Qualcomm Incorporated (QCOM)
Solvency ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.28 | 0.28 | 0.33 | 0.43 | 0.41 |
| Debt-to-capital ratio | 0.40 | 0.43 | 0.58 | 0.71 | 0.73 |
| Debt-to-equity ratio | 0.67 | 0.75 | 1.38 | 2.51 | 2.74 |
| Financial leverage ratio | 2.37 | 2.72 | 4.14 | 5.86 | 6.71 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. For Qualcomm Incorporated, the trends in solvency ratios from 2019 to 2023 indicate improvements in its financial health and ability to manage debt.
The debt-to-assets ratio remained relatively stable at around 0.28 in 2022 and 2023, showing that Qualcomm's debt level in relation to its total assets has been well managed and has not significantly increased. This ratio indicates that Qualcomm relies modestly on debt to finance its assets.
The debt-to-capital ratio decreased from 0.43 in 2022 to 0.40 in 2023, reflecting a reduction in the proportion of debt in Qualcomm's capital structure. This trend suggests that Qualcomm has been successful in lowering its debt compared to its total capital, which may reduce financial risk and improve its solvency position.
The debt-to-equity ratio also showed a positive trend, decreasing from 1.38 in 2021 to 0.67 in 2023. This decline indicates that Qualcomm's reliance on debt financing relative to shareholders' equity has decreased, showing a stronger equity position and improved financial stability.
The financial leverage ratio decreased significantly from 6.71 in 2019 to 2.37 in 2023, indicating a substantial improvement in Qualcomm's financial leverage. This implies that Qualcomm has reduced its reliance on debt funding, which may lead to a lower risk of insolvency and improved financial flexibility.
In summary, based on the solvency ratios analyzed, Qualcomm has shown positive trends in managing its debt levels and improving its long-term financial stability over the years. These improvements suggest that Qualcomm is in a better position to meet its financial obligations and navigate potential economic challenges.
Coverage ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 11.57 | 31.51 | 19.38 | 10.50 | 12.93 |
Qualcomm Incorporated's interest coverage ratio has shown fluctuation over the past five years. In 2022, the interest coverage was particularly strong at 31.51, indicating that the company's operating income was 31.51 times higher than its interest expenses for that year. This exceptionally high ratio suggests Qualcomm had significant earnings to cover its interest payments comfortably.
In 2023, the interest coverage ratio decreased to 11.57. While this is still a healthy ratio, it represents a notable decline from the previous year. The drop in the interest coverage ratio may indicate a decrease in operating income relative to interest expenses, potentially signaling a need for Qualcomm to closely monitor its ability to meet debt obligations from operating earnings.
Overall, Qualcomm has generally maintained solid interest coverage levels over the period, with ratios above 10 in each year. An interest coverage ratio above 1 indicates that the company is generating enough operating income to cover its interest expenses. However, investors and analysts may want to keep an eye on Qualcomm's future interest coverage ratios to ensure the company can continue to comfortably service its debt obligations from its earnings.