Illumina Inc (ILMN)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.24 | 0.15 | 0.12 | 0.11 | 0.09 |
| Debt-to-capital ratio | 0.39 | 0.21 | 0.18 | 0.14 | 0.13 |
| Debt-to-equity ratio | 0.63 | 0.26 | 0.23 | 0.16 | 0.14 |
| Financial leverage ratio | 2.66 | 1.76 | 1.86 | 1.42 | 1.62 |
Based on the provided data, the solvency ratios of Illumina Inc show a mixed trend over the years.
1. Debt-to-assets ratio has been steadily increasing from 0.09 in 2020 to 0.24 in 2024, indicating that the proportion of debt relative to total assets has been rising. This could raise concerns about the company's ability to cover its debts with its assets.
2. Debt-to-capital ratio has also shown an upward trajectory, increasing from 0.13 in 2020 to 0.39 in 2024. This indicates a higher reliance on debt financing compared to equity, which could expose the company to higher financial risk.
3. Debt-to-equity ratio has seen a substantial increase from 0.14 in 2020 to 0.63 in 2024, signifying a significant rise in the level of debt relative to shareholders' equity. This suggests that the company has been increasingly leveraging debt to finance its operations.
4. Financial leverage ratio, which measures the extent to which a company is using debt to finance its operations, has also fluctuated over the years. It peaked at 2.66 in 2024, indicating a higher proportion of debt in the company's capital structure compared to equity.
Overall, the increasing trend in these solvency ratios suggests that Illumina Inc has been taking on more debt relative to its assets, capital, and equity over the years, which may raise concerns about the company's long-term financial stability and ability to manage its debt obligations.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | — | -13.51 | -160.73 | 15.49 | 18.47 |
Interest coverage ratio is a financial metric that indicates a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio reflects a stronger ability to meet interest obligations.
For Illumina Inc, the interest coverage ratio has shown fluctuations over the years. In 2020, the interest coverage ratio was 18.47, indicating a strong ability to cover interest payments. However, this ratio decreased to 15.49 in 2021, which may suggest a slight decline in the company's ability to cover its interest expenses.
The interest coverage ratio then experienced a significant negative swing in 2022, dropping to -160.73. This drastic decline raises concerns about Illumina's ability to cover its interest obligations with its earnings. The company may need to closely reevaluate its debt structure and financial management strategies to address this severe imbalance.
Subsequently, in 2023, the interest coverage ratio improved slightly but remained negative at -13.51, indicating ongoing challenges for Illumina in meeting its interest payments relative to its earnings.
Lastly, the data for 2024 is not available (denoted by "—"), making it difficult to provide a current evaluation of Illumina's interest coverage ratio for that year. Overall, the trend in Illumina's interest coverage ratio shows fluctuations and an alarming negative swing in 2022, highlighting the importance of closely monitoring the company's financial health and debt management practices.