Cisco Systems Inc. (NASDAQ:CSCO)

Debt to Equity Ratio

The debt to equity ratio exhibits a general downtrend from October 2018 through July 2023, decreasing from 0.58 to a low of 0.17. This suggests a gradual reduction in reliance on debt financing relative to shareholders' equity. However, starting in January 2024, the ratio sharply increases again, reaching approximately 0.64 by April 2025. This indicates a renewed increase in leverage during the most recent quarters.

Debt to Capital Ratio

Similar to the debt to equity ratio, the debt to capital ratio declines steadily from 0.37 in late 2018 to about 0.14 in July 2023, reflecting lower debt as a proportion of total capital. From January 2024 onwards, this ratio rises markedly back to around 0.39 by April 2025, consistent with the increased leverage observed in the debt to equity metric.

Debt to Assets Ratio

This ratio follows a decreasing pattern from 0.24 in late 2018 to approximately 0.08 in mid-2023, indicating a reduced debt level relative to total assets over this period. A significant reversal occurs starting in early 2024, with the ratio increasing to roughly 0.24 by early 2025, corroborating the resumed trend of higher debt usage within the asset base.

Financial Leverage Ratio

Financial leverage rises initially from 2.4 in October 2018 to a peak near 2.91 in July 2019, suggesting increased asset base funded by equity. It then declines steadily to a low near 2.18 by July 2023, indicating a more conservative capital structure. Beginning in January 2024, the ratio escalates back to roughly 2.61 by April 2025, consistent with the increase in leverage metrics seen elsewhere.

Interest Coverage Ratio

Data on interest coverage starts from April 2019, showing a strong upward trend from 17.96 to a peak of 41.54 in October 2022, reflecting improving ability to cover interest expenses with operating earnings. This capability deteriorates significantly after that, plummeting to 7.39 by April 2025, which signals weakening financial health and potentially higher risk in servicing debt.

The financial data reveals several notable trends in the company's leverage and equity position over the observed periods.

Total Debt

The total debt exhibits a general decline from October 2018 through April 2023, decreasing from $25,564 million to a low of $7,650 million. This decline indicates a reduction in the company's reliance on debt financing during this period. However, starting from January 2024, total debt spikes sharply, reaching $31,987 million by April 2024 before slightly decreasing to $29,279 million by April 2025. This sudden increase suggests a strategic change in capital structure or increased borrowing.

Total Equity

Total equity shows a moderate decline from $43,848 million in October 2018 to around $39,496 million in January 2022, indicating potential distribution of earnings or other equity adjustments. From then on, equity stabilizes and even improves slightly, rising to $45,935 million in July 2024. This relative stability in equity suggests consistent retained earnings and capital contributions.

Debt to Equity Ratio

The debt to equity ratio confirms the trends seen in total debt and equity. Between October 2018 and July 2023, the ratio steadily decreases from 0.58 to a low of 0.17, illustrating a declining leverage and a strengthening equity base. This downward trend indicates a conservative financing approach during this interval. In contrast, the period from January 2024 onwards experiences a sharp increase in the debt to equity ratio, peaking at 0.71 in April 2024 and then moderating to 0.64 by April 2025. This shift implies a reversal to higher financial leverage, possibly reflecting new debt-funded initiatives or adjustments in capital strategy.

The debt to capital ratio demonstrates notable fluctuations over the course of the observed periods, reflecting changes in the company's leverage strategy and capital structure.

Initial Period (Oct 2018 - Jul 2019)

The debt to capital ratio increased from 0.37 to 0.42, suggesting a rising reliance on debt financing during this timeframe. Total debt levels showed moderate variation, peaking at 24,666 million USD, while total capital declined steadily from 69,412 million USD to 58,237 million USD.

Subsequent Decline Phase (Oct 2019 - Jul 2023)

During this extended period, the debt to capital ratio experienced a consistent downward trend, falling from 0.35 in October 2019 to a low of 0.14 by July 2023. This reduction is associated primarily with decreases in total debt—from approximately 18,497 million USD to 7,650 million USD—and relatively stable total capital levels fluctuating around 50,000 to 53,000 million USD. This signifies a deleveraging trend and an emphasis on strengthening the equity base relative to debt.

Recent Reversal (Oct 2023 - Apr 2025)

A marked increase in debt to capital ratio occurs again from 0.16 in October 2023 to about 0.41 by April 2025. This is concurrent with a sharp rise in total debt, surging from 7,650 million USD to a peak close to 31,000 million USD in early 2024 before slightly decreasing but remaining elevated. Total capital also rises, reaching a maximum of nearly 77,761 million USD in July 2024, then slightly declining thereafter. The simultaneous increase in both total debt and total capital suggests an aggressive leverage expansion, possibly to finance growth or other strategic investments.

Overall, the company's capital structure has alternated between phases of deleveraging and increased leverage. The recent trend indicates a return to higher indebtedness levels, which may influence financial risk profiles and cost of capital moving forward.

Total debt

Over the observed periods, total debt exhibits a general declining trend from late 2018 through early 2023, decreasing from approximately $25.6 billion to around $8.4 billion. This reduction indicates a significant deleveraging over several years. However, from early 2023 onward, there is a marked reversal as total debt sharply increases, reaching values above $31 billion by mid-2024, followed by a slight decline but still remaining elevated near $29 billion by early 2025. This suggests a renewed accumulation of debt after a prolonged period of reduction.

Total assets

Total assets show relative stability with minor fluctuations between approximately $90 billion and $102 billion from late 2018 to early 2023. Starting in early 2023, total assets rise significantly, peaking near $124 billion in late 2024 before a modest decline to about $120 billion by early 2025. This increase in assets coincides with the rise in total debt, indicating possible asset acquisition or investments funded by debt issuance during this interval.

Debt to assets ratio

The debt to assets ratio experiences a clear downward trend from 0.24-0.25 levels in 2018-2019 to around 0.08-0.1 by early 2023, reflecting improved balance sheet leverage and reduced reliance on debt relative to asset base. However, starting around early 2023, this ratio rises sharply back to levels around 0.25-0.26 through mid to late 2024, before slightly decreasing to 0.24 by early 2025. This pattern aligns with the earlier noted surge in total debt and asset levels, indicating a substantial increase in leverage in recent periods.

Total assets

Over the analyzed period, total assets exhibit a fluctuating pattern with an overall moderate increase. From late 2018 through early 2020, total assets generally declined, reaching a low point around January 2020. Beginning mid-2020, a recovery and steady increase is noticeable, peaking in mid-2024 before a slight decline towards April 2025. This suggests a period of initial contraction followed by asset growth, possibly reflecting strategic acquisitions, investments, or improved operational performance.

Total equity

Total equity shows a declining trend from late 2018 until early 2022, hitting a trough between late 2021 and early 2022. Following this, equity demonstrates a gradual upward trend with some fluctuations, indicating partial restoration of shareholder value. The equity figures improve steadily through 2023 and into early 2024, but exhibit a mild decrease toward the end of the period. This pattern may point to variations in retained earnings, dividend policies, or changes in comprehensive income.

Financial leverage

The financial leverage ratio initially rises from 2.4 in late 2018 to peak near 2.91 in mid-2019, indicating increasing reliance on debt relative to equity. Subsequently, there is a downward trend in leverage through late 2021, reaching a lower range around 2.18 to 2.31, suggesting a deleveraging phase or equity growth outpacing debt. However, starting early 2024, financial leverage increases sharply to approximately 2.74 before slightly declining again, reflecting another phase of higher leverage. These shifts likely relate to the company's financing strategies, debt issuance, or equity changes over time.

The analysis of the quarterly financial data reveals several notable trends in key financial metrics over the observed periods.

Earnings Before Interest and Tax (EBIT)

EBIT demonstrates a fluctuating trend throughout the periods. Starting at 4,130 million US dollars in October 2018, it experienced a decline reaching a low point around October 2020 at 2,793 million. Subsequently, EBIT showed a recovery phase with a peak of 4,582 million in October 2023, followed by a significant decrease again in early 2024, ending at 3,350 million in April 2025. This pattern indicates volatility with intermittent periods of growth and contraction.

Interest Expense

Interest expense showed a general declining trend from October 2018 (221 million US dollars) to around January 2021 (89 million), indicating a reduction in borrowing costs or debt levels during this period. However, from early 2021 onwards, the interest expense began to rise again, reaching a peak of 418 million by April 2024 and maintaining a similar level through April 2025. This increase suggests higher financing costs or increased debt financing in the later periods.

Interest Coverage Ratio

The interest coverage ratio, an indicator of the company's ability to pay interest on its debt, improved notably from around mid-2019 through early 2023. Starting from approximately 18 in mid-2019, it increased steadily to peak at around 41.54 by July 2021. After this peak, the ratio declined significantly, falling to below 9 by April 2025. The initial improvement reflects stronger earnings relative to interest expenses, while the subsequent decline suggests rising interest burden coupled with reduced EBIT, potentially raising concerns about debt servicing capacity in the most recent periods.

Overall, the data illustrate a period of fluctuating operational profitability with EBIT showing considerable variability, a reduction and later resurgence in interest expenses, and a corresponding rise followed by a steep decline in interest coverage. These dynamics may reflect external economic factors, changes in capital structure, or shifts in operational efficiency impacting financial performance and risk profile over time.