NXP Semiconductors N.V. (NASDAQ:NXPI)

Leverage Ratios

The debt to equity ratio exhibits an increasing trend over the five-year period, rising from 0.49 in 2017 to 1.62 in 2021. A similar upward trajectory is observed when including operating lease liabilities, moving from 0.49 to 1.66 during the same period. This suggests an increasing reliance on debt financing relative to shareholders' equity. Correspondingly, the debt to capital ratio also demonstrates growth, increasing from 0.33 in 2017 to 0.62 in 2021, both with and without consideration of operating lease liabilities, indicating an expanding proportion of debt within the company's capital structure. Furthermore, the debt to assets ratio rises from 0.27 to 0.51 (0.52 including operating leases), reflecting a higher portion of total assets financed through debt.

Financial Leverage

Financial leverage escalates notably throughout the period, increasing from 1.78 in 2017 to a significant 3.2 in 2021. This indicates that the company is using more debt relative to equity, which may enhance returns but also suggests a higher risk profile.

Interest and Fixed Charge Coverage Ratios

The interest coverage ratio shows considerable volatility. It increases from 6.77 in 2017 to a peak of 9.92 in 2018, then dramatically declines to 1.79 in 2019 and further to 0.99 in 2020, before recovering to 6.9 in 2021. This pattern indicates fluctuating ability to meet interest obligations, with significant strain during 2019-2020. The fixed charge coverage ratio mirrors this trend, rising initially from 5.8 in 2017 to 8.38 in 2018, dropping sharply to 1.68 in 2019 and 0.99 in 2020, and then improving to 6.01 in 2021. These fluctuations reflect changes in operating performance and financial expenses affecting the company's capacity to cover fixed financial charges.

Overall Insights

Over the analyzed period, the company exhibits a marked increase in leverage, particularly evident in the sharp rise in debt to equity and financial leverage ratios in 2021. Despite heightened leverage, coverage ratios rebounded strongly in 2021 after a period of reduced coverage in 2019 and 2020, suggesting an improvement in earnings or reduction in interest expenses. The trend denotes a transition toward higher debt usage with temporary periods of increased risk related to fixed financial obligations. Continuous monitoring of these ratios is advisable to assess the impact on financial stability and debt servicing capability.

The annual financial data indicates notable shifts in the company's capital structure and leverage from 2017 to 2021.

Total debt

The total debt consistently increased throughout the period, starting from US$6,565 million in 2017 and rising to US$10,572 million by the end of 2021. This represents an overall increase of approximately 61%, demonstrating a clear trend of growing indebtedness.

Stockholders’ equity

Stockholders’ equity shows a declining trend over the analyzed years. Beginning with US$13,527 million in 2017, it decreased steadily each year, reaching US$6,528 million in 2021. This amounts to a reduction of nearly 52%, reflecting a substantial erosion of the equity base.

Debt to equity ratio

The debt to equity ratio rose notably from 0.49 in 2017 to 1.62 in 2021. This increase indicates a shift towards greater leverage, with debt surpassing equity in 2021. The progression from below 1 to well above 1 highlights an increasing reliance on borrowed funds relative to shareholders’ financing.

In summary, the financial data reveals a pattern of rising indebtedness paired with a significant decline in equity, leading to a more leveraged capital structure by the end of 2021. This trend warrants attention to the implications for financial risk and the company’s ability to sustain its capital requirements going forward.

The financial data indicates a clear progression concerning the company's leverage and equity position over the five-year period ending December 31, 2021.

Total Debt (including operating lease liability)

The total debt showed a consistent increase each year, starting at $6,565 million in 2017 and rising to $10,809 million by 2021. This represents an overall increase of approximately 64.6%, suggesting a growing reliance on external financing sources over the period.

Stockholders' Equity

Conversely, stockholders' equity decreased steadily each year, from $13,527 million in 2017 to $6,528 million in 2021. This decline of about 51.8% signals a reduction in net assets attributable to shareholders, which could be due to factors such as losses, dividends paid exceeding earnings, or share repurchases.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio rose markedly from 0.49 in 2017 to 1.66 in 2021. This ratio escalation reflects the combined effect of increasing debt and diminishing equity, indicating a shift towards greater financial leverage and potentially increased financial risk.

Overall, the trends reveal a company that has been progressively increasing its debt load while simultaneously experiencing a reduction in shareholders' equity. The resulting higher leverage ratio may imply greater financial risk and obligations, which could impact future financial flexibility and solvency considerations.

The analysis of the financial data reveals notable trends in the company's leverage and capital structure over the five-year period ending December 31, 2021.

Total Debt

Total debt exhibited a consistent upward trajectory from 2017 through 2021. The amount increased from $6,565 million in 2017 to $7,354 million in 2018, a modest rise, and remained relatively stable in 2019 at $7,365 million. This stability was followed by another increase to $7,609 million in 2020. A more pronounced escalation occurred in 2021, with total debt rising significantly to $10,572 million. This jump in debt in the final period is a critical point, indicating heightened leverage or new financing activities.

Total Capital

Total capital showed a declining trend from 2017 to 2020, decreasing from $20,092 million in 2017 to $16,553 million in 2020. Although the decline slowed from 2018 to 2019, the overall reduction is substantial and suggests a contraction in the capital base during this timeframe. Notably, there was a slight recovery in 2021, with total capital increasing to $17,100 million. Despite this uptick, the total capital at the end of 2021 remained below the initial 2017 level.

Debt to Capital Ratio

The debt to capital ratio further substantiates the increased leverage trend. Initially low at 0.33 in 2017, the ratio increased consistently each year, reaching 0.41 in 2018, 0.44 in 2019, and 0.46 in 2020. In 2021, this ratio rose sharply to 0.62, reflecting a substantial increase in the relative proportion of debt within the capital structure. This indicates that debt financing represented a larger share of the total capital, suggesting potentially higher financial risk or strategic financing adjustments.

In summary, the data suggest the company has progressively increased its debt levels over the period, particularly in 2021, while total capital declined initially and only partially recovered in the last year. The continuous rise in the debt to capital ratio points towards an increasing reliance on debt financing, which may have implications for financial risk and future capital management strategies.

Total Debt (including operating lease liability)

The total debt exhibits a consistent upward trend over the analyzed period. Starting at 6,565 million US dollars in 2017, it increased steadily each year, reaching 10,809 million US dollars by the end of 2021. This represents a significant increase of approximately 64.6% over the five-year span, indicating a rising reliance on debt financing or greater obligations recognized as operating lease liabilities.

Total Capital (including operating lease liability)

Total capital displays a generally decreasing trend during the first four years, declining from 20,092 million US dollars in 2017 to 16,790 million US dollars in 2020. In 2021, however, there is a modest recovery to 17,337 million US dollars. The overall decrease from 2017 to 2021 amounts to approximately 13.7%, suggesting a contraction or reduced capitalization relative to earlier years despite the recent slight rebound.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio follows a clear upward trajectory throughout the period. Beginning at 0.33 in 2017, the ratio increases consistently each year, reaching 0.62 by 2021. This indicates that debt constitutes a growing portion of the total capital structure, with the ratio nearly doubling, reflecting a shift towards greater leverage and potentially increased financial risk.

Overall Insights

The data reveals that total debt has risen considerably while total capital has diminished slightly before showing a minor improvement in the final year. The resulting increase in the debt to capital ratio underscores a trend of escalating leverage. This pattern implies that the company has been increasingly financing its operations or growth through debt. The implications may include higher financial risk and interest obligations, which should be carefully managed to maintain financial stability.

Total Debt

The total debt demonstrates a consistent upward trend over the five-year period. Starting at 6,565 million US dollars in 2017, it increased to 7,354 million US dollars in 2018, followed by a marginal rise to 7,365 million in 2019. The upward momentum continued in 2020 with total debt reaching 7,609 million US dollars and saw a more significant jump in 2021, closing at 10,572 million US dollars. This indicates an increasing reliance on debt financing over the years, particularly notable with the sharp increase in the last year of the period.

Total Assets

Total assets show a downward trajectory from 2017 to 2020, decreasing from 24,049 million US dollars to 19,847 million US dollars. This represents a reduction of approximately 17.5% over the three-year span. In 2021, there is a slight recovery with total assets increasing to 20,864 million US dollars, yet the figure remains below the 2017 level. Overall, total assets experienced a contraction before a modest rebound in the final year, suggesting some asset divestment or depreciation during the earlier years.

Debt to Assets Ratio

The debt to assets ratio exhibits a clear increasing trend throughout the period, rising from 0.27 in 2017 to 0.34 in 2018, and further to 0.37 in 2019. The ratio continued to climb to 0.38 in 2020 and reached a notably higher level of 0.51 in 2021. This indicates that the proportion of debt relative to the company’s assets has grown substantially, particularly in the latest year, underscoring a higher financial leverage and potentially increased financial risk.

Total Debt (including operating lease liability)

The total debt exhibited a consistent upward trend over the five-year period. Beginning at $6,565 million in 2017, it increased each subsequent year to reach $10,809 million by the end of 2021, representing an approximate 64.7% increase over the period. The most notable rise occurred between 2020 and 2021, with an increase of nearly $2,963 million.

Total Assets

Total assets showed a declining trend from 2017 through 2020, starting at $24,049 million and decreasing to $19,847 million in 2020. This represents an overall reduction of about 17.5% across these four years. In 2021, there was a slight recovery with assets increasing to $20,864 million, although they remained below the 2017 level.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio steadily increased throughout the period, indicating rising leverage. Starting at 0.27 in 2017, the ratio increased to 0.34 in 2018, followed by incremental increases to 0.38 in 2019, 0.40 in 2020, and culminating at 0.52 in 2021. The sharpest increase was observed between 2020 and 2021, underscoring a significant rise in debt relative to assets.

The financial data presented reveals several notable trends over the five-year period ending December 31, 2021.

Total Assets

The total assets exhibit a declining trend from 2017 through 2020, decreasing from 24,049 million US dollars in 2017 to 19,847 million in 2020. In 2021, a slight recovery is observed with total assets rising to 20,864 million. This pattern indicates a reduction in the company’s asset base over the first four years, followed by a modest increase in the latest year.

Stockholders’ Equity

Stockholders’ equity shows a continuous and more pronounced downward trajectory throughout the entire period. Beginning at 13,527 million US dollars in 2017, equity declines steadily each year, reaching a low of 6,528 million by the end of 2021. This decline suggests diminishing net assets attributable to shareholders over time, which may reflect factors such as sustained losses, dividend payouts exceeding earnings, share repurchases, or other equity-reducing activities.

Financial Leverage

The financial leverage ratio, defined as total assets divided by stockholders’ equity, increases markedly over the observed period. Starting at 1.78 in 2017, the ratio gradually rises each year, reaching 3.20 in 2021. This increase indicates growing reliance on debt or other liabilities relative to equity. The sharp uptick in 2021 suggests a significant shift toward more leveraged operations, likely driven by the accelerated decline in equity coupled with only a slight recovery in assets.

In summary, the company’s total assets declined for several years but showed a slight rebound in the final year. Stockholders’ equity, however, decreased consistently and significantly throughout the period, which in turn caused a substantial increase in financial leverage. The rising leverage ratio could imply higher financial risk, necessitating careful monitoring of the company’s debt levels and capital structure going forward.

Earnings Before Interest and Tax (EBIT)

The EBIT values exhibit significant fluctuations throughout the analyzed period. The EBIT increased from 2,099 million USD in 2017 to a peak of 2,707 million USD in 2018, indicating strong operational performance. However, a sharp decline occurred in 2019 and 2020, with EBIT dropping dramatically to 662 million USD and then to 359 million USD, respectively. This downward trend suggests potential challenges in operational efficiency or market conditions during these years. In 2021, EBIT rebounded substantially to 2,547 million USD, nearly recovering to the 2018 level and indicating a strong operational turnaround.

Interest Expense

Interest expense remained relatively stable over the period, fluctuating within a narrow range. It started at 310 million USD in 2017, slightly decreased to 273 million USD in 2018, and then increased modestly over the following years, reaching 369 million USD by 2021. The minor variations suggest stable debt levels or borrowing costs without drastic changes in financing structure or interest rates.

Interest Coverage Ratio

The interest coverage ratio, representing the ability to meet interest obligations from EBIT, experienced notable volatility. It improved from 6.77 times in 2017 to a peak of 9.92 times in 2018, signaling strong coverage and lower financial risk at that time. This ratio then plunged sharply to 1.79 in 2019 and further declined to 0.99 in 2020, implying that EBIT barely covered interest expenses or was insufficient during these years. In 2021, the ratio recovered to 6.9, aligning closely with the 2017 value and reflecting improved financial health and reduced risk in meeting interest obligations.

Overall Assessment

The operational profitability as reflected by EBIT shows a strong peak in 2018, followed by significant deterioration in 2019 and 2020, and then marked recovery in 2021. Interest expenses remained relatively constant, which when combined with the EBIT trends, caused pronounced fluctuations in the interest coverage ratio. The sharp drop in interest coverage during 2019 and 2020 highlights a period of increased financial risk, while the recovery in 2021 suggests an improvement in earnings relative to interest obligations and enhanced financial stability.

The financial data reveals notable fluctuations in earnings before fixed charges and tax over the analyzed periods. Earnings displayed an upward trend from 2017 to 2018, rising from 2,162 million US dollars to 2,764 million US dollars, followed by a sharp decline in 2019 and 2020, reaching 721 million and 424 million US dollars respectively. In 2021, earnings rebounded significantly, increasing to 2,613 million US dollars.

Fixed charges exhibited relative stability across the years, with amounts ranging between 330 million and 435 million US dollars. The lowest fixed charges were recorded in 2018 at 330 million US dollars, while the highest occurred in 2021 at 435 million US dollars.

The fixed charge coverage ratio, representing the ability to cover fixed charges from earnings, mirrored the volatility in earnings before fixed charges and tax. It peaked at 8.38 in 2018, reflecting strong earnings relative to fixed charges. However, the ratio dropped drastically in 2019 and 2020 to 1.68 and 0.99 respectively, indicating decreased coverage capacity and potential challenges meeting fixed obligations during those years. By 2021, the coverage ratio improved substantially to 6.01, suggesting restored financial strength and enhanced capacity to meet fixed charges.

Overall, the financial trends indicate a period of earnings instability between 2019 and 2020, with corresponding impacts on fixed charge coverage, but a recovery towards the end of the period in 2021. Fixed charges remained relatively consistent, implying fixed financial obligations did not significantly adjust according to earnings variability.

Earnings before fixed charges and tax

Increased from 2017 to 2018, sharply declined during 2019-2020, then rebounded strongly in 2021.

Fixed charges

Relatively stable with minor fluctuations, ranging narrowly between 330 and 435 million US dollars.

Fixed charge coverage ratio

High in 2018, showing strong coverage; dropped near or below 1 in 2019-2020 indicating marginal coverage; improved significantly in 2021.