Semtech Corporation (SMTC)

The solvency ratios of Semtech Corporation indicate the company's ability to meet its long-term financial obligations and its overall financial stability over the years.

1. Debt-to-assets ratio: This ratio measures the proportion of total assets financed by debt. Semtech's debt-to-assets ratio has increased significantly over the last five years, reaching 1.00 in 2024, indicating that the company's assets are entirely financed by debt.

2. Debt-to-capital ratio: This ratio reflects the percentage of the company's capital structure that is financed by debt. Semtech's debt-to-capital ratio has also increased notably, reaching 1.29 in 2024, indicating a higher reliance on debt for capital funding.

3. Debt-to-equity ratio: Unfortunately, the data for this ratio is missing for the latest year. However, in the preceding years, Semtech's debt-to-equity ratio increased steadily, reaching 1.72 in 2023. This suggests that the company had a higher level of debt relative to shareholders' equity in those years.

4. Financial leverage ratio: This ratio indicates the extent to which a company's operations are funded by debt. Semtech's financial leverage ratio has fluctuated over the years but has maintained a relatively stable range between 1.53 and 3.40. A higher ratio implies a higher level of financial risk associated with the company's capital structure.

In summary, Semtech Corporation's solvency ratios indicate a progressive increase in debt reliance and financial leverage over the past five years, signaling a potentially higher level of financial risk and debt obligations that the company needs to manage effectively.

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Coverage ratios

The interest coverage ratio for Semtech Corporation has fluctuated over the past five years. In January 2020, the company had an interest coverage ratio of 6.03, indicating that it was generating enough operating income to cover its interest expenses. However, this ratio declined significantly to -9.87 in January 2024, indicating that the company's operating income was insufficient to cover its interest expenses, which could be a cause for concern. The sharp decrease in the interest coverage ratio suggests a potential deterioration in the company's financial health and its ability to meet its interest obligations. Investors and creditors may want to carefully monitor Semtech's financial performance and leverage levels moving forward.