InterDigital Inc (IDCC)

Interdigital Inc's solvency ratios provide insights into the company's ability to meet its financial obligations over the long term.

The debt-to-assets ratio has been increasing over the past five years, from 0.28 in 2019 to 0.34 in 2023. This indicates that Interdigital is relying more on debt to finance its assets. While the ratio is still relatively low, the trend suggests the company is becoming more leveraged.

The debt-to-capital ratio has also been on the rise, increasing from 0.37 in 2019 to 0.51 in 2023. This shows that debt makes up a larger portion of Interdigital's capital structure. The higher ratio may imply increased financial risk as a larger proportion of the company's capital comes from debt.

The debt-to-equity ratio has shown a similar upward trend, from 0.58 in 2019 to 1.05 in 2023. This indicates that Interdigital's reliance on debt financing relative to equity has been growing. A ratio above 1 suggests that the company has more debt than equity, which can raise concerns about financial stability and the ability to meet obligations.

The financial leverage ratio has also been increasing, from 2.12 in 2019 to 3.04 in 2023. This indicates that Interdigital's reliance on debt to finance its operations and growth has been intensifying. A higher financial leverage ratio means the company is more leveraged and carries higher financial risk.

Overall, Interdigital Inc's solvency ratios indicate a growing reliance on debt financing over the past five years, which may raise concerns about the company's ability to manage its debt levels and meet its financial obligations in the long run.

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Coverage ratios

The interest coverage ratio for Interdigital Inc has shown a positive trend over the past five years, indicating an improvement in the company's ability to meet its interest obligations. The ratio increased from 0.92 in 2019 to 4.94 in 2023, reflecting a significant enhancement in the company's ability to cover its interest expenses with operating income.

This upward trend suggests that Interdigital Inc has been generating sufficient earnings to comfortably cover its interest payments, indicating a healthier financial position and reduced risk of default on debt obligations. The company's interest coverage ratio of 4.94 in 2023 implies that it is generating nearly 5 times more operating income than the interest expenses incurred for that period.

A higher interest coverage ratio is generally seen as a positive indicator of financial stability and creditworthiness, as it demonstrates the company's capability to service its debt with its operating profits. The consistent improvement in Interdigital Inc's interest coverage ratio over the years is a favorable sign for investors and lenders, as it suggests a lower probability of financial distress due to inadequate cash flow to meet debt obligations.