Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Fortinet Inc., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Debt to Equity Ratios
- The debt to equity ratio is reported only for 2021 at 1.26, indicating the company had $1.26 in debt for every dollar of equity at that time. When including operating lease liabilities, there is a noticeable increase from 0.03 in 2019 to 1.35 in 2021, suggesting a sharp rise in leverage when considering lease obligations.
- Debt to Capital Ratios
- The debt to capital ratio shows a significant increase from 0.56 in 2021 to 1.4 in 2022, implying the company's reliance on debt financing has grown substantially. Including operating lease liabilities, the ratio rises from 0.03 in 2019 to 1.35 in 2022, reinforcing the trend towards higher leverage when leases are accounted for in capital structure.
- Debt to Assets Ratios
- The debt to assets ratio remains relatively stable, with a slight decrease from 0.17 in 2021 to 0.16 in 2022. Including operating lease liabilities, the ratio goes from 0.01 in 2019 to 0.18 in 2021, then marginally decreases to 0.17 in 2022. This stability suggests that asset growth may have offset any incremental debt increases, maintaining a balanced ratio.
- Financial Leverage
- Financial leverage has risen sharply, moving from 2.94 in 2019 to 7.57 in 2021. Such an increase highlights an intensified use of debt or other liabilities relative to equity, potentially raising the company's financial risk profile over this period.
- Interest Coverage Ratio
- The interest coverage ratio exhibits a strong upward trend, increasing from 42.66 in 2021 to 50.3 in 2022. This indicates that earnings before interest and taxes are more than sufficient to cover interest expenses, reflecting a solid capacity to service debt despite the rising leverage observed.
- Fixed Charge Coverage Ratio
- Fixed charge coverage improved notably from 15.67 in 2018 to 30.28 in 2020, showing enhanced ability to cover fixed financial obligations during that period. However, this ratio declined sharply to 16.0 in 2021 and slightly increased to 17.11 in 2022, which may signal some volatility or challenges in maintaining coverage of fixed charges as financial commitments shift.
Debt Ratios
Coverage Ratios
Debt to Equity
Fortinet Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Long-term debt | 990,400) | 988,400) | —) | —) | —) | |
| Total debt | 990,400) | 988,400) | —) | —) | —) | |
| Total Fortinet, Inc. stockholders’ equity (deficit) | (281,600) | 781,700) | 856,000) | 1,321,900) | 1,010,200) | |
| Solvency Ratio | ||||||
| Debt to equity1 | — | 1.26 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Accenture PLC | 0.00 | 0.00 | 0.00 | 0.00 | — | |
| Adobe Inc. | 0.29 | 0.28 | 0.31 | 0.39 | — | |
| Cadence Design Systems Inc. | 0.27 | 0.13 | 0.14 | — | — | |
| CrowdStrike Holdings Inc. | 0.72 | 0.85 | 0.00 | — | — | |
| Fair Isaac Corp. | — | — | 2.54 | 2.87 | — | |
| International Business Machines Corp. | 2.32 | 2.74 | 2.99 | — | — | |
| Intuit Inc. | 0.42 | 0.21 | 0.66 | 0.12 | — | |
| Microsoft Corp. | 0.39 | 0.50 | 0.62 | 0.77 | — | |
| Oracle Corp. | — | 16.08 | 5.93 | — | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.13 | — | — | |
| Palo Alto Networks Inc. | 17.51 | 5.08 | 2.80 | 0.90 | — | |
| Salesforce Inc. | 0.19 | 0.07 | 0.09 | — | — | |
| ServiceNow Inc. | 0.30 | 0.43 | 0.58 | — | — | |
| Synopsys Inc. | 0.00 | 0.02 | 0.03 | 0.03 | — | |
| Workday Inc. | 0.41 | 0.55 | 0.51 | — | — | |
| Debt to Equity, Sector | ||||||
| Software & Services | 0.71 | 0.83 | 0.95 | — | — | |
| Debt to Equity, Industry | ||||||
| Information Technology | 0.71 | 0.83 | 0.97 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Fortinet, Inc. stockholders’ equity (deficit)
= 990,400 ÷ -281,600 = —
2 Click competitor name to see calculations.
The financial data reveals several important trends relating to the company's debt and equity position over the five-year period examined.
- Total Debt
- Total debt figures are available only for the years ending December 31, 2021, and December 31, 2022, showing values of approximately US$988.4 million and US$990.4 million respectively. This indicates that the company's debt level remained relatively stable, with a slight increase of about US$2 million, suggesting no substantial new borrowing or debt repayment occurred during this timeframe.
- Total Stockholders' Equity (Deficit)
- Stockholders' equity demonstrates a fluctuating and overall declining trend throughout the period. Beginning at US$1.01 billion at the end of 2018, it increased notably to about US$1.32 billion by the end of 2019. However, a significant reduction follows in subsequent years, with equity falling to US$856 million in 2020, and further decreasing to US$781.7 million in 2021. By the end of 2022, equity turns negative, reaching a deficit of approximately US$281.6 million. This shift from positive to negative equity is a critical signal highlighting potential solvency concerns or substantial accumulated losses impacting the company's net worth.
- Debt to Equity Ratio
- Debt to equity ratio data is incomplete but indicates a ratio of 1.26 for 2021. Given the equity in 2021 was approximately US$781.7 million and debt was US$988.4 million, this ratio roughly aligns with the reported figure, suggesting moderate leverage. Absence of data for other years prevents a comprehensive analysis of changes in leverage over time. However, the negative equity in 2022 would imply an undefined or high debt-to-equity ratio, which could indicate heightened financial risk.
In summary, the company experienced a substantial decline in shareholder equity culminating in a negative equity position by 2022, while total debt remained nearly constant over the last two years. This deterioration of equity along with sustained debt levels potentially signals increasing financial vulnerability and warrants further investigation into the causes underlying the negative equity situation.
Debt to Equity (including Operating Lease Liability)
Fortinet Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Long-term debt | 990,400) | 988,400) | —) | —) | —) | |
| Total debt | 990,400) | 988,400) | —) | —) | —) | |
| Operating lease liabilities, current (classification: Accrued liabilities) | 33,200) | 26,300) | 19,100) | 15,500) | —) | |
| Operating lease liabilities, non-current (classification: Other liabilities) | 62,500) | 40,500) | 34,000) | 30,600) | —) | |
| Total debt (including operating lease liability) | 1,086,100) | 1,055,200) | 53,100) | 46,100) | —) | |
| Total Fortinet, Inc. stockholders’ equity (deficit) | (281,600) | 781,700) | 856,000) | 1,321,900) | 1,010,200) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | — | 1.35 | 0.06 | 0.03 | 0.00 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.15 | 0.18 | 0.21 | 0.00 | — | |
| Adobe Inc. | 0.33 | 0.32 | 0.35 | 0.39 | — | |
| Cadence Design Systems Inc. | 0.34 | 0.18 | 0.20 | — | — | |
| CrowdStrike Holdings Inc. | 0.76 | 0.89 | 0.00 | — | — | |
| Fair Isaac Corp. | — | — | 2.83 | 2.87 | — | |
| International Business Machines Corp. | 2.46 | 2.92 | 3.23 | — | — | |
| Intuit Inc. | 0.46 | 0.25 | 0.71 | 0.12 | — | |
| Microsoft Corp. | 0.47 | 0.58 | 0.69 | 0.84 | — | |
| Oracle Corp. | — | 16.61 | 6.10 | — | — | |
| Palantir Technologies Inc. | 0.10 | 0.11 | 0.30 | — | — | |
| Palo Alto Networks Inc. | 19.12 | 5.68 | 3.16 | 0.90 | — | |
| Salesforce Inc. | 0.25 | 0.15 | 0.18 | — | — | |
| ServiceNow Inc. | 0.44 | 0.60 | 0.75 | — | — | |
| Synopsys Inc. | 0.12 | 0.13 | 0.14 | 0.03 | — | |
| Workday Inc. | 0.46 | 0.68 | 0.63 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.81 | 0.94 | 1.06 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.77 | 0.91 | 1.04 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Fortinet, Inc. stockholders’ equity (deficit)
= 1,086,100 ÷ -281,600 = —
2 Click competitor name to see calculations.
- Total Debt (Including Operating Lease Liability)
- The total debt demonstrates a distinct upward trend from 2019 through 2022. Starting at $46,100 thousand in 2019, the debt increased slightly to $53,100 thousand in 2020, followed by a significant surge to $1,055,200 thousand in 2021. The elevated debt level was maintained with a marginal rise to $1,086,100 thousand in 2022. This rapid increase indicates a substantial shift in the company's leverage or financing strategy beginning in 2021.
- Total Stockholders' Equity (Deficit)
- Stockholders' equity exhibits fluctuations and a notable downward trajectory over the period. Equity increased from $1,010,200 thousand in 2018 to a peak of $1,321,900 thousand in 2019. However, it declined sharply to $856,000 thousand in 2020 and continued to decrease to $781,700 thousand in 2021. By 2022, the equity position turned negative, recording a deficit of $281,600 thousand. This negative equity position suggests possible accumulated losses, significant liabilities, or other financial pressures impacting the net worth of the company.
- Debt to Equity Ratio (Including Operating Lease Liability)
- The debt to equity ratio follows the changes in debt and equity and reveals increasing financial leverage over time. It starts very low at 0.03 in 2019, indicating minimal debt relative to equity. The ratio doubles to 0.06 in 2020, showing a modest increase in leverage. In 2021, the ratio jumps markedly to 1.35, reflecting a significant accumulation of debt relative to equity. Data for 2018 and 2022 are incomplete or missing, but the available figures indicate a trend towards greater dependence on debt financing, especially notable in 2021.
Debt to Capital
Fortinet Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Long-term debt | 990,400) | 988,400) | —) | —) | —) | |
| Total debt | 990,400) | 988,400) | —) | —) | —) | |
| Total Fortinet, Inc. stockholders’ equity (deficit) | (281,600) | 781,700) | 856,000) | 1,321,900) | 1,010,200) | |
| Total capital | 708,800) | 1,770,100) | 856,000) | 1,321,900) | 1,010,200) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 1.40 | 0.56 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Accenture PLC | 0.00 | 0.00 | 0.00 | 0.00 | — | |
| Adobe Inc. | 0.23 | 0.22 | 0.24 | 0.28 | — | |
| Cadence Design Systems Inc. | 0.21 | 0.11 | 0.12 | — | — | |
| CrowdStrike Holdings Inc. | 0.42 | 0.46 | 0.00 | — | — | |
| Fair Isaac Corp. | 1.76 | 1.10 | 0.72 | 0.74 | — | |
| International Business Machines Corp. | 0.70 | 0.73 | 0.75 | — | — | |
| Intuit Inc. | 0.30 | 0.17 | 0.40 | 0.10 | — | |
| Microsoft Corp. | 0.28 | 0.33 | 0.38 | 0.43 | — | |
| Oracle Corp. | 1.09 | 0.94 | 0.86 | — | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.12 | — | — | |
| Palo Alto Networks Inc. | 0.95 | 0.84 | 0.74 | 0.47 | — | |
| Salesforce Inc. | 0.16 | 0.06 | 0.08 | — | — | |
| ServiceNow Inc. | 0.23 | 0.30 | 0.37 | — | — | |
| Synopsys Inc. | 0.00 | 0.02 | 0.03 | 0.03 | — | |
| Workday Inc. | 0.29 | 0.35 | 0.34 | — | — | |
| Debt to Capital, Sector | ||||||
| Software & Services | 0.42 | 0.45 | 0.49 | — | — | |
| Debt to Capital, Industry | ||||||
| Information Technology | 0.41 | 0.45 | 0.49 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 990,400 ÷ 708,800 = 1.40
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the company's capital structure over the observed periods from 2018 to 2022. There is a notable absence of recorded total debt values until 2021, at which point total debt first appears at approximately US$988.4 million and slightly increases to US$990.4 million in 2022. This indicates the company either incurred new debt or began recording it only in these later years.
Total capital shows an inconsistent trend, starting at approximately US$1.01 billion in 2018, rising to around US$1.32 billion in 2019, then declining substantially to US$856 million in 2020. Following this decrease, a significant surge occurs in 2021, reaching US$1.77 billion, before falling sharply to US$708.8 million in 2022. This volatility in total capital suggests fluctuating investment levels, asset base changes, or possible equity financing and repurchase activities during these periods.
The debt-to-capital ratio is only available for 2021 and 2022 and shows a marked increase from 0.56 in 2021 to 1.4 in 2022. This spike indicates that debt comprised a much larger proportion of the capital structure by the end of 2022 compared to the previous year, reflecting increased leverage. Combined with the decrease in total capital in 2022, this suggests a relatively higher risk profile due to greater reliance on debt financing.
Overall, the data displays a trend of rising debt levels coinciding with decreasing total capital in the most recent year, leading to an elevated debt-to-capital ratio. This points to a shift towards more aggressive leverage, which may impact the company’s financial stability and risk exposure going forward.
Debt to Capital (including Operating Lease Liability)
Fortinet Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Long-term debt | 990,400) | 988,400) | —) | —) | —) | |
| Total debt | 990,400) | 988,400) | —) | —) | —) | |
| Operating lease liabilities, current (classification: Accrued liabilities) | 33,200) | 26,300) | 19,100) | 15,500) | —) | |
| Operating lease liabilities, non-current (classification: Other liabilities) | 62,500) | 40,500) | 34,000) | 30,600) | —) | |
| Total debt (including operating lease liability) | 1,086,100) | 1,055,200) | 53,100) | 46,100) | —) | |
| Total Fortinet, Inc. stockholders’ equity (deficit) | (281,600) | 781,700) | 856,000) | 1,321,900) | 1,010,200) | |
| Total capital (including operating lease liability) | 804,500) | 1,836,900) | 909,100) | 1,368,000) | 1,010,200) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 1.35 | 0.57 | 0.06 | 0.03 | 0.00 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.13 | 0.15 | 0.17 | 0.00 | — | |
| Adobe Inc. | 0.25 | 0.24 | 0.26 | 0.28 | — | |
| Cadence Design Systems Inc. | 0.25 | 0.15 | 0.17 | — | — | |
| CrowdStrike Holdings Inc. | 0.43 | 0.47 | 0.00 | — | — | |
| Fair Isaac Corp. | 1.72 | 1.09 | 0.74 | 0.74 | — | |
| International Business Machines Corp. | 0.71 | 0.74 | 0.76 | — | — | |
| Intuit Inc. | 0.31 | 0.20 | 0.42 | 0.10 | — | |
| Microsoft Corp. | 0.32 | 0.37 | 0.41 | 0.46 | — | |
| Oracle Corp. | 1.08 | 0.94 | 0.86 | — | — | |
| Palantir Technologies Inc. | 0.09 | 0.10 | 0.23 | — | — | |
| Palo Alto Networks Inc. | 0.95 | 0.85 | 0.76 | 0.47 | — | |
| Salesforce Inc. | 0.20 | 0.13 | 0.16 | — | — | |
| ServiceNow Inc. | 0.31 | 0.37 | 0.43 | — | — | |
| Synopsys Inc. | 0.11 | 0.11 | 0.12 | 0.03 | — | |
| Workday Inc. | 0.32 | 0.41 | 0.39 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.45 | 0.48 | 0.51 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.44 | 0.48 | 0.51 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 1,086,100 ÷ 804,500 = 1.35
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt remained zero or negligible in 2018, then increased modestly to 46,100 thousand US dollars in 2019. It continued to rise to 53,100 thousand in 2020, followed by a substantial surge reaching 1,055,200 thousand in 2021. A further slight increase was noted in 2022, with total debt reaching 1,086,100 thousand. This trend indicates significant borrowing primarily occurring between 2020 and 2021, maintained into 2022.
- Total Capital (including operating lease liability)
- Total capital started at 1,010,200 thousand in 2018 and grew moderately to 1,368,000 thousand in 2019. However, there was a noticeable decline to 909,100 thousand in 2020. This was followed by a sharp rebound to 1,836,900 thousand in 2021. In 2022, the total capital sharply decreased to 804,500 thousand, the lowest in the observed period. The volatility suggests fluctuations in equity or other capital sources, with a peak in 2021 before a marked contraction.
- Debt to Capital Ratio (including operating lease liability)
- The debt to capital ratio was unreported in 2018 but was low at 0.03 in 2019. It doubled to 0.06 in 2020, reflecting incremental borrowing. In 2021, this ratio escalated dramatically to 0.57, signifying debt constituting more than half of the total capital, coinciding with the large increase in total debt that year. By 2022, the ratio exceeded 1.00, reaching 1.35, indicating that total debt surpassed total capital, a sign of high leverage and potential financial risk.
Debt to Assets
Fortinet Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Long-term debt | 990,400) | 988,400) | —) | —) | —) | |
| Total debt | 990,400) | 988,400) | —) | —) | —) | |
| Total assets | 6,228,000) | 5,919,100) | 4,044,500) | 3,885,500) | 3,078,000) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.16 | 0.17 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Accenture PLC | 0.00 | 0.00 | 0.00 | 0.00 | — | |
| Adobe Inc. | 0.15 | 0.15 | 0.17 | 0.20 | — | |
| Cadence Design Systems Inc. | 0.15 | 0.08 | 0.09 | — | — | |
| CrowdStrike Holdings Inc. | 0.20 | 0.27 | 0.00 | — | — | |
| Fair Isaac Corp. | 1.29 | 0.80 | 0.52 | 0.58 | — | |
| International Business Machines Corp. | 0.40 | 0.39 | 0.39 | — | — | |
| Intuit Inc. | 0.25 | 0.13 | 0.31 | 0.07 | — | |
| Microsoft Corp. | 0.18 | 0.21 | 0.24 | 0.27 | — | |
| Oracle Corp. | 0.69 | 0.64 | 0.62 | — | — | |
| Palantir Technologies Inc. | 0.00 | 0.00 | 0.07 | — | — | |
| Palo Alto Networks Inc. | 0.30 | 0.31 | 0.34 | 0.22 | — | |
| Salesforce Inc. | 0.12 | 0.04 | 0.06 | — | — | |
| ServiceNow Inc. | 0.11 | 0.15 | 0.19 | — | — | |
| Synopsys Inc. | 0.00 | 0.01 | 0.02 | 0.02 | — | |
| Workday Inc. | 0.18 | 0.21 | 0.19 | — | — | |
| Debt to Assets, Sector | ||||||
| Software & Services | 0.26 | 0.28 | 0.30 | — | — | |
| Debt to Assets, Industry | ||||||
| Information Technology | 0.26 | 0.29 | 0.31 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 990,400 ÷ 6,228,000 = 0.16
2 Click competitor name to see calculations.
The financial data indicates a consistent increase in the total assets over the evaluated period. Starting from approximately 3.08 billion US dollars at the end of 2018, the total assets rose to about 6.23 billion US dollars by the end of 2022. This reflects a substantial growth, nearly doubling the asset base within five years.
Regarding the total debt, data is only available for the years 2021 and 2022, showing amounts of approximately 988.4 million and 990.4 million US dollars, respectively. The total debt remained relatively stable during this period, increasing marginally by about 2 million US dollars.
The debt to assets ratio, defined as the proportion of total debt relative to total assets, is provided for the last two years only. The ratio shows a slight decrease from 0.17 in 2021 to 0.16 in 2022. This decline suggests an improvement in financial leverage, indicating that total assets have grown proportionally more than total debt, slightly reducing the relative debt burden.
- Total Assets
- Demonstrated a significant upward trend, nearly doubling in value from 2018 to 2022.
- Total Debt
- Remained almost unchanged between 2021 and 2022, with a marginal increase.
- Debt to Assets Ratio
- Saw a slight improvement from 0.17 to 0.16, implying enhanced asset coverage over debt.
Overall, these trends indicate strengthening financial stability with expanding asset bases and manageable debt levels. The modest decline in the debt to assets ratio supports a strategy of cautious leverage relative to asset growth.
Debt to Assets (including Operating Lease Liability)
Fortinet Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Long-term debt | 990,400) | 988,400) | —) | —) | —) | |
| Total debt | 990,400) | 988,400) | —) | —) | —) | |
| Operating lease liabilities, current (classification: Accrued liabilities) | 33,200) | 26,300) | 19,100) | 15,500) | —) | |
| Operating lease liabilities, non-current (classification: Other liabilities) | 62,500) | 40,500) | 34,000) | 30,600) | —) | |
| Total debt (including operating lease liability) | 1,086,100) | 1,055,200) | 53,100) | 46,100) | —) | |
| Total assets | 6,228,000) | 5,919,100) | 4,044,500) | 3,885,500) | 3,078,000) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.17 | 0.18 | 0.01 | 0.01 | 0.00 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Accenture PLC | 0.07 | 0.08 | 0.09 | 0.00 | — | |
| Adobe Inc. | 0.17 | 0.17 | 0.19 | 0.20 | — | |
| Cadence Design Systems Inc. | 0.18 | 0.11 | 0.13 | — | — | |
| CrowdStrike Holdings Inc. | 0.21 | 0.29 | 0.00 | — | — | |
| Fair Isaac Corp. | 1.33 | 0.85 | 0.58 | 0.58 | — | |
| International Business Machines Corp. | 0.42 | 0.42 | 0.43 | — | — | |
| Intuit Inc. | 0.27 | 0.16 | 0.33 | 0.07 | — | |
| Microsoft Corp. | 0.21 | 0.25 | 0.27 | 0.30 | — | |
| Oracle Corp. | 0.73 | 0.66 | 0.64 | — | — | |
| Palantir Technologies Inc. | 0.07 | 0.08 | 0.17 | — | — | |
| Palo Alto Networks Inc. | 0.33 | 0.35 | 0.38 | 0.22 | — | |
| Salesforce Inc. | 0.15 | 0.10 | 0.11 | — | — | |
| ServiceNow Inc. | 0.17 | 0.21 | 0.24 | — | — | |
| Synopsys Inc. | 0.07 | 0.08 | 0.08 | 0.02 | — | |
| Workday Inc. | 0.20 | 0.26 | 0.23 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Software & Services | 0.30 | 0.32 | 0.34 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Information Technology | 0.29 | 0.31 | 0.33 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 1,086,100 ÷ 6,228,000 = 0.17
2 Click competitor name to see calculations.
- Total Debt (Including Operating Lease Liability)
- The total debt level shows a significant upward trend over the analyzed period. Starting from an unspecified amount in 2018, the debt rose moderately to 46,100 thousand US dollars in 2019 and further to 53,100 thousand US dollars in 2020. However, there is a sharp increase in debt balancing from 2020 onwards, reaching 1,055,200 thousand US dollars in 2021 and slightly increasing to 1,086,100 thousand US dollars in 2022. This suggests a major financing or leasing activity during these later years.
- Total Assets
- Total assets consistently increased throughout the five-year period. Beginning at 3,078,000 thousand US dollars in 2018, assets grew steadily to 3,885,500 thousand US dollars in 2019 and 4,044,500 thousand US dollars in 2020. A more pronounced growth occurred in 2021 with total assets rising to 5,919,100 thousand US dollars and further increasing to 6,228,000 thousand US dollars in 2022. This continuous asset growth indicates expansion and possible investments in business operations or acquisitions.
- Debt to Assets Ratio (Including Operating Lease Liability)
- The debt to assets ratio remained low and stable at approximately 0.01 in 2019 and 2020, indicating minimal leverage relative to the asset base during these years. In 2021, there was a substantial increase to 0.18, reflecting the significant rise in debt relative to assets. In 2022, the ratio slightly decreased to 0.17, suggesting that while leverage remained elevated, the proportion of debt compared to assets stabilized. This ratio trajectory aligns with the sharp increase in total debt and the growth in assets, highlighting a shift toward higher indebtedness in recent years.
Financial Leverage
Fortinet Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 6,228,000) | 5,919,100) | 4,044,500) | 3,885,500) | 3,078,000) | |
| Total Fortinet, Inc. stockholders’ equity (deficit) | (281,600) | 781,700) | 856,000) | 1,321,900) | 1,010,200) | |
| Solvency Ratio | ||||||
| Financial leverage1 | — | 7.57 | 4.72 | 2.94 | 3.05 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Accenture PLC | 2.14 | 2.21 | 2.18 | 2.07 | — | |
| Adobe Inc. | 1.93 | 1.84 | 1.83 | 1.97 | — | |
| Cadence Design Systems Inc. | 1.87 | 1.60 | 1.58 | — | — | |
| CrowdStrike Holdings Inc. | 3.53 | 3.14 | 1.89 | — | — | |
| Fair Isaac Corp. | — | — | 4.85 | 4.95 | — | |
| International Business Machines Corp. | 5.80 | 6.98 | 7.57 | — | — | |
| Intuit Inc. | 1.69 | 1.57 | 2.14 | 1.68 | — | |
| Microsoft Corp. | 2.19 | 2.35 | 2.55 | 2.80 | — | |
| Oracle Corp. | — | 25.03 | 9.56 | — | — | |
| Palantir Technologies Inc. | 1.35 | 1.42 | 1.77 | — | — | |
| Palo Alto Networks Inc. | 58.35 | 16.14 | 8.23 | 4.16 | — | |
| Salesforce Inc. | 1.64 | 1.60 | 1.63 | — | — | |
| ServiceNow Inc. | 2.64 | 2.92 | 3.07 | — | — | |
| Synopsys Inc. | 1.71 | 1.65 | 1.64 | 1.57 | — | |
| Workday Inc. | 2.31 | 2.66 | 2.74 | — | — | |
| Financial Leverage, Sector | ||||||
| Software & Services | 2.73 | 2.96 | 3.14 | — | — | |
| Financial Leverage, Industry | ||||||
| Information Technology | 2.69 | 2.90 | 3.12 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Fortinet, Inc. stockholders’ equity (deficit)
= 6,228,000 ÷ -281,600 = —
2 Click competitor name to see calculations.
- Total assets
- There was a consistent increase in total assets over the five-year period. The assets grew from approximately $3.08 billion at the end of 2018 to about $6.23 billion by the end of 2022. The most significant jump occurred between 2020 and 2021, where assets increased by over 46%.
- Total stockholders' equity
- Stockholders' equity showed a fluctuating trend. It rose from around $1.01 billion in 2018 to approximately $1.32 billion in 2019, then declined sharply to $856 million in 2020 and further to $782 million in 2021. By 2022, the equity turned negative, reaching approximately -$282 million, indicating a significant deterioration in the company’s net worth over the period.
- Financial leverage
- The financial leverage ratio initially remained relatively stable, moving slightly from 3.05 in 2018 to 2.94 in 2019. However, it increased notably in subsequent years, reaching 4.72 in 2020 and 7.57 in 2021. The data for 2022 is not provided. This rising leverage suggests the company assumed more debt relative to equity, amplifying financial risk, especially as equity moved into negative territory.
Interest Coverage
Fortinet Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Fortinet, Inc. | 857,300) | 606,800) | 488,500) | 326,500) | 332,200) | |
| Add: Net income attributable to noncontrolling interest | (700) | (100) | —) | —) | —) | |
| Add: Income tax expense | 30,800) | 14,100) | 53,200) | 52,700) | (81,300) | |
| Add: Interest expense | 18,000) | 14,900) | —) | —) | —) | |
| Earnings before interest and tax (EBIT) | 905,400) | 635,700) | 541,700) | 379,200) | 250,900) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 50.30 | 42.66 | — | — | — | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Accenture PLC | 195.34 | 131.46 | 205.84 | 273.26 | — | |
| Adobe Inc. | 54.64 | 51.49 | 37.00 | 21.38 | — | |
| Cadence Design Systems Inc. | 46.58 | 46.26 | 31.50 | — | — | |
| CrowdStrike Holdings Inc. | -5.34 | -55.36 | -315.25 | — | — | |
| Fair Isaac Corp. | 7.83 | 12.80 | 7.09 | 6.44 | — | |
| International Business Machines Corp. | 1.97 | 5.20 | 4.62 | — | — | |
| Intuit Inc. | 32.38 | 89.14 | 158.00 | 126.40 | — | |
| Microsoft Corp. | 41.58 | 31.31 | 21.47 | 17.27 | — | |
| Oracle Corp. | 3.84 | 6.28 | 7.13 | — | — | |
| Palantir Technologies Inc. | -87.97 | -133.20 | -82.39 | — | — | |
| Palo Alto Networks Inc. | -6.56 | -1.85 | -1.61 | 0.11 | — | |
| Salesforce Inc. | 7.93 | 21.49 | 6.43 | — | — | |
| ServiceNow Inc. | 15.78 | 9.89 | 5.56 | — | — | |
| Synopsys Inc. | 657.96 | 240.38 | 125.16 | 47.79 | — | |
| Workday Inc. | 1.97 | -3.00 | -7.22 | — | — | |
| Interest Coverage, Sector | ||||||
| Software & Services | 18.09 | 17.35 | 13.97 | — | — | |
| Interest Coverage, Industry | ||||||
| Information Technology | 22.65 | 19.92 | 14.14 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 905,400 ÷ 18,000 = 50.30
2 Click competitor name to see calculations.
The financial data reveals a consistent and substantial growth trend in Earnings Before Interest and Tax (EBIT) over the five-year period. Starting from approximately $250.9 million in 2018, EBIT nearly doubled by 2020 to $541.7 million, then continued to increase significantly through 2021 and 2022, reaching $905.4 million. This demonstrates strong operational performance and increasing profitability before the effects of interest and taxes.
Interest expense figures are available only for the last two years, showing an increase from $14.9 million in 2021 to $18 million in 2022. Although interest expenses are rising, their magnitude relative to EBIT remains very low.
This is corroborated by the interest coverage ratio, available for 2021 and 2022, which is exceedingly high at 42.66 and 50.3 respectively. These values imply that EBIT is more than sufficient to cover interest obligations, indicating low financial risk related to debt servicing in recent years.
- Key Observations:
- - EBIT has demonstrated strong, continuous growth year over year, reflecting improved earnings capacity.
- - Interest expenses increased modestly in the last two years but remain a small fraction of EBIT.
- - The very high interest coverage ratios suggest robust ability to meet interest payments comfortably, signaling healthy financial leverage and low solvency risk.
Overall, the trends indicate strengthening core profitability alongside manageable increases in interest expenses, with a solid buffer for debt servicing as evidenced by the high interest coverage ratios.
Fixed Charge Coverage
Fortinet Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Fortinet, Inc. | 857,300) | 606,800) | 488,500) | 326,500) | 332,200) | |
| Add: Net income attributable to noncontrolling interest | (700) | (100) | —) | —) | —) | |
| Add: Income tax expense | 30,800) | 14,100) | 53,200) | 52,700) | (81,300) | |
| Add: Interest expense | 18,000) | 14,900) | —) | —) | —) | |
| Earnings before interest and tax (EBIT) | 905,400) | 635,700) | 541,700) | 379,200) | 250,900) | |
| Add: Operating lease expense | 37,100) | 26,500) | 18,500) | 15,300) | 17,100) | |
| Earnings before fixed charges and tax | 942,500) | 662,200) | 560,200) | 394,500) | 268,000) | |
| Interest expense | 18,000) | 14,900) | —) | —) | —) | |
| Operating lease expense | 37,100) | 26,500) | 18,500) | 15,300) | 17,100) | |
| Fixed charges | 55,100) | 41,400) | 18,500) | 15,300) | 17,100) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 17.11 | 16.00 | 30.28 | 25.78 | 15.67 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Accenture PLC | 12.25 | 10.41 | 9.66 | 10.07 | — | |
| Adobe Inc. | 26.79 | 25.59 | 18.77 | 10.78 | — | |
| Cadence Design Systems Inc. | 15.50 | 13.77 | 11.46 | — | — | |
| CrowdStrike Holdings Inc. | -3.39 | -6.40 | -12.01 | — | — | |
| Fair Isaac Corp. | 6.39 | 8.93 | 4.91 | 4.52 | — | |
| International Business Machines Corp. | 1.52 | 3.13 | 2.62 | — | — | |
| Intuit Inc. | 14.67 | 25.58 | 27.48 | 34.00 | — | |
| Microsoft Corp. | 19.50 | 16.90 | 12.44 | 10.94 | — | |
| Oracle Corp. | 3.22 | 5.17 | 5.68 | — | — | |
| Palantir Technologies Inc. | -5.06 | -7.89 | -16.41 | — | — | |
| Palo Alto Networks Inc. | -1.18 | -1.09 | -0.52 | 0.41 | — | |
| Salesforce Inc. | 2.18 | 2.92 | 1.68 | — | — | |
| ServiceNow Inc. | 3.87 | 2.95 | 2.29 | — | — | |
| Synopsys Inc. | 12.91 | 9.29 | 7.46 | 6.30 | — | |
| Workday Inc. | 1.15 | -0.69 | -2.35 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Software & Services | 9.44 | 9.23 | 7.43 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Information Technology | 13.44 | 12.21 | 9.04 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 942,500 ÷ 55,100 = 17.11
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
-
There is a consistent upward trend in earnings before fixed charges and tax over the five-year period. Starting at $268,000 thousand in 2018, the figure increases substantially each year, reaching $942,500 thousand by the end of 2022. The growth appears particularly strong between 2021 and 2022, suggesting acceleration in earnings generation capabilities during that interval.
- Fixed charges
-
Fixed charges display fluctuations with a general increase over the analyzed period. Initial fixed charges were $17,100 thousand in 2018, slightly decreasing to $15,300 thousand in 2019, then rising to $18,500 thousand in 2020. From 2020 onward, the fixed charges saw a significant increase, peaking at $55,100 thousand in 2022. The sharp rise starting in 2021 indicates increased financial obligations related to fixed costs.
- Fixed charge coverage ratio
-
The fixed charge coverage ratio exhibits notable variability. It began at a moderate level of 15.67 in 2018, increasing substantially to peak at 30.28 in 2020, reflecting improved ability to cover fixed charges from earnings. However, this ratio declined sharply to 16.00 in 2021 before slightly improving to 17.11 in 2022. Despite the decrease, the ratio remains above the starting point in 2018, indicating that the company still maintains a relatively strong capacity to cover fixed charges despite increased obligations.