Applied Materials Inc (AMAT)

Debt-to-capital ratio

		Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Long-term debt	US$ in thousands	5,461,000	5,457,000	5,452,000	5,448,000	4,713,000
Total stockholders’ equity	US$ in thousands	16,349,000	12,194,000	12,247,000	10,578,000	8,214,000
Debt-to-capital ratio		0.25	0.31	0.31	0.34	0.36

October 29, 2023 calculation

Debt-to-capital ratio = Long-term debt ÷ (Long-term debt + Total stockholders’ equity)
= $5,461,000K ÷ ($5,461,000K + $16,349,000K)
= 0.25

The debt-to-capital ratio measures the proportion of a company's capital structure that is funded by debt. It is calculated by dividing a company's total debt by its total capital (debt plus equity). A lower debt-to-capital ratio indicates a smaller reliance on debt financing and a stronger financial position.

Looking at Applied Materials Inc.'s debt-to-capital ratio over the past five years, we can observe a decreasing trend, which suggests a positive development in the company's capital structure and financial health. The ratio has declined from 0.39 in 2019 to 0.26 in 2023.

The decreasing trend in the debt-to-capital ratio indicates that Applied Materials Inc. has been reducing its reliance on debt financing in relation to its total capital. This suggests that the company may be strengthening its balance sheet and reducing its financial risk. A lower ratio also indicates a higher proportion of equity in the capital structure, which can provide a cushion against financial downturns and improve the company's creditworthiness.

The consistent reduction in the debt-to-capital ratio over the five-year period reflects Applied Materials Inc.'s prudent financial management and its ability to maintain a healthy capital structure. It indicates that the company has been effectively managing its debt levels in relation to its total capital, which is crucial for long-term financial stability.

Overall, the declining trend in Applied Materials Inc.'s debt-to-capital ratio highlights a positive financial trajectory, suggesting improved financial strength and risk management. However, it's important to consider other financial metrics and factors in conjunction with this ratio to gain a comprehensive understanding of the company's financial position.