Applied Materials Inc (AMAT)
Solvency ratios
| Oct 31, 2024 | Oct 27, 2024 | Oct 31, 2023 | Oct 29, 2023 | Oct 31, 2022 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.16 | 0.00 | 0.18 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.22 | 0.00 | 0.25 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.29 | 0.00 | 0.33 | 0.00 |
| Financial leverage ratio | 1.81 | 1.81 | 1.88 | 1.88 | 2.19 |
The solvency ratios of Applied Materials Inc provide insight into the company's ability to meet its long-term financial obligations and manage its debt levels.
1. Debt-to-assets ratio:
- The debt-to-assets ratio reflects the proportion of a company's assets that are financed by debt. Applied Materials Inc showed a steady trend of maintaining a very low debt-to-assets ratio, with values consistently around 0.00 or up to 0.18 over the financial years analyzed.
- This indicates that the company relies minimally on debt to fund its operations, which can be viewed positively as it implies lower financial risk and a stronger financial position.
2. Debt-to-capital ratio:
- The debt-to-capital ratio measures the proportion of a company's capital structure that is funded by debt. Applied Materials Inc demonstrated a similar pattern to the debt-to-assets ratio, with values hovering around 0.00 to 0.25 across the period.
- The company's ability to keep this ratio relatively low suggests a conservative approach to leveraging, ensuring a healthy balance between debt and equity in its funding mix.
3. Debt-to-equity ratio:
- The debt-to-equity ratio compares a company's total debt to its total equity, indicating the level of financial leverage. Applied Materials Inc maintained a consistent trend of maintaining a low debt-to-equity ratio, ranging from 0.00 to 0.33 during the period analyzed.
- This signifies that the company has a strong equity base relative to its debt obligations, which can enhance its financial stability and flexibility in managing debt.
4. Financial leverage ratio:
- The financial leverage ratio assesses the extent to which a company relies on debt to finance its assets. Applied Materials Inc exhibited a decreasing trend in its financial leverage ratio, indicating a reduction in reliance on debt financing.
- The declining values (from 2.19 to 1.81) suggest that the company has been effectively managing its debt levels and improving its financial structure over time, potentially reducing risk and enhancing its solvency position.
In conclusion, the solvency ratios of Applied Materials Inc reflect a prudent approach to managing debt and maintaining a strong financial position, with a focus on minimizing financial risk and ensuring stability in meeting long-term obligations.
Coverage ratios
| Oct 31, 2024 | Oct 27, 2024 | Oct 31, 2023 | Oct 29, 2023 | Oct 31, 2022 | |
|---|---|---|---|---|---|
| Interest coverage | 31.85 | 31.85 | 32.16 | 33.42 | 34.14 |
The interest coverage ratio for Applied Materials Inc has shown a gradual decrease over the period from October 31, 2022, to October 31, 2024. The ratio, which stood at 34.14 on October 31, 2022, declined to 33.42 on October 29, 2023, and further to 32.16 on October 31, 2023. The trend continued with a ratio of 31.85 for both October 27, 2024, and October 31, 2024.
This indicates that the company's ability to cover its interest expenses with its operating income has slightly weakened over the period. It may suggest a decrease in the company's profitability relative to its interest obligations, potentially warranting further investigation into the efficiency of its operations and financial management.