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)
EMC Corp., solvency ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The financial data reveals several important trends in the company's leverage and coverage ratios over the five-year period ending December 31, 2015.
- Debt to Equity
- This ratio experienced fluctuation, falling from 0.17 in 2011 to a low of 0.07 in 2012, indicating a reduction in reliance on debt relative to equity. Subsequently, it increased to 0.32 by 2013, decreased slightly in 2014, and rose again to 0.32 in 2015. The overall pattern suggests an initial deleveraging followed by a gradual increase in debt relative to equity over the latter years.
- Debt to Capital
- The debt to capital ratio mirrored the debt to equity trend, decreasing sharply from 0.15 in 2011 to 0.07 in 2012, then rising steadily to 0.24 by 2015. This reflects an initial strengthening of the capital structure, followed by increased debt financing.
- Debt to Assets
- This ratio decreased significantly from 0.10 to 0.04 between 2011 and 2012, indicating less debt relative to total assets. It subsequently climbed to 0.16 by 2013 before moderating slightly to 0.12 in 2014 and increasing again to 0.15 in 2015. This trend shows a variable use of debt financing relative to asset base over the period.
- Financial Leverage
- Financial leverage decreased from 1.81 in 2011 to 1.70 in 2012, indicating less use of debt relative to equity financing. However, it then rose consistently each year to reach 2.20 in 2015, suggesting a growing dependence on leverage over time.
- Interest Coverage
- This ratio peaked at 49.21 in 2012 after an initial 20.06 in 2011, demonstrating a significant improvement in the company's ability to meet interest obligations. However, it declined noticeably thereafter, falling to 18.57 by 2015. Despite the decline, the ratio remained at a level generally considered safe, yet the downward trend could indicate reduced earnings relative to interest expenses or increased interest burden.
- Fixed Charge Coverage
- This ratio increased from 7.78 in 2011 to 10.74 in 2012, reflecting an improved ability to cover fixed charges. It then declined gradually over the subsequent years, reaching 5.69 by 2015. This trend suggests a weakening capacity to cover fixed financial obligations, raising potential concerns about financial flexibility.
Overall, the data depicts a company that initially reduced its leverage and improved coverage metrics between 2011 and 2012, followed by a gradual increase in debt levels accompanied by declining coverage ratios through 2015. The rising leverage combined with decreasing interest and fixed charge coverage ratios may warrant attention to ensure sustainable financial management going forward.
Debt Ratios
Coverage Ratios
Debt to Equity
EMC Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Notes converted and payable | —) | —) | 1,665) | —) | 1,700) | |
| Short-term debt | 1,299) | —) | —) | —) | —) | |
| Current portion of convertible debt | —) | —) | —) | 1,652) | 1,605) | |
| Long-term debt | 5,475) | 5,495) | 5,494) | —) | —) | |
| Total debt | 6,774) | 5,495) | 7,159) | 1,652) | 3,305) | |
| Total EMC Corporation’s shareholders’ equity | 21,140) | 21,896) | 22,301) | 22,357) | 18,959) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.32 | 0.25 | 0.32 | 0.07 | 0.17 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | |
| Analog Devices Inc. | — | — | — | — | — | |
| Applied Materials Inc. | — | — | — | — | — | |
| Broadcom Inc. | — | — | — | — | — | |
| Intel Corp. | — | — | — | — | — | |
| KLA Corp. | — | — | — | — | — | |
| Lam Research Corp. | — | — | — | — | — | |
| Micron Technology Inc. | — | — | — | — | — | |
| NVIDIA Corp. | — | — | — | — | — | |
| Qualcomm Inc. | — | — | — | — | — | |
| Texas Instruments Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to equity = Total debt ÷ Total EMC Corporation’s shareholders’ equity
= 6,774 ÷ 21,140 = 0.32
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibits significant fluctuations over the five-year period. Initially, there was a notable decrease from 3,305 million USD in 2011 to 1,652 million USD in 2012, indicating a reduction in leverage or debt repayment during this timeframe. However, in 2013, total debt surged sharply to 7,159 million USD, more than quadrupling compared to the previous year. This elevated debt level then decreased to 5,495 million USD in 2014, followed by another increase to 6,774 million USD in 2015. Overall, total debt shows a pattern of volatility with a substantial peak in 2013 and increased levels compared to the early years in the series.
- Shareholders' Equity
- Shareholders' equity remained relatively stable over the period, fluctuating within a narrow range between approximately 18,959 million USD and 22,357 million USD. After an increase from 18,959 million USD in 2011 to a peak of 22,357 million USD in 2012, equity levels slightly decreased and hovered around 22,000 million USD through 2013 and 2014, before declining marginally to 21,140 million USD in 2015. The equity base has thus maintained relative consistency, without significant upward or downward trends.
- Debt to Equity Ratio
- The debt to equity ratio reflects the changes in total debt relative to shareholders’ equity and displays noticeable variability. Starting at 0.17 in 2011, the ratio decreased to a low of 0.07 in 2012, corresponding to the reduction in total debt and increase in equity during that year. In 2013, the ratio increased sharply to 0.32, driven by the substantial rise in debt. Subsequently, the ratio declined to 0.25 in 2014 but rose again to 0.32 in 2015, mirroring the increases and decreases in total debt while equity remained relatively stable. This indicates a fluctuating leverage position with periods of increased financial risk due to higher debt levels relative to equity.
Debt to Capital
EMC Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Notes converted and payable | —) | —) | 1,665) | —) | 1,700) | |
| Short-term debt | 1,299) | —) | —) | —) | —) | |
| Current portion of convertible debt | —) | —) | —) | 1,652) | 1,605) | |
| Long-term debt | 5,475) | 5,495) | 5,494) | —) | —) | |
| Total debt | 6,774) | 5,495) | 7,159) | 1,652) | 3,305) | |
| Total EMC Corporation’s shareholders’ equity | 21,140) | 21,896) | 22,301) | 22,357) | 18,959) | |
| Total capital | 27,914) | 27,391) | 29,460) | 24,010) | 22,264) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.24 | 0.20 | 0.24 | 0.07 | 0.15 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | |
| Analog Devices Inc. | — | — | — | — | — | |
| Applied Materials Inc. | — | — | — | — | — | |
| Broadcom Inc. | — | — | — | — | — | |
| Intel Corp. | — | — | — | — | — | |
| KLA Corp. | — | — | — | — | — | |
| Lam Research Corp. | — | — | — | — | — | |
| Micron Technology Inc. | — | — | — | — | — | |
| NVIDIA Corp. | — | — | — | — | — | |
| Qualcomm Inc. | — | — | — | — | — | |
| Texas Instruments Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to capital = Total debt ÷ Total capital
= 6,774 ÷ 27,914 = 0.24
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited significant fluctuations over the analyzed period. Initially, there was a marked decrease from 3,305 million US dollars at the end of 2011 to 1,652 million in 2012. However, this trend reversed sharply in 2013, with total debt increasing substantially to 7,159 million. Subsequently, total debt decreased to 5,495 million in 2014 before rising again to 6,774 million by the end of 2015. Overall, total debt showed high volatility with notable spikes in 2013 and 2015.
- Total Capital
- Total capital demonstrated a generally upward trend from 22,264 million US dollars in 2011 to 27,914 million in 2015. The capital base grew steadily each year except for a slight decline in 2014, where it decreased from 29,460 million in 2013 to 27,391 million. Despite this dip, the overall capital amount increased by approximately 25% over the five-year period, reflecting moderate growth in the company's capital structure.
- Debt to Capital Ratio
- The debt to capital ratio showed considerable variation in line with the fluctuations in total debt. It decreased from 0.15 in 2011 to its lowest value of 0.07 in 2012, indicating a reduced reliance on debt within the capital structure at that time. The ratio then rose sharply to 0.24 in 2013, followed by a slight decline to 0.20 in 2014. By 2015, the ratio returned to 0.24, mirroring the period of increased debt. This pattern suggests shifts in financing strategy with alternating periods of leveraging and deleveraging.
Debt to Assets
EMC Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Notes converted and payable | —) | —) | 1,665) | —) | 1,700) | |
| Short-term debt | 1,299) | —) | —) | —) | —) | |
| Current portion of convertible debt | —) | —) | —) | 1,652) | 1,605) | |
| Long-term debt | 5,475) | 5,495) | 5,494) | —) | —) | |
| Total debt | 6,774) | 5,495) | 7,159) | 1,652) | 3,305) | |
| Total assets | 46,612) | 45,885) | 45,849) | 38,069) | 34,268) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.15 | 0.12 | 0.16 | 0.04 | 0.10 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | |
| Analog Devices Inc. | — | — | — | — | — | |
| Applied Materials Inc. | — | — | — | — | — | |
| Broadcom Inc. | — | — | — | — | — | |
| Intel Corp. | — | — | — | — | — | |
| KLA Corp. | — | — | — | — | — | |
| Lam Research Corp. | — | — | — | — | — | |
| Micron Technology Inc. | — | — | — | — | — | |
| NVIDIA Corp. | — | — | — | — | — | |
| Qualcomm Inc. | — | — | — | — | — | |
| Texas Instruments Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to assets = Total debt ÷ Total assets
= 6,774 ÷ 46,612 = 0.15
2 Click competitor name to see calculations.
The financial data reflects notable fluctuations in debt levels and the overall asset base over the five-year period.
- Total Debt
-
Total debt experienced a significant decline from 2011 to 2012, dropping from 3,305 million to 1,652 million USD. However, in 2013, there was a sharp increase reaching 7,159 million USD, more than quadrupling the previous year's debt. Subsequently, total debt declined to 5,495 million USD in 2014 but rose again to 6,774 million USD in 2015. This pattern indicates volatility in the company's leverage decisions or financing activities.
- Total Assets
-
Total assets showed a consistent upward trend throughout the period. Starting at 34,268 million USD in 2011, assets increased steadily each year, reaching 46,612 million USD by the end of 2015. This growth suggests expansion or accumulation of assets, with the asset base increasing by approximately 36% over the five years.
- Debt to Assets Ratio
-
The ratio of debt to assets mirrored the fluctuation in total debt relative to total assets. It decreased from 0.10 in 2011 to a low of 0.04 in 2012, reflecting a strong reduction in leverage relative to assets. In 2013, the ratio surged to 0.16, correlating with the large increase in debt. It then decreased to 0.12 in 2014 but again rose to 0.15 in 2015. Despite the fluctuations, the ratio remained below 0.2 throughout the period, indicating a moderate level of leverage overall.
Financial Leverage
EMC Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 46,612) | 45,885) | 45,849) | 38,069) | 34,268) | |
| Total EMC Corporation’s shareholders’ equity | 21,140) | 21,896) | 22,301) | 22,357) | 18,959) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.20 | 2.10 | 2.06 | 1.70 | 1.81 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | |
| Analog Devices Inc. | — | — | — | — | — | |
| Applied Materials Inc. | — | — | — | — | — | |
| Broadcom Inc. | — | — | — | — | — | |
| Intel Corp. | — | — | — | — | — | |
| KLA Corp. | — | — | — | — | — | |
| Lam Research Corp. | — | — | — | — | — | |
| Micron Technology Inc. | — | — | — | — | — | |
| NVIDIA Corp. | — | — | — | — | — | |
| Qualcomm Inc. | — | — | — | — | — | |
| Texas Instruments Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Financial leverage = Total assets ÷ Total EMC Corporation’s shareholders’ equity
= 46,612 ÷ 21,140 = 2.20
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the five-year period ending December 31, 2015.
- Total Assets
- Total assets have shown a consistent upward trend from 34,268 million USD in 2011 to 46,612 million USD in 2015. The most significant increase occurred between 2012 and 2013, where total assets grew by approximately 7,780 million USD. Growth then slowed somewhat but remained positive through 2014 and 2015, indicating steady asset base expansion.
- Total Shareholders’ Equity
- Shareholders’ equity initially increased from 18,959 million USD in 2011 to a peak of 22,357 million USD in 2012. It then remained relatively flat in 2013 before experiencing a gradual decline in the subsequent two years, reaching 21,140 million USD by the end of 2015. This trend suggests a plateau followed by a modest reduction in equity, potentially due to changes in retained earnings or distributions.
- Financial Leverage
- The financial leverage ratio decreased slightly from 1.81 in 2011 to 1.7 in 2012, indicating a reduction in reliance on debt relative to equity. However, from 2013 onward, financial leverage increased steadily to 2.2 by 2015. This rise implies an increasing use of debt financing relative to equity, coinciding with the plateau and eventual decrease in shareholders’ equity and the continued rise in total assets.
Overall, the company has demonstrated growth in asset size over the period, while shareholders’ equity has stabilized and slightly declined in later years. The increasing financial leverage suggests a strategic shift toward greater debt utilization, which warrants further assessment of risk and capital structure dynamics.
Interest Coverage
EMC Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to EMC Corporation | 1,990) | 2,714) | 2,889) | 2,733) | 2,461) | |
| Add: Net income attributable to noncontrolling interest | 182) | 180) | 204) | 153) | 148) | |
| Add: Income tax expense | 710) | 868) | 772) | 918) | 640) | |
| Add: Interest expense | 164) | 147) | 156) | 79) | 170) | |
| Earnings before interest and tax (EBIT) | 3,046) | 3,909) | 4,021) | 3,883) | 3,420) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 18.57 | 26.59 | 25.78 | 49.21 | 20.06 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | |
| Analog Devices Inc. | — | — | — | — | — | |
| Applied Materials Inc. | — | — | — | — | — | |
| Broadcom Inc. | — | — | — | — | — | |
| Intel Corp. | — | — | — | — | — | |
| KLA Corp. | — | — | — | — | — | |
| Lam Research Corp. | — | — | — | — | — | |
| Micron Technology Inc. | — | — | — | — | — | |
| NVIDIA Corp. | — | — | — | — | — | |
| Qualcomm Inc. | — | — | — | — | — | |
| Texas Instruments Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,046 ÷ 164 = 18.57
2 Click competitor name to see calculations.
- EBIT Trend Analysis
- The earnings before interest and tax (EBIT) increased from 3,420 million US dollars in 2011 to a peak of 4,021 million in 2013. After 2013, a decline is observed, with EBIT falling to 3,909 million in 2014 and further decreasing to 3,046 million in 2015. This indicates a positive growth trend until 2013, followed by a noticeable reduction in operating profitability in the subsequent two years.
- Interest Expense Trend
- Interest expense shows variability over the period. It significantly dropped from 170 million US dollars in 2011 to 79 million in 2012, then increased again to 156 million in 2013. From 2013 to 2015, interest expense remained relatively stable but slightly increased to 164 million by 2015. This fluctuation may point to changes in the company's debt or financing costs over the years.
- Interest Coverage Ratio Trend
- The interest coverage ratio started at a strong level of 20.06 in 2011 and rose sharply to 49.21 in 2012, indicating an improved ability to cover interest expenses with EBIT. After 2012, the ratio declined steadily, falling to 25.78 in 2013, 26.59 in 2014, and further to 18.57 in 2015. This downward trend suggests a weakening ability to cover interest obligations as EBIT declined and interest expenses had moderate increases.
- Overall Financial Insight
- The company experienced growth in EBIT and a substantial improvement in interest coverage ratio up to 2012 and 2013. Following this period, there was a decline in profitability alongside a steady interest expense, reducing the cushion to cover interest obligations. This pattern may imply rising financial risk and the need for attention to operational efficiency or debt management strategies from 2014 onward.
Fixed Charge Coverage
EMC Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to EMC Corporation | 1,990) | 2,714) | 2,889) | 2,733) | 2,461) | |
| Add: Net income attributable to noncontrolling interest | 182) | 180) | 204) | 153) | 148) | |
| Add: Income tax expense | 710) | 868) | 772) | 918) | 640) | |
| Add: Interest expense | 164) | 147) | 156) | 79) | 170) | |
| Earnings before interest and tax (EBIT) | 3,046) | 3,909) | 4,021) | 3,883) | 3,420) | |
| Add: Rent expense | 451) | 361) | 328) | 312) | 309) | |
| Earnings before fixed charges and tax | 3,497) | 4,270) | 4,349) | 4,194) | 3,728) | |
| Interest expense | 164) | 147) | 156) | 79) | 170) | |
| Rent expense | 451) | 361) | 328) | 312) | 309) | |
| Fixed charges | 615) | 508) | 484) | 391) | 479) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 5.69 | 8.41 | 8.99 | 10.74 | 7.78 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Advanced Micro Devices Inc. | — | — | — | — | — | |
| Analog Devices Inc. | — | — | — | — | — | |
| Applied Materials Inc. | — | — | — | — | — | |
| Broadcom Inc. | — | — | — | — | — | |
| Intel Corp. | — | — | — | — | — | |
| KLA Corp. | — | — | — | — | — | |
| Lam Research Corp. | — | — | — | — | — | |
| Micron Technology Inc. | — | — | — | — | — | |
| NVIDIA Corp. | — | — | — | — | — | |
| Qualcomm Inc. | — | — | — | — | — | |
| Texas Instruments Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,497 ÷ 615 = 5.69
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax demonstrated an overall increasing trend from 2011 to 2014, rising from $3,728 million to a peak of $4,349 million in 2013, followed by a slight decline to $4,270 million in 2014. In 2015, there was a notable decrease to $3,497 million, indicating a downturn in earnings performance for that year.
- Fixed charges
- Fixed charges fluctuated over the analyzed period, starting at $479 million in 2011 and decreasing significantly to $391 million in 2012. Subsequently, these charges rose steadily to $484 million in 2013 and further increased to $508 million in 2014. The upward trend continued sharply in 2015, reaching $615 million, representing the highest fixed charge value in the period considered.
- Fixed charge coverage ratio
- The fixed charge coverage ratio showed variability correlating inversely with the trends in fixed charges and earnings. It increased markedly from 7.78 in 2011 to 10.74 in 2012, reflecting improved capacity to cover fixed charges despite lower fixed charges in 2012. The ratio then declined over the next three years: dropping to 8.99 in 2013, 8.41 in 2014, and falling significantly to 5.69 in 2015. This declining trend in coverage ratio signals a weakening ability to meet fixed financial obligations due to rising fixed charges and reduced earnings in 2015.
- Overall analysis
- The financial data indicates that while earnings showed initial growth and relative stability before 2015, there was a sharp drop in 2015. Fixed charges decreased initially but increased steadily thereafter, peaking in the final year. The combined effect of declining earnings and rising fixed charges caused the fixed charge coverage ratio to deteriorate significantly by 2015, highlighting increased financial risk and decreased cushion for covering fixed obligations in that year.