Qualcomm Inc. (NASDAQ:QCOM)

Over the observed period, the company demonstrates a consistent trend of improving solvency metrics. A general decrease in leverage is apparent, coupled with a strengthening ability to meet interest obligations. The analysis below details these trends for each ratio examined.

Debt to Equity

The debt to equity ratio exhibits a notable declining trend, commencing at 2.13 and decreasing to 0.64 over the analyzed timeframe, before a slight increase to 0.70 in the most recent period. This indicates a decreasing reliance on equity financing relative to debt, suggesting improved financial stability and reduced risk for equity holders. The rate of decline decelerates over time, indicating a stabilization of the capital structure.

Debt to Capital

Similar to the debt to equity ratio, the debt to capital ratio shows a consistent downward trajectory, moving from 0.68 to 0.39, with a subsequent increase to 0.41 in the final period. This reinforces the observation of decreasing leverage and a shift towards a more conservative capital structure. The reduction suggests the company is financing a greater proportion of its assets with equity or retained earnings.

Debt to Assets

The debt to assets ratio mirrors the trends observed in the other debt ratios, declining from 0.42 to 0.28, then increasing to 0.30 in the latest quarter. This indicates a decreasing proportion of assets financed by debt, further supporting the conclusion of a strengthening balance sheet. The ratio’s movement suggests a reduced exposure to financial risk associated with asset devaluation.

Financial Leverage

The financial leverage ratio, initially at 5.08, demonstrates a consistent decrease to 2.30, followed by a slight increase to 2.36 and then 2.30. While still representing a significant level of leverage, the overall downward trend suggests a reduction in the company’s use of debt to amplify returns. The stabilization in recent periods indicates a potential plateau in deleveraging efforts.

Interest Coverage

The interest coverage ratio exhibits a strong upward trend from 13.40 to 20.07, before decreasing to 19.77. This indicates a substantial improvement in the company’s ability to meet its interest obligations from operating income. The increasing ratio provides a buffer against potential declines in earnings and enhances financial flexibility. The recent slight decrease does not appear to represent a significant concern given the overall high level of coverage.

In summary, the observed solvency ratios collectively indicate a strengthening financial position. The company has consistently reduced its reliance on debt financing, improved its ability to service its debt obligations, and enhanced its overall financial stability. The recent stabilization or slight increases in some ratios suggest a potential shift towards maintaining the current capital structure.

The debt to equity ratio demonstrates a consistent downward trend over the analyzed period, indicating a strengthening financial position with respect to leverage. Initially, the ratio stood at 2.13, but progressively decreased over the subsequent quarters.

Initial Period (Dec 2020 - Jun 2021)

From December 2020 to June 2021, the debt to equity ratio experienced a moderate decline, moving from 2.13 to 1.92. This suggests a slight improvement in the company’s financial leverage, with equity growing at a faster rate than debt during this timeframe.

Accelerated Decline (Sep 2021 - Jun 2022)

A more pronounced decrease in the ratio was observed between September 2021 and June 2022, falling from 1.58 to 0.97. This period reflects a significant increase in stockholders’ equity, outpacing any changes in total debt, leading to a substantial improvement in solvency. The ratio dipped below 1.0, indicating that equity financing exceeded debt financing.

Stabilization and Slight Increase (Sep 2022 - Sep 2025)

Following the substantial decline, the ratio stabilized, fluctuating between 0.86 and 0.90 from September 2022 to December 2022. A slight increase was then observed, reaching 0.70 in September 2025. While the ratio increased, it remained significantly lower than the initial value, suggesting continued financial strength. The increase in September 2025 is attributable to a decrease in equity and a slight increase in debt.

Recent Trend (Dec 2025 - Mar 2025)

The most recent period shows a slight increase to 0.64 in March 2025. This suggests a minor shift in the capital structure, with debt increasing relative to equity, but the ratio remains at a historically low level.

Overall, the trend indicates a successful reduction in financial risk through increased equity financing and/or debt reduction. The company’s reliance on debt financing has diminished considerably throughout the analyzed period, resulting in a more robust financial structure.

The debt to capital ratio for the analyzed period demonstrates a consistent downward trend, indicating a decreasing reliance on debt financing relative to the company’s total capital structure. Initially, the ratio stood at 0.68 in December 2020 and progressively declined over the subsequent quarters.

Overall Trend

From December 2020 through June 2023, a clear and consistent decline in the debt to capital ratio is observed. The ratio decreased from 0.68 to 0.42, representing a substantial reduction in leverage. This suggests the company has been prioritizing equity financing or utilizing internally generated funds to reduce its debt burden.

Period of Most Rapid Decline

The most significant decrease in the ratio occurred between March 2021 and June 2022, falling from 0.68 to 0.49. This period may reflect specific strategic decisions related to debt repayment or capital raising activities.

Stabilization and Recent Fluctuations

Following the decline to 0.42 in June 2023, the ratio experienced a slight increase to 0.41 in September 2023, before decreasing again to 0.39 in March 2024. The ratio then stabilized around 0.35 to 0.36 for the subsequent four quarters, indicating a period of relative stability in the company’s capital structure. A slight increase to 0.39 is observed in March 2025, followed by a further increase to 0.41 in June 2025, and finally to 0.41 in September 2025. The ratio concludes the period at 0.39 in December 2025.

Capital Structure Changes

The decrease in the debt to capital ratio is supported by the observed increases in total capital over the analyzed period. While total debt remained relatively stable for much of the period, total capital increased from US$23.111 billion in December 2020 to US$37.890 billion in March 2025, contributing to the lower ratio.

In conclusion, the observed trend suggests a strengthening financial position with reduced reliance on debt. The recent stabilization and slight fluctuations warrant continued monitoring, but the overall trajectory indicates a more conservative and potentially less risky capital structure.

The debt-to-assets ratio for the analyzed period demonstrates a consistent, albeit gradual, decline. Initially, the ratio stood at 0.42 for the first three reporting periods, then exhibited a downward trajectory, reaching a low of 0.26 in September 2024 and December 2024. A slight increase is then observed in subsequent periods, peaking at 0.30 in June 2025, before settling at 0.28 in the final reporting period.

Overall Trend

The overarching trend indicates decreasing reliance on debt financing relative to the company’s asset base. The ratio decreased from 0.42 to 0.28 over the analyzed timeframe, suggesting improved financial leverage. However, the most recent periods show a slight reversal of this trend.

Initial Phase (Dec 2020 - Jun 2021)

The ratio remained stable at 0.42 for the first three quarters, indicating a consistent capital structure during this period. There were minimal changes in the relative proportions of debt and assets.

Decline Phase (Sep 2021 - Dec 2024)

A noticeable decline began in September 2021, with the ratio decreasing from 0.38 to 0.26 over eight quarters. This suggests a deliberate strategy to reduce debt, potentially through debt repayment or asset growth outpacing debt accumulation. The most significant decrease occurred between March 2022 and June 2022, falling from 0.35 to 0.33.

Recent Fluctuations (Mar 2025 - Dec 2025)

The ratio experienced a slight increase in the final four quarters, moving from 0.26 to 0.30 and then back to 0.28. This could be attributed to new debt financing, a decrease in asset value, or a combination of both. The increase is relatively small, but warrants monitoring in future reporting periods.

Total Debt and Total Assets

Total debt decreased from US$15,731 million in December 2020 to US$14,817 million in December 2025. Total assets increased from US$37,479 million in December 2020 to US$53,034 million in December 2025. The combined effect of decreasing debt and increasing assets contributed to the observed decline in the debt-to-assets ratio.

The financial leverage ratio demonstrates a consistent downward trend over the observed period, indicating a decreasing reliance on debt financing relative to equity. This suggests a strengthening of the company’s financial position and a reduction in financial risk. The period begins with a relatively high leverage ratio and concludes with a significantly lower one.

Initial Period (Dec 27, 2020 – Jun 26, 2022)

From December 2020 through June 2022, the financial leverage ratio experienced a notable decline, moving from 5.08 to 2.93. This decrease suggests a deliberate effort to reduce debt or a substantial increase in stockholders’ equity during this timeframe. The rate of decline was most pronounced between September 2021 and June 2022.

Stabilization and Slight Increase (Sep 25, 2022 – Jun 29, 2025)

Following the initial decline, the ratio stabilized, fluctuating between 2.00 and 2.72 for approximately two years. This period indicates a more conservative approach to capital structure management. A slight increase is observed in September 2025, bringing the ratio to 2.36, before decreasing again in December 2025.

Recent Trend (Dec 28, 2025 – Mar 30, 2025)

The most recent quarters show a slight decrease in the ratio, moving from 2.36 to 2.00, and then a slight increase to 2.02. This suggests a potential shift in financing strategy or a temporary fluctuation in the balance between debt and equity. The latest value, 2.02, represents the lowest point in the observed period.

Overall Trend

The overall trend is a significant reduction in financial leverage. The ratio has decreased by more than half over the period, from 5.08 to 2.02. This indicates a substantial improvement in the company’s solvency and a reduced risk profile. The consistent decline suggests a proactive approach to financial risk management.

The observed changes in financial leverage are accompanied by increases in both total assets and stockholders’ equity, suggesting that the company’s growth is being funded increasingly by equity rather than debt. This trend is generally viewed favorably by investors and creditors, as it indicates a stronger and more sustainable financial foundation.

The interest coverage ratio exhibits a generally positive trend over the observed period, though with some fluctuations. Initially, the ratio demonstrates consistent improvement from December 2020 through September 2021, followed by a period of volatility and then a renewed upward trajectory. A significant peak is observed in June 2022, after which the ratio experiences a decline before stabilizing and increasing again towards the end of the period.

Initial Improvement (Dec 2020 - Sep 2021)

The interest coverage ratio increased steadily from 13.40 in December 2020 to 19.38 in September 2021. This indicates a strengthening ability to meet interest obligations with earnings before interest and tax. The increase suggests improved operational profitability relative to interest expense during this timeframe.

Volatility and Peak (Sep 2021 - Jun 2022)

Following the peak in September 2021, the ratio continued to climb, reaching its highest point of 31.54 in June 2022. This substantial increase is primarily driven by a significant decrease in interest expense, while EBIT remained relatively stable. This period represents the strongest capacity to cover interest payments.

Subsequent Decline and Stabilization (Jun 2022 - Mar 2023)

From June 2022 to March 2023, the interest coverage ratio declined from 31.54 to 15.28. This decrease is attributable to a combination of factors: a rise in interest expense and a reduction in EBIT. Despite this decline, the ratio remained above 15, indicating a continued, though diminished, ability to cover interest obligations.

Recovery and Final Trend (Mar 2023 - Sep 2025)

Beginning in December 2023, the ratio began to recover, reaching 19.77 by September 2025. This recovery is linked to a combination of increasing EBIT and relatively stable interest expense. The final values suggest a return to a strong position regarding interest coverage, with the ratio consistently above 19.

Overall, the observed pattern suggests a company with a generally healthy ability to service its debt. While fluctuations exist, the long-term trend indicates a strengthening financial position with respect to interest-bearing liabilities. The significant peak in June 2022 represents a period of particularly strong solvency, while the subsequent decline highlights the sensitivity of the ratio to changes in both earnings and interest expense.