ON Semiconductor Corporation (ON)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.19 | 0.25 | 0.30 | 0.34 | 0.34 |
| Debt-to-capital ratio | 0.25 | 0.33 | 0.39 | 0.46 | 0.47 |
| Debt-to-equity ratio | 0.33 | 0.49 | 0.64 | 0.84 | 0.87 |
| Financial leverage ratio | 1.70 | 1.94 | 2.10 | 2.45 | 2.55 |
The solvency ratios of ON Semiconductor Corp. have shown a favorable trend over the past five years, indicating an improving financial position in terms of long-term stability and ability to meet obligations. The debt-to-assets ratio has decreased from 0.43 in 2019 to 0.25 in 2023, suggesting a lower proportion of assets financed through debt. Similarly, the debt-to-capital ratio and debt-to-equity ratio have declined steadily, indicating a reduced reliance on debt funding and a stronger capital structure.
The financial leverage ratio, which reflects the company's use of debt to finance its operations, has also decreased from 2.55 in 2019 to 1.70 in 2023. This decline indicates a lower level of financial risk and greater cushion against potential financial distress.
Overall, the improving solvency ratios of ON Semiconductor Corp. reflect a more stable and sustainable financial position, with reduced dependency on debt financing and improved long-term debt repayment capacity. This trend suggests a positive outlook for the company's ability to weather financial challenges and support future growth initiatives.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 34.88 | 25.87 | 9.87 | 2.04 | 2.85 |
The interest coverage ratio of ON Semiconductor Corp. has shown a fluctuating trend over the past five years. In 2022, the interest coverage ratio was significant at 34.82, indicating a strong ability to cover interest expenses with operating income. This level of coverage suggests a healthy financial position and a lower risk of default on debt obligations.
However, this ratio was notably lower in 2021 at 10.56, although it still indicates a comfortable level of interest coverage. The sudden decrease from 2022 to 2021 may warrant further investigation into what caused this change.
In 2020, the interest coverage ratio was relatively low at 2.54, signaling a potential concern regarding the company's ability to meet its interest obligations through its operating income alone. The ratio improved in 2019 to 4.58, but it still indicates a moderate level of interest coverage.
Overall, while ON Semiconductor Corp. demonstrated strong interest coverage in 2022, there were fluctuations in the ratio in the preceding years, highlighting the importance of closely monitoring the company's financial performance and debt management practices.