NetApp Inc (NTAP)

NetApp Inc's solvency ratios show the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing.

The Debt-to-assets ratio has been fairly stable over the past five years, decreasing slightly from 0.28 in 2021 to 0.20 in 2024. This ratio indicates that 20% of NetApp's assets are financed by debt, highlighting a conservative approach to leverage.

The Debt-to-capital ratio has also shown a decreasing trend, declining from 0.83 in 2020 to 0.63 in 2024. This ratio suggests that 63% of NetApp's capital structure is debt-based, signaling a lower reliance on debt financing compared to the total capital employed.

The Debt-to-equity ratio has exhibited a consistent decline over the same period, dropping from 4.74 in 2020 to 1.74 in 2024. This trend indicates that NetApp has been reducing its dependence on equity financing in favor of debt, likely aiming to optimize its capital structure and improve financial performance.

The Financial leverage ratio, which measures the extent to which a company utilizes debt to finance its assets, has shown a downward trend from 31.08 in 2020 to 8.63 in 2024. This significant reduction suggests NetApp has been deleveraging its balance sheet, which may reduce financial risk and improve overall solvency.

Overall, the solvency ratios of NetApp Inc demonstrate a prudent approach to managing debt and capital structure, with a focus on reducing reliance on equity financing and improving long-term financial stability.

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Coverage ratios

The interest coverage ratio for NetApp Inc has shown a positive trend over the past five years. In the most recent fiscal year ending April 26, 2024, the interest coverage ratio stood at 20.73, indicating a strong ability to cover interest expenses with operating income. This reflects a significant improvement compared to the previous year where the ratio was 16.91, and demonstrates the company's enhanced capacity to meet its interest obligations.

Furthermore, the trend reveals a consistent performance in maintaining a healthy interest coverage ratio over the last five years, with figures above 14. This indicates that NetApp Inc has been in a favorable position to service its debt obligations from its operating profits.

Overall, the increasing trend in interest coverage ratios suggests that NetApp Inc has been effectively managing its interest expenses in relation to its operating income, which can contribute to the company's financial stability and creditworthiness.