ADEIA CORP (ADEA)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.41 | 0.47 | 0.51 | 0.30 | 0.29 |
| Debt-to-capital ratio | 0.53 | 0.59 | 0.67 | 0.35 | 0.35 |
| Debt-to-equity ratio | 1.15 | 1.46 | 2.06 | 0.54 | 0.55 |
| Financial leverage ratio | 2.77 | 3.10 | 4.02 | 1.83 | 1.85 |
Based on the provided data, I have analyzed the solvency ratios of ADEIA CORP over the years from December 31, 2020, to December 31, 2024. Here are the key findings based on the solvency ratios:
1. Debt-to-Assets Ratio:
- The debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. ADEIA CORP's debt-to-assets ratio has shown an increasing trend from 0.29 in 2020 to 0.41 in 2024. This indicates that the company's reliance on debt to finance its assets has been gradually increasing over the years.
2. Debt-to-Capital Ratio:
- The debt-to-capital ratio indicates the percentage of a company's capital that is contributed by debt. ADEIA CORP's debt-to-capital ratio has also exhibited an upward trend, rising from 0.35 in 2020 to 0.53 in 2024. This suggests that debt financing has become a more significant component of the company's capital structure.
3. Debt-to-Equity Ratio:
- The debt-to-equity ratio compares a company's total debt to its total equity, reflecting the amount of leverage used by the firm. ADEIA CORP's debt-to-equity ratio spiked in 2022 to 2.06 and has since decreased to 1.15 in 2024. Although the ratio has decreased in recent years, it still indicates a relatively high level of debt compared to equity.
4. Financial Leverage Ratio:
- The financial leverage ratio measures the extent to which a company is using debt to support its operations. ADEIA CORP's financial leverage ratio increased significantly from 1.85 in 2020 to 2.77 in 2024, indicating a higher reliance on debt financing to generate returns for shareholders.
In summary, the solvency ratios of ADEIA CORP illustrate a growing reliance on debt financing over the years, which could potentially increase the company's financial risk and impact its overall financial stability. It is essential for stakeholders to closely monitor these ratios to assess the company's ability to meet its debt obligations and sustain long-term growth.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.45 | 2.18 | 3.38 | 3.05 | 7.06 |
ADEIA CORP's interest coverage has shown a declining trend over the past five years. The interest coverage ratio provides an indication of a company's ability to meet its interest obligations with its operating income.
As of December 31, 2020, the interest coverage ratio was 7.06, reflecting a relatively healthy position where the company's operating income was able to cover its interest expenses over seven times. However, by the end of December 31, 2024, the interest coverage ratio had decreased to 2.45, indicating a weakening ability to cover interest payments from operating income.
The declining trend in the interest coverage ratio raises concerns about ADEIA CORP's ability to comfortably meet its interest obligations in the future. It is important for investors and stakeholders to monitor this ratio closely as a low interest coverage ratio may indicate higher financial risk and potential challenges in servicing debt.