Harmonic Inc (HLIT)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.71 | 1.76 | 2.19 | 2.34 | 2.29 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. In the case of Harmonic Inc, the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio have consistently been at 0.00 over the past five years. This indicates that the company has not relied on debt to finance its operations and investments, resulting in a strong financial position in terms of solvency.
Furthermore, the financial leverage ratio, which shows the proportion of the company's assets financed by debt compared to equity, has been decreasing steadily from 2.29 in 2020 to 1.71 in 2024. This trend suggests that the company has been reducing its reliance on debt financing over the years, improving its financial stability and reducing potential financial risks associated with high leverage.
Overall, based on the solvency ratios analyzed, Harmonic Inc appears to have a robust financial structure with minimal debt obligations and decreasing financial leverage over the years, indicating a healthy solvency position and a lower risk of financial distress.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 8.91 | 8.22 | 9.03 | 1.83 | -1.28 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. In the case of Harmonic Inc, the trend in the interest coverage ratio over the past five years reflects fluctuations in the company's ability to cover its interest expenses.
As of December 31, 2020, Harmonic Inc had an interest coverage ratio of -1.28. This indicates that the company's operating income was not sufficient to cover its interest expenses, resulting in a deficit. A negative interest coverage ratio raises concerns about the company's financial health and its ability to meet its debt obligations.
However, there was a significant improvement in the interest coverage ratio for Harmonic Inc in the following years. By December 31, 2021, the ratio increased to 1.83, suggesting that the company's operating income was just sufficient to cover its interest expenses. This improvement indicates a better financial position compared to the previous year, but the company was still relatively close to not being able to cover its interest payments.
Over the next three years, Harmonic Inc's interest coverage ratio continued to strengthen significantly. By December 31, 2022, the ratio had improved to 9.03, demonstrating a robust ability to cover interest expenses with ample room for safety. This trend of strong interest coverage continued in the subsequent years, with ratios of 8.22 by December 31, 2023, and 8.91 by December 31, 2024.
The steady improvement in Harmonic Inc's interest coverage ratio from negative territory to robust levels indicates a positive shift in the company's financial performance and ability to manage its debt obligations. This trend suggests that Harmonic Inc has enhanced its operational efficiency and profitability, enabling it to comfortably meet its interest expenses and potentially pursue growth opportunities.