Teradyne Inc. (NASDAQ:TER)

Debt Ratios

There is a clear downward trend across all debt-related ratios from 2019 to 2023 where data is available. The debt to equity ratio decreased significantly from 0.27 in 2019 to 0.02 by the end of 2022, and including operating lease liabilities, it dropped from 0.31 to 0.03 by 2023. Similarly, debt to capital and debt to assets ratios exhibited consistent declines over the periods, suggesting a reduction in the company's leverage and overall debt burden relative to capital and assets. Inclusion of operating lease liabilities increased these ratios marginally but the downward trend remained consistent.

Financial Leverage

The financial leverage ratio steadily decreased from 1.88 in 2019 to 1.38 in 2023, indicating a gradual reduction in the reliance on debt financing relative to equity. This aligns with the observed decreases in the various debt ratios, reinforcing the trend of a strengthening balance sheet with lower leverage.

Interest Coverage

Interest coverage ratio demonstrated substantial improvement over the period, increasing from 23.72 in 2019 to a peak of 226.97 in 2022, before moderating to 139.09 in 2023. This suggests a marked increase in the company’s ability to cover interest expenses from earnings, reflecting improved profitability or reduced interest obligations, although there was some decline from the peak value in the last year recorded.

Fixed Charge Coverage

Fixed charge coverage also showed an overall positive movement from 9.95 in 2019, reaching a high of 21.36 in 2021 before declining to 12.3 in 2023. This pattern indicates improved capacity to meet fixed charges like lease payments and interest during the earlier years, followed by a reduction in this capacity in the most recent period, though it remains above the initial 2019 level.

The financial data over the analyzed periods reflects significant changes in the company's capital structure and leverage.

Total Debt

The total debt decreased markedly from US$394,687 thousand in 2019 to US$108,426 thousand in 2021 and further down to US$50,115 thousand in 2022. The trend suggests a substantial reduction in reliance on debt financing during this period, though data for 2023 is missing which limits the assessment of the latest position.

Shareholders’ Equity

Shareholders’ equity exhibited consistent growth, increasing from US$1,480,158 thousand in 2019 to US$2,701,897 thousand in 2023. The equity rose sharply between 2019 and 2020, then showed steady increases, indicating strengthening financial stability and likely retention of earnings or equity issuances contributing to the growth.

Debt to Equity Ratio

The debt to equity ratio decreased from 0.27 in 2019 to 0.02 in 2022, mirroring the decline in total debt alongside the rising equity base. This indicates a significant improvement in the company’s leverage position, reflecting reduced financial risk and a stronger equity buffer. The absence of the ratio for 2023 prevents confirmation of whether this trend continued.

Overall, the data portrays a company that has been actively reducing its indebtedness while simultaneously enhancing its equity position, resulting in a robust decline in leverage. This trend points towards a more conservative financial strategy and potentially greater financial flexibility. However, the missing 2023 debt and ratio figures limit the full evaluation of the most recent fiscal year.

Total debt (including operating lease liability)

The total debt shows a consistent and significant decline over the five-year period. Starting at approximately $460 million in 2019, the debt slightly increased to around $473 million in 2020, followed by a sharp reduction to $185 million in 2021. This downward trend continued in subsequent years, reaching about $83 million by the end of 2023. This indicates a strong deleveraging trend and an improved debt management strategy.

Shareholders’ equity

Shareholders' equity experienced substantial growth from 2019 through 2023. The equity base increased sharply from $1.48 billion in 2019 to $2.2 billion in 2020, continuing to rise to approximately $2.56 billion in 2021. A slight decline occurred in 2022 to $2.45 billion, but equity rebounded in 2023 to around $2.53 billion. Overall, this reflects an expanding equity base, suggesting retained earnings accumulation or equity issuances contributing to a stronger capitalization.

Debt to equity (including operating lease liability)

The debt to equity ratio declined markedly throughout the period, starting at 0.31 in 2019 and decreasing steadily each year. By 2020, the ratio dropped to 0.21, then to 0.07 in 2021, followed by 0.05 and 0.03 in 2022 and 2023 respectively. This consistent reduction corresponds with the significant debt reduction and equity growth, indicating improving financial leverage and a stronger balance sheet position over time.

Total Debt

The total debt level demonstrated a significant decline over the period from 2019 to 2022. It started at 394,687 thousand US dollars at the end of 2019, slightly increasing to 410,111 thousand in 2020. However, in 2021, there was a sharp reduction to 108,426 thousand, followed by a further decrease to 50,115 thousand by the end of 2022. The absence of data for 2023 prevents analysis beyond this point. This trend indicates a considerable effort to deleverage or repay debt during these years.

Total Capital

Total capital increased markedly from 1,874,845 thousand US dollars at the end of 2019 to 2,617,129 thousand in 2020. It then continued to grow modestly to 2,670,870 thousand in 2021. In 2022, a slight contraction to 2,501,409 thousand was observed, followed by a minor increase to 2,525,897 thousand at the end of 2023. Overall, total capital showed growth with mild fluctuations, suggesting an overall strengthening of the capital base over the period analyzed.

Debt to Capital Ratio

The debt to capital ratio revealed a substantial downward trend. Starting at 0.21 in 2019, it lowered to 0.16 in 2020, then sharply dropped to 0.04 in 2021, and further declined to 0.02 in 2022. Data for 2023 is missing. This decreasing ratio aligns with the observed reduction in total debt and indicates an enhanced capital structure with a lower proportion of debt financing relative to the total capital.

The financial data reveals a consistent downward trend in the total debt, including operating lease liability, over the five-year period. Beginning at 460,012 thousand US dollars in 2019, total debt increased slightly to 472,757 thousand in 2020 but then significantly decreased in the following years, reaching 82,614 thousand by the end of 2023. This reduction indicates a strong deleveraging strategy or improved cash flow management over time.

Total capital, inclusive of operating lease liability, shows a different pattern. It increased markedly from 1,940,170 thousand US dollars in 2019 to a peak of 2,747,025 thousand in 2021. Subsequently, it declined slightly to 2,584,179 thousand in 2022 and increased modestly again to 2,608,511 thousand in 2023. This suggests overall growth in the company's capital base, albeit with some fluctuation after 2021.

The debt to capital ratio reflects these movements clearly. It decreased from 0.24 in 2019 to 0.18 in 2020, and then dramatically dropped in subsequent years to 0.07 in 2021, 0.05 in 2022, and finally 0.03 in 2023. This downward trend signifies a continuous reduction in the proportion of debt relative to total capital, which indicates an improvement in financial stability and lower financial risk.

Total Debt

Initial increase in 2020 followed by a pronounced decrease through 2023, indicating effective debt reduction measures.

Total Capital

Growth through 2021 with a mild adjustment thereafter, reflecting a strengthening and then stabilization of the capital base.

Debt to Capital Ratio

Consistent decline over the period, demonstrating reduced leverage and improved capital structure quality.

Total Debt

The total debt displayed a significant downward trend from the end of 2019 through 2022. Initially, the debt was approximately 395 million USD in 2019, rising slightly to about 410 million USD in 2020. However, a sharp decrease followed in subsequent years, with debt dropping drastically to approximately 108 million USD in 2021 and further down to around 50 million USD by the end of 2022. Data for 2023 is missing, preventing analysis for that period.

Total Assets

Total assets demonstrated overall growth from 2019 to 2021, increasing from approximately 2.79 billion USD at the end of 2019 to about 3.81 billion USD in 2021. After this peak, assets saw a decline, falling to roughly 3.50 billion USD in 2022 and slightly decreasing again to approximately 3.49 billion USD in 2023. This indicates a contraction phase after initial asset accumulation over the earlier years.

Debt to Assets Ratio

The debt to assets ratio has consistently decreased across the analyzed timeframe. Beginning at 0.14 in 2019, the ratio fell to 0.11 in 2020, before dropping further to 0.03 in 2021 and reaching a low of 0.01 in 2022. The last available ratio indicates a substantial reduction in leverage, illustrating a significant decrease in the reliance on debt financing relative to total assets. Data for 2023 is unavailable for this ratio.

Overall Analysis

The data depict a clear trend of financial deleveraging over the reported period. While assets initially increased up to 2021, a subsequent decline suggests a strategic adjustment or market-related contraction. Simultaneously, the firm markedly reduced its debt levels, resulting in a much lower debt to assets ratio, signifying a stronger balance sheet with less financial risk. The absence of 2023 debt and ratio data limits concluding remarks for the most recent year.

Total debt (including operating lease liability)

The total debt demonstrates a significant downward trend over the five-year period. Starting at $460 million in 2019, the debt slightly increased to approximately $473 million in 2020 but then decreased sharply to $185 million in 2021. This decline continued steadily to about $133 million in 2022 and further reduced to nearly $83 million by the end of 2023. This consistent reduction indicates a strong deleveraging strategy, possibly aimed at improving financial stability or reducing interest burden.

Total assets

Total assets show a general growth trend from 2019 through 2021, rising from approximately $2.79 billion to a peak of about $3.81 billion. However, there is a decline in asset size beginning in 2022, decreasing to around $3.50 billion and marginally further to $3.49 billion in 2023. Despite the decline in the later years, the asset base remains well above the initial 2019 level, indicating sustained asset strength overall with some partial contraction or revaluation in recent years.

Debt to assets (including operating lease liability)

The debt-to-assets ratio reflects a marked improvement in the company's leverage position throughout the analyzed period. From a ratio of 0.17 in 2019, it fell to 0.13 in 2020 and dropped significantly to 0.05 in 2021. This declining trend continued with further reductions to 0.04 in 2022 and 0.02 in 2023. The decreasing leverage ratio suggests increased financial resilience and a conservative approach to debt, especially notable given the stable asset base in recent years.

Total assets

The total assets of the company demonstrated a notable upward trajectory from 2019 through 2021, increasing from approximately 2.79 billion US dollars in 2019 to about 3.81 billion US dollars in 2021. However, in the subsequent years, 2022 and 2023, total assets exhibited a declining trend, decreasing to roughly 3.50 billion and 3.49 billion US dollars respectively. This suggests a peak in asset accumulation in 2021, followed by a modest contraction or asset optimization phase thereafter.

Shareholders’ equity

Shareholders’ equity showed consistent growth over the five-year period. Starting at around 1.48 billion US dollars in 2019, it increased significantly to about 2.21 billion in 2020 and further to 2.56 billion in 2021. Despite a slight dip in 2022 to approximately 2.45 billion, equity levels rebounded to nearly 2.53 billion by the end of 2023. Overall, equity expansion was solid, indicating strengthening net asset value and possibly retained earnings growth or capital injections.

Financial leverage

The financial leverage ratio steadily declined from 1.88 in 2019 to 1.38 in 2023. This downward trend reflects a reduction in the use of debt relative to equity financing. The decreasing leverage ratio suggests an improving balance sheet structure, with lower reliance on debt and potentially reduced financial risk over time.

Earnings before interest and tax (EBIT)

The EBIT shows a general upward trend from 2019 to 2021, increasing from approximately 549 million USD to nearly 1.18 billion USD. However, from 2021 onwards, there is a notable decline, with EBIT decreasing to about 844 million USD in 2022 and further to around 529 million USD in 2023. This indicates a peak in profitability in 2021 followed by a significant reduction over the next two years.

Interest expense

The interest expense remains relatively stable across the five years, fluctuating slightly but staying within a narrow range of about 3.7 to 24 million USD. It peaks in 2020 at around 24 million USD but falls sharply in 2022 and 2023 to below 4 million USD, which is the lowest in the observed period.

Interest coverage ratio

The interest coverage ratio, indicating the company's ability to meet its interest obligations, improves substantially over the period. Starting at 23.72 in 2019, it rises sharply to 66.15 in 2021 and peaks at 226.97 in 2022. Although it declines to 139.09 in 2023, it remains at a very high level compared to the initial years, reflecting a strong capacity to cover interest expenses despite the decrease in EBIT after 2021.

Earnings before fixed charges and tax

The earnings before fixed charges and tax demonstrated an overall upward trend from 2019 to 2021, increasing from approximately 584.5 million US dollars in 2019 to nearly 1.22 billion US dollars in 2021. However, a decline is observed in the subsequent years, dropping to roughly 884.2 million US dollars in 2022 and further down to about 572.1 million US dollars in 2023. This suggests a peak in profitability in 2021 followed by a significant decrease over the next two years.

Fixed charges

Fixed charges exhibited a relatively stable pattern with minor fluctuations. The values started around 58.7 million US dollars in 2019, increased slightly to approximately 62.7 million US dollars in 2020, then decreased to 57 million US dollars in 2021. In 2022, the fixed charges dropped notably to about 43.8 million US dollars, followed by a modest rise to approximately 46.5 million US dollars in 2023. The trend indicates a slight reduction in fixed charges in the latter periods compared to the earlier years.

Fixed charge coverage ratio

The fixed charge coverage ratio showed a strong upward trend from 2019 through 2021, rising from 9.95 in 2019 to a peak of 21.36 in 2021. This indicates an enhanced ability to cover fixed charges with earnings during this period. While the ratio decreased slightly to 20.18 in 2022, it remained significantly higher than 2019 levels. However, a more pronounced decline occurred in 2023, with the ratio dropping to 12.3, suggesting a reduced margin of safety in covering fixed charges relative to prior peak years. Despite the decline, the coverage ratio in 2023 remains above the 2019 level, indicating an overall better capacity to service fixed charges over the five-year span.