| Add: Interest expense | 326) | 260) | 289) | 332) | 311) | 353) | |
| Earnings before interest and tax (EBIT) | 2,567) | 1,141) | 3,885) | (99) | 1,880) | 617) | |
| Add: Operating lease cost | 200) | 197) | 207) | 236) | —) | —) | |
| Earnings before fixed charges and tax | 2,767) | 1,338) | 4,092) | 137) | 1,880) | 617) | |
| Interest expense | 326) | 260) | 289) | 332) | 311) | 353) | |
| Operating lease cost | 200) | 197) | 207) | 236) | —) | —) | |
| Fixed charges | 526) | 457) | 496) | 568) | 311) | 353) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 5.26 | 2.93 | 8.25 | 0.24 | 6.05 | 1.75 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Apple Inc. | 20.17 | 25.65 | 26.13 | 16.34 | — | — | |
| 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 | 11.19 | 13.23 | 12.08 | — | — | — | |
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,767 ÷ 526 = 5.26
2 Click competitor name to see calculations.
The solvency profile over the period from 2018 to 2023 is characterized by significant volatility in earnings, which has directly impacted the capacity to meet fixed obligations. While the long-term trend indicates a general ability to service debt, the extreme fluctuations in the coverage ratio suggest periodic exposure to operational instability.
- Fixed Charge Coverage Ratio Analysis
- The coverage ratio exhibited extreme variance, starting at 1.75 in 2018 and reaching a peak of 8.25 in 2021. A critical decline was observed in 2020, where the ratio dropped to 0.24, indicating that earnings were insufficient to cover fixed charges during that fiscal year. This was followed by a rapid recovery and subsequent stabilization, with the ratio ending at 5.26 in 2023.
- Earnings Before Fixed Charges and Tax (EBFCT)
- The primary driver of solvency volatility is the EBFCT, which fluctuated from 617 million in 2018 to a low of 137 million in 2020, before surging to a peak of 4,092 million in 2021. These inconsistent earnings figures created an unstable solvency margin, although the values in 2023 (2,767 million) represent a substantial improvement over the initial 2018 levels.
- Fixed Charge Obligations
- Fixed charges remained relatively stable compared to earnings, ranging between 311 million and 568 million. A notable increase in charges to 568 million occurred in 2020, which, when coupled with the simultaneous decline in earnings, resulted in the period's lowest coverage capacity.
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