KLA Corp. (NASDAQ:KLAC)

The financial ratios exhibit varying trends over the observed periods, highlighting changes in leverage, capital structure, and the company’s capacity to cover interest obligations.

Debt to Equity Ratio

The ratio generally declined from 1.25 (Sep 30, 2020) to a low of 0.85 (Dec 31, 2021), indicating a reduction in reliance on debt relative to equity during this timeframe. A significant spike occurs on Jun 30, 2022, reaching 4.75, suggesting a sharp increase in debt relative to equity, followed by gradual decreases to 1.25 by Jun 30, 2025. This fluctuation may indicate periods of increased debt financing or equity adjustments.

Debt to Capital Ratio

From Sep 30, 2020 to Dec 31, 2021, this ratio decreased from 0.55 to 0.46, showing a declining proportion of debt within the capital structure. Similar to the Debt to Equity ratio, there is a peak at 0.83 on Jun 30, 2022, signaling heightened debt usage, which slowly reduces thereafter to 0.56 by Jun 30, 2025. This pattern confirms the temporary increase in leverage observed.

Debt to Assets Ratio

The ratio slightly decreased from 0.37 at the start to 0.29 at year-end 2021, reflecting a modest reduction in debt relative to total assets. An increase emerges on Jun 30, 2022 at 0.53, coinciding with other leverage ratio spikes, indicative of increased debt relative to asset base. It then trends downward steadily to 0.37 by mid-2025, suggesting improved asset coverage over time.

Financial Leverage Ratio

Initially declining from 3.39 to 2.89 through 2021, this ratio jumps substantially to 8.99 on Jun 30, 2022—paralleling the sharp rise in debt ratios—indicating amplified use of debt financing relative to equity. Post-peak, the leverage ratio reduces progressively to 3.42 by Jun 30, 2025, aligning with a restoration of more balanced financial structure.

Interest Coverage Ratio

This ratio presents an overall rising trend from 9.97 in Sep 2020 to 22.76 in Jun 2022, which points to an increased ability to meet interest obligations through earnings. After the peak, it gradually decreases but remains solidly above 10, reaching 16.37 by Jun 30, 2025. The trend implies relatively strong and sustained earnings performance despite fluctuations in leverage.

In summary, the data reveals that the company experienced a period of reduced leverage and strengthened capital structure up to late 2021, followed by a marked increase in debt usage mid-2022, reflected by all leverage ratios peaking. Subsequently, debt levels and leverage moderate steadily towards mid-2025, while interest coverage remains robust, indicating maintained operational earnings strength amidst financial adjustments.

The financial data reveals notable trends in the levels of total debt, stockholders' equity, and their resulting debt-to-equity ratio over the series of quarterly observations. These metrics exhibit significant fluctuations, indicating shifts in financing structure and capital management over the observed periods.

Total Debt

The total debt remains relatively stable around 3.4 billion USD in the initial eight quarters until mid-2022, after which it sharply increases to over 6.6 billion USD. Following this spike, total debt fluctuates mildly but stays near the 6 billion USD level, with a slight decline approaching the end of the period.

Total Stockholders’ Equity

Equity displays a generally positive growth trend starting from approximately 2.7 billion USD and rising steadily through the first seven quarters to about 4 billion USD, before experiencing a substantial drop to nearly 1.4 billion USD in mid-2022. After this decline, equity gradually increases again, rising back over 4.6 billion USD by the end of the period observed.

Debt to Equity Ratio

The debt-to-equity ratio trends downwards initially, decreasing from 1.25 to 0.85 over the first six quarters, reflecting strengthening equity relative to debt. However, in mid-2022, the ratio spikes sharply to 4.75, coinciding with the debt increase and equity decrease at that point. Subsequently, the ratio moderates steadily downward from 3 to about 1.25 by the final quarter, indicating debt levels reducing or equity increasing relative to each other, and a return to a more conservative capital structure by the end of the period.

Overall, the data suggest a significant capital restructuring occurred around mid-2022, with a sharp increase in debt and a concurrent drop in equity, driving the debt-to-equity ratio to its highest level in the observed timeframe. Following this period, measures appear to have been taken to rebalance the financial structure, as seen by the steady decline in the debt-to-equity ratio and recovery in equity levels coupled with modest debt reduction.

The financial data reveals notable fluctuations in the debt and capital structure over the observed periods. Total debt exhibits a generally stable trend initially, with values closely ranging between approximately 3.4 billion and 3.7 billion US dollars from late 2020 through early 2022. However, a significant increase is apparent starting mid-2022, where total debt jumps sharply to over 6.6 billion US dollars. Following this peak, there is a gradual decline through to mid-2025, settling around 5.88 billion US dollars.

In comparison, total capital demonstrates a consistent upward trajectory throughout the entire period. Starting from approximately 6.17 billion US dollars in late 2020, it steadily grows to surpass 10.5 billion US dollars by mid-2025. This persistent increase indicates ongoing capital accumulation or expansion efforts, contributing positively to the company’s financial base.

The debt-to-capital ratio provides further insight into the company's leverage and financial risk profile. Initially, this ratio decreases from 0.55 to a low of 0.46 between late 2020 and late 2021, indicating a reduction in debt relative to total capital, which suggests an improved balance sheet and potentially lower financial risk. However, in the middle of 2022, the ratio spikes dramatically to 0.83, coinciding with the sharp increase in total debt. This sudden rise indicates a heightened leverage position, reflecting increased borrowing or financial obligations relative to capital.

Following this spike, the debt-to-capital ratio trends downward steadily, reaching 0.56 by mid-2025. This decline aligns with the decrease in total debt and continuous growth in total capital, signaling gradual deleveraging and strengthening of the financial structure over the last several quarters. Despite this improvement, the ratio remains above the initial levels seen in 2020, suggesting that while leverage is being managed, it remains elevated compared to earlier periods.

In summary, the company experienced a period of relatively stable and decreasing leverage through 2021, followed by a marked increase in debt and leverage in mid-2022. Since then, efforts appear to have been directed towards debt reduction and capital growth, resulting in a gradual rebalancing of the capital structure by mid-2025. The trends reflect a dynamic financial strategy potentially responsive to varying operational needs, market conditions, or investment opportunities during the timeline.

The financial data reveals discernible trends in the company’s leverage and asset position over the analyzed periods. Total debt and total assets demonstrate significant movements, which impact the debt to assets ratio consistently.

Total Debt

Total debt remained relatively stable initially, fluctuating slightly around the 3.4 million thousand USD mark through mid-2021. However, starting in the second half of 2021 and into 2022, a sharp increase occurred, peaking near 6.6 million thousand USD, nearly doubling the previous level. In the subsequent quarters, total debt shows cyclical variations with a downward adjustment during parts of 2023 and early 2024, before rising again mid-2024 and stabilizing around 5.8 to 6.6 million thousand USD towards mid-2025.

Total Assets

Total assets exhibit a steady upward trajectory throughout the entire period. From just over 9.3 million thousand USD in late 2020, assets increase consistently, crossing 15 million thousand USD during 2024 and reaching approximately 16 million thousand USD by mid-2025. This indicates sustained growth in asset base, reflecting either operational expansion or asset accumulation strategies.

Debt to Assets Ratio

The debt to assets ratio begins at 0.37 in late 2020, with a gradual decline to a low of 0.29 by the end of 2021, indicating a period where asset growth outpaced debt accumulation. Starting in early 2022, the ratio spikes sharply to 0.53, concurrent with the significant increase in total debt earlier noted. This peak is followed by a decline, stabilizing around the low 0.40s throughout 2023 and into 2024. Toward mid-2025, the ratio gradually decreases further to 0.37, suggesting an improvement in leverage or stronger asset growth relative to debt.

Overall, the data points to a phase of increased borrowing around 2022, possibly funding asset acquisitions or other strategic initiatives, followed by efforts to manage and reduce indebtedness relative to assets in subsequent periods. The continual increase in total assets indicates ongoing growth initiatives, while the fluctuating but improving debt to asset ratio suggests deliberate financial management aimed at sustaining a balanced capital structure.

Total assets

Total assets exhibit a consistent upward trend from September 2020 through June 2025. Starting at approximately $9.32 billion, assets increase steadily each quarter, reaching close to $16.07 billion by mid-2025. The growth demonstrates a general pattern of asset expansion over the analyzed period, with no significant periods of decline or stagnation.

Total KLA stockholders’ equity

Stockholders’ equity generally increases over time but shows notable volatility at certain points. It rises steadily from about $2.75 billion in September 2020 to roughly $4.08 billion by the first quarter of 2022. Subsequently, there is a sharp drop in equity in mid-2022, declining to approximately $1.40 billion. After this pronounced dip, equity recovers progressively, reaching approximately $4.69 billion by mid-2025. The fluctuations suggest possible significant events such as share repurchases, dividends, or other equity transactions impacting the capital structure.

Financial leverage

Financial leverage, defined as the ratio of total assets to stockholders’ equity, decreases steadily from 3.39 in late 2020 to 2.89 in late 2021, indicating a strengthening equity base relative to assets. A marked spike occurs in mid-2022, where leverage reaches a peak near 8.99, corresponding to the sharp drop observed in equity. Following this peak, leverage declines gradually through 2024 and into mid-2025, reaching 3.42. The changes in leverage primarily reflect the fluctuations in equity rather than total assets, suggesting increased reliance on debt or other liabilities during the mid-2022 period, with a return to more balanced capital structure afterward.

The financial data indicates several notable trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratios over the analyzed periods.

Earnings Before Interest and Tax (EBIT)

EBIT shows a general upward trajectory with some fluctuations. Starting at approximately 523 million USD in the third quarter of 2020, EBIT increased steadily, peaking above 1.2 billion USD by the fourth quarter of 2022. Subsequently, a decline is observed in early 2023, with EBIT values dropping below one billion USD by the first two quarters of 2023. From mid-2023 onwards, EBIT resumed growth, reaching new highs above 1.4 billion USD in the second quarter of 2025. This pattern suggests overall strong operational profitability with some short-term variability.

Interest Expense

Interest expense remained relatively stable around the 38 to 44 million USD range until mid-2022. A sharp increase occurred by the third quarter of 2022, more than doubling to approximately 74 million USD, and remained near that elevated level throughout 2023. Some modest fluctuations followed, with interest expense gradually moving between approximately 71 to 83 million USD through mid-2025. This rise likely reflects changes in debt levels or interest rates, warranting attention to financing costs.

Interest Coverage Ratio

The interest coverage ratio exhibited an overall decreasing trend following a peak in mid-2022. Initially, the ratio improved from roughly 10 in late 2020 to a high near 23 by mid-2022, indicating increased capability to cover interest expenses via EBIT. Afterwards, the ratio declined steadily to about 11 by late 2023, reflecting the increased interest expense combined with EBIT fluctuations. However, from early 2024 through mid-2025, the ratio rebounded, reaching values above 16, signifying strengthened capacity to meet interest obligations again.

In summary, the company demonstrated strong EBIT growth over the period, though punctuated by an episodic decline in early 2023. Interest expenses notably rose in late 2022 and remained elevated, which compressed interest coverage ratios temporarily. The latter half of the period shows recovery in both EBIT and coverage, suggesting improved financial stability and operational performance.