Applied Materials Inc. (NASDAQ:AMAT)

The financial data reveals several key trends in the company’s capital structure and coverage ratios over the six-year period.

Leverage Ratios

There is a consistent decline in debt-related leverage ratios. The debt to equity ratio decreased from 0.52 in 2020 to 0.32 in 2025, indicating a reduction in reliance on debt financing relative to shareholder equity. When including operating lease liabilities, the debt to equity ratio follows a similar trend, albeit slightly higher, declining from 0.54 to 0.35 in the same period.

The debt to capital ratio also declined steadily from 0.34 in 2020 to 0.24 in 2025, reflecting a stronger equity base relative to total capital employed. Similarly, when incorporating operating lease liabilities, the metric decreased from 0.35 to 0.26, maintaining a parallel trend.

Debt to assets ratio showed a gradual decrease from 0.24 in 2020 to 0.18 in 2025, highlighting a reduction in the proportion of total assets financed by debt. Including operating lease liabilities, the ratio decreased from 0.26 to 0.19, mirroring the overall reduction trend.

Financial Leverage

The financial leverage ratio exhibits a declining trend, dropping from 2.11 in 2020 to 1.78 by 2025. This suggests that the company is increasingly relying on equity rather than debt to finance its assets.

Coverage Ratios

Interest coverage ratio improved significantly, increasing from 18.36 in 2020 to 35.46 in 2025. This indicates a stronger ability to meet interest obligations from operating earnings.

Fixed charge coverage ratio similarly shows improvement, rising from 14.48 in 2020 to 35.46 in 2025, suggesting enhanced capacity to cover fixed financial obligations, including lease payments.

Overall, the data indicates a strengthening financial position with decreasing debt burden relative to equity and assets, accompanied by improved capacity to cover interest and fixed charges. The consistent decline in leverage ratios coupled with stronger coverage ratios points to more conservative financial management and improving solvency over the analyzed period.

Total Debt

The total debt demonstrated a gradual increase over the period under review, rising from $5,448 million in 2020 to $6,555 million in 2025. This represents a cumulative increase of approximately 20.3% over six years. While the debt level remained relatively stable between 2020 and 2022, it showed a more pronounced upward trend beginning in 2023.

Stockholders’ Equity

Stockholders’ equity exhibited a significant upward trajectory throughout the analyzed timeframe, expanding from $10,578 million in 2020 to $20,415 million in 2025. This nearly doubled the equity base, with the most notable increases occurring after 2022. The growth in equity indicates an enhanced financial base and potential accumulated earnings or capital infusions.

Debt to Equity Ratio

The debt to equity ratio decreased consistently from 0.52 in 2020 to 0.32 in 2025. This downward trend reflects a strengthening equity position relative to total debt, suggesting a more conservative capital structure. The steady reduction in leverage indicates a strategic focus on expanding equity or managing incremental debt growth relative to equity.

Overall Financial Insights

The company’s financial structure has improved in terms of solvency and leverage over the observed periods. Despite incremental increases in total debt, the acceleration in stockholders' equity growth has outpaced debt accumulation, resulting in a declining debt to equity ratio. This pattern suggests improved financial resilience and potentially lower financial risk, positioning the company favorably for future capital needs or economic variability.

The financial data indicates a steady increase in total debt, including operating lease liabilities, over the six-year period from October 2020 to October 2025. The debt level rose from $5,707 million to $7,050 million, representing an increase of approximately 23.6%. This upward trend suggests a growing reliance on debt financing during this timeframe.

Stockholders’ equity demonstrated a notable upward trajectory, increasing from $10,578 million to $20,415 million. This nearly doubling of equity reflects significant retained earnings or additional equity injections, leading to a strengthened financial position and potentially supporting future growth initiatives.

The debt to equity ratio decreased from 0.54 in 2020 to 0.35 by 2024 and remained stable at this lower level into 2025. This declining ratio, despite the increase in total debt, indicates that equity growth outpaced the growth in debt, thereby improving the company's leverage position. Reduced leverage can be associated with lower financial risk and enhanced capacity to absorb potential financial shocks.

Total debt

Increased consistently, reflecting possibly greater investment or operational funding needs.

Stockholders’ equity

Experienced significant growth, contributing to a stronger capital base.

Debt to equity ratio

Marked decrease showing improved leverage and decreased relative dependence on debt financing.

Overall, the data portrays a company that has increased its total debt moderately while substantially boosting equity, thereby enhancing its financial stability and reducing its relative leverage over the period examined.

The financial data exhibits several notable trends and developments over the analyzed period.

Total Debt

The total debt has shown a gradual increase from 5,448 million USD in 2020 to 6,555 million USD in 2025. Despite fluctuations, the overall trend is a moderate rise, with a sharper increase observed particularly between 2023 and 2025.

Total Capital

Total capital has displayed a steady upward trajectory across the years, rising from 16,026 million USD in 2020 to 26,970 million USD in 2025. The growth accelerated notably from 2022 onward, suggesting increased capital investment or accumulation.

Debt to Capital Ratio

The debt to capital ratio has declined consistently over the period, decreasing from 0.34 in 2020 to 0.24 in 2025. This reduction indicates an improved capital structure with a relatively lower reliance on debt financing compared to total capital.

In summary, while both total debt and total capital have increased, the proportion of debt relative to capital has decreased steadily, reflecting a strengthening financial position with potentially reduced financial risk. The company appears to be managing its leverage conservatively, expanding its capital base more rapidly than its debt burden.

Total Debt (Including Operating Lease Liability)

The total debt showed a steady increase over the analyzed periods. It rose from 5,707 million USD in late 2020 to 7,050 million USD by late 2025. The growth in debt was gradual, reflecting a consistent approach to leveraging the company’s capital structure over time.

Total Capital (Including Operating Lease Liability)

Total capital also increased significantly, rising from 16,285 million USD in 2020 to 27,465 million USD in 2025. The increase was particularly notable between 2022 and 2023, followed by continued expansion at a somewhat slower pace. This indicates an overall growth in the company's financial base and resources available for operations or investment.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio demonstrated a declining trend during the period. It decreased from 0.35 in 2020 to 0.26 in 2024 and 2025. This reduction suggests an improvement in the company's leverage position, with a larger proportion of capital being financed by equity or other non-debt sources despite the absolute increase in debt.

Total Debt

The company's total debt exhibited a gradual increase over the reported periods, starting from 5,448 million USD and reaching 6,555 million USD by the final year. This upward trend suggests a moderate rise in leverage or borrowing activity.

Total Assets

Total assets increased consistently throughout the years, rising from 22,353 million USD to 36,299 million USD. This steady growth indicates expansion in asset base, reflecting potential business growth or asset acquisitions.

Debt to Assets Ratio

The debt to assets ratio showed a declining trend, decreasing from 0.24 to 0.18 over the period. This decline suggests that, despite rising total debt, the company’s asset growth outpaced its debt increase, resulting in improved leverage ratios and potentially better financial stability.

The analysis of the financial data reveals several key trends over the period from 2020 to 2025 in the company's balance sheet metrics.

Total Debt (Including Operating Lease Liability)

The total debt shows a gradual increase year over year, rising from $5,707 million in 2020 to $7,050 million in 2025. Although the debt level grows steadily, the pace of increase is moderate relative to the asset base expansion.

Total Assets

Total assets have exhibited a consistent and robust upward trend throughout the observed periods. The company’s total assets expanded significantly from $22,353 million in 2020 to $36,299 million in 2025, reflecting considerable growth in the asset base. This growth in assets outpaces the rise in total debt, indicating accumulation of assets possibly through reinvestments or acquisitions.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt-to-assets ratio demonstrates a declining pattern over the years. Starting from 0.26 in 2020, it decreases gradually to 0.19 by 2024 and remains stable at that level in 2025. This decline indicates an improvement in the company's leverage position, suggesting enhanced financial stability and lower relative indebtedness. The reduction in leverage ratio despite rising debt implies that asset growth exceeds debt growth, strengthening the company’s capital structure.

The financial data reveals a consistent growth in total assets over the examined six-year period. Total assets increased from US$22,353 million in 2020 to US$36,299 million in 2025. This represents a significant expansion in the company's asset base, reflecting either acquisitions, investments, or organic growth.

Stockholders’ equity also exhibited a steady upward trajectory. It rose from US$10,578 million in 2020 to US$20,415 million by 2025, nearly doubling over the period. Notably, there was a marked increase between 2022 and 2023, where equity grew from US$12,194 million to US$16,349 million, suggesting substantial retained earnings or capital infusions during that period.

Financial leverage, expressed as a ratio of total assets to stockholders’ equity, showed a declining trend. It remained constant at 2.11 in 2020 and 2021 before slightly increasing to 2.19 in 2022. From 2023 onward, financial leverage decreased steadily to 1.78 in 2025. This decline in leverage indicates a strengthening equity position relative to liabilities, implying a more conservative capital structure or improved debt management.

Total Assets

Increased progressively each year, indicating asset growth from US$22,353 million to US$36,299 million between 2020 and 2025.

Stockholders’ Equity

Rose steadily, nearly doubling from US$10,578 million to US$20,415 million with particularly strong growth between 2022 and 2023.

Financial Leverage

Started stable at 2.11 (2020-2021), peaked slightly in 2022 at 2.19, then decreased to 1.78 by 2025, suggesting reduced reliance on debt relative to equity.

The analyzed financial data reveals notable trends over the period from 2020 to 2025 in key financial metrics related to operating profitability and debt servicing capacity.

Earnings Before Interest and Tax (EBIT)

There is a consistent upward trend in EBIT over the entire six-year period. Starting at 4,406 million US dollars in 2020, EBIT shows strong growth each year, reaching 9,540 million US dollars by 2025. This represents more than a doubling of EBIT, indicating robust operational performance expansion and improved profitability.

Interest Expense

The interest expense exhibits relative stability with minor fluctuations. From 240 million US dollars in 2020, the expense slightly decreases to 228 million in 2022, before gradually rising again to 269 million in 2025. Although there is a slight increase in the later years, the overall interest expense level remains quite moderate compared to EBIT growth.

Interest Coverage Ratio

This ratio, which measures the company's ability to cover interest obligations from EBIT, improves significantly during the period. Starting at 18.36 in 2020, it peaks at 35.46 by 2025. Such a steady increase reflects enhanced financial strength and a greater capacity to meet interest payments comfortably, driven primarily by the substantial growth in EBIT relative to moderate interest expense changes.

In summary, the data illustrates a strong improvement in operating earnings accompanied by a relatively stable interest expense. This results in a significantly improved interest coverage ratio, implying enhanced financial health and reduced risk related to interest obligations over the observed period.

The analysis of the annual financial data reveals several key trends regarding the company’s earnings, fixed charges, and fixed charge coverage over the six-year period under review.

Earnings before fixed charges and tax

The earnings before fixed charges and tax show a clear upward trajectory from 2020 to 2025. Starting at $4,475 million in 2020, the figure increases substantially to $9,540 million by 2025. This represents more than a twofold increase over the period, indicating consistent growth in operating performance and profitability before accounting for fixed financial obligations.

Fixed charges

Fixed charges remain relatively stable across the years, fluctuating within a narrow range. Beginning at $309 million in 2020, the charges slightly rise to $340 million in 2023, then decline to $247 million in 2024 before slightly increasing again to $269 million in 2025. These variations, although modest, suggest some management of fixed financial obligations or changes in financing costs but no significant increase despite the growth in earnings.

Fixed charge coverage

The fixed charge coverage ratio demonstrates a markedly positive trend, increasing from 14.48 in 2020 to 35.46 in 2025. This ratio reflects the company’s ability to cover fixed charges with its earnings before fixed charges and tax. The improvement indicates enhanced financial health and greater ease in meeting fixed financial commitments, given rising earnings outpace relatively stable fixed charges.

Overall, the data indicate strong operational growth and an improved capacity to service fixed charges, pointing to robust financial stability and efficient management of fixed financial obligations over the period analyzed.