Broadcom Inc (AVGO)
Solvency ratios
| Nov 3, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Nov 1, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.39 | 0.46 | 0.45 | 0.55 | 0.53 |
| Debt-to-capital ratio | 0.49 | 0.58 | 0.59 | 0.62 | 0.63 |
| Debt-to-equity ratio | 0.96 | 1.38 | 1.45 | 1.65 | 1.68 |
| Financial leverage ratio | 2.45 | 3.04 | 3.23 | 3.02 | 3.18 |
Broadcom Inc's solvency ratios indicate the company's ability to meet its long-term debt obligations. Looking at the trend over the past five years, we can see improvements in the company's solvency position.
The debt-to-assets ratio has decreased from 0.53 in 2020 to 0.39 in 2024, indicating that Broadcom is relying less on debt to finance its assets. This suggests a stronger financial position as a lower ratio means lower financial risk.
Similarly, the debt-to-capital and debt-to-equity ratios have also shown a decline from 2020 to 2024. The debt-to-capital ratio decreased from 0.63 to 0.49, and the debt-to-equity ratio decreased from 1.68 to 0.96. These decreases indicate that Broadcom has been able to reduce its reliance on debt in relation to its capital and equity, respectively. This demonstrates an improvement in the company's ability to cover its debt obligations using its capital and shareholder equity.
Furthermore, the financial leverage ratio, which measures the company's overall debt burden, has shown a decreasing trend from 3.18 in 2020 to 2.45 in 2024. This reduction indicates that Broadcom's financial leverage has decreased over the years, meaning the company has been able to reduce its dependence on debt financing.
Overall, the improving solvency ratios reflect positively on Broadcom's financial health and indicate that the company is managing its debt obligations more efficiently.
Coverage ratios
| Nov 3, 2024 | Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Nov 1, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 3.44 | 9.99 | 8.19 | 4.52 | 2.26 |
Broadcom Inc's interest coverage ratio has shown fluctuations over the past five years. The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income.
In the most recent fiscal year as of November 3, 2024, Broadcom Inc had an interest coverage ratio of 3.44, indicating that the company generated operating income 3.44 times the amount needed to cover its interest expenses. This represents a decline from the prior year when the ratio was 9.99.
Looking at the trend over the past five years, there has been variability in Broadcom Inc's interest coverage ratio, with fluctuations between 2.26 and 9.99. The ratios have generally been above 2, indicating a relatively healthy ability to cover interest expenses with operating income.
It is essential for investors and creditors to monitor Broadcom Inc's interest coverage ratio closely as it provides insights into the company's financial health and risk of default on debt obligations. A lower ratio may suggest financial distress or an increased risk of default, while a higher ratio indicates a stronger ability to meet interest payments.