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)
Debt Ratios
Coverage Ratios
Twitter Inc., solvency ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The solvency profile exhibits a progressive deterioration in financial stability from 2017 through 2021. There is a consistent upward trend in leverage ratios alongside a critical decline in the capacity to service debt obligations, culminating in negative coverage ratios by the end of the period.
- Leverage and Capital Structure
- Debt relative to equity, capital, and assets shows a general increase over the five-year period. The debt-to-equity ratio rose from 0.36 in 2017 to 0.58 in 2021, while the debt-to-assets ratio increased from 0.24 to 0.30. A more pronounced escalation is observed when operating lease liabilities are included; the debt-to-equity ratio including leases climbed from 0.36 in 2017 to 0.76 in 2021, suggesting that lease obligations have become a more significant component of the company's long-term liabilities.
- Financial Leverage
- The financial leverage ratio remained relatively stable between 2017 and 2019, fluctuating between 1.46 and 1.49. However, a sharp increase occurred thereafter, reaching 1.68 in 2020 and peaking at 1.92 in 2021, indicating a higher reliance on debt to finance assets.
- Debt Service Capacity
- A severe decline is evident in the coverage ratios. Interest coverage experienced significant volatility, peaking at 4.19 in 2018 before collapsing to -7.03 in 2021. Similarly, the fixed charge coverage ratio shifted from a high of 2.56 in 2018 to a negative value of -0.34 in 2021. This transition from positive to negative coverage indicates that operating earnings are no longer sufficient to cover interest and fixed charges.
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Debt to Equity
Twitter Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Convertible notes, short-term | —) | 917,866) | —) | 897,328) | —) | |
| Finance lease liabilities, short-term | —) | 567) | 23,476) | 68,046) | 84,976) | |
| Convertible notes, long-term | 3,559,023) | 1,875,878) | 1,816,833) | 1,730,922) | 1,627,460) | |
| Senior notes, long-term | 693,996) | 692,994) | 691,967) | —) | —) | |
| Finance lease liabilities, long-term | —) | —) | 205) | 24,394) | 81,308) | |
| Total debt | 4,253,019) | 3,487,305) | 2,532,481) | 2,720,690) | 1,793,744) | |
| Stockholders’ equity | 7,307,199) | 7,970,082) | 8,704,386) | 6,805,594) | 5,047,218) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.58 | 0.44 | 0.29 | 0.40 | 0.36 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | — | — | — | — | |
| Comcast Corp. | 0.99 | — | — | — | — | |
| Meta Platforms Inc. | 0.00 | — | — | — | — | |
| Netflix Inc. | 0.97 | — | — | — | — | |
| Walt Disney Co. | 0.62 | 0.71 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Media & Entertainment | 0.31 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Communication Services | 0.65 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 4,253,019 ÷ 7,307,199 = 0.58
2 Click competitor name to see calculations.
Between 2017 and 2021, a general increase in financial leverage is observed, characterized by a rising total debt load and a subsequent contraction in stockholders' equity starting in 2020.
- Total Debt Trends
- Total debt experienced a consistent upward trajectory over the five-year period, rising from 1,793,744 thousand USD in 2017 to 4,253,019 thousand USD by 2021. Although a marginal decrease was noted in 2019, the subsequent years showed accelerated borrowing, with a substantial increase in obligations occurring between 2020 and 2021.
- Stockholders' Equity Trends
- Equity demonstrated growth from 2017 through 2019, peaking at 8,704,386 thousand USD. However, a reversal occurred after 2019, with equity declining to 7,970,082 thousand USD in 2020 and further to 7,307,199 thousand USD by the end of 2021, indicating a reduction in the net asset base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio exhibited volatility, reaching a minimum of 0.29 in 2019. This low point resulted from the convergence of peak equity levels and a slight reduction in total debt. Following 2019, the ratio rose sharply to 0.44 in 2020 and reached 0.58 in 2021. This trend indicates an increasing reliance on debt financing relative to shareholder equity, signifying a shift toward a more leveraged solvency profile.
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Debt to Equity (including Operating Lease Liability)
Twitter Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Convertible notes, short-term | —) | 917,866) | —) | 897,328) | —) | |
| Finance lease liabilities, short-term | —) | 567) | 23,476) | 68,046) | 84,976) | |
| Convertible notes, long-term | 3,559,023) | 1,875,878) | 1,816,833) | 1,730,922) | 1,627,460) | |
| Senior notes, long-term | 693,996) | 692,994) | 691,967) | —) | —) | |
| Finance lease liabilities, long-term | —) | —) | 205) | 24,394) | 81,308) | |
| Total debt | 4,253,019) | 3,487,305) | 2,532,481) | 2,720,690) | 1,793,744) | |
| Operating lease liabilities, short-term | 222,346) | 177,147) | 146,959) | —) | —) | |
| Operating lease liabilities, long-term | 1,071,209) | 819,748) | 609,245) | —) | —) | |
| Total debt (including operating lease liability) | 5,546,574) | 4,484,200) | 3,288,685) | 2,720,690) | 1,793,744) | |
| Stockholders’ equity | 7,307,199) | 7,970,082) | 8,704,386) | 6,805,594) | 5,047,218) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.76 | 0.56 | 0.38 | 0.40 | 0.36 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.11 | — | — | — | — | |
| Comcast Corp. | 1.06 | — | — | — | — | |
| Meta Platforms Inc. | 0.12 | — | — | — | — | |
| Netflix Inc. | 1.14 | — | — | — | — | |
| Walt Disney Co. | 0.66 | 0.75 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.38 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.79 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 5,546,574 ÷ 7,307,199 = 0.76
2 Click competitor name to see calculations.
An analysis of the solvency position between 2017 and 2021 reveals a progressive increase in financial leverage. While a relatively conservative debt-to-equity profile was maintained in the early part of the period, a significant shift occurred after 2019, characterized by rising liabilities and a simultaneous contraction in equity.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trajectory over the five-year period. Obligations grew from 1,793,744 thousand US dollars in 2017 to 5,546,574 thousand US dollars by the end of 2021, indicating a substantial and uninterrupted increase in total borrowing and lease commitments.
- Stockholders' Equity Dynamics
- Equity demonstrated a non-linear trend, increasing from 5,047,218 thousand US dollars in 2017 to a peak of 8,704,386 thousand US dollars in 2019. Following this peak, a downward trend emerged, with equity decreasing to 7,307,199 thousand US dollars by December 31, 2021, which suggests a reduction in the net asset base available to absorb potential losses.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio remained relatively stable, fluctuating between 0.36 and 0.40 from 2017 to 2019. However, a sharp acceleration in leverage is observed starting in 2020, where the ratio rose to 0.56, and further climbed to 0.76 in 2021. This escalation is the result of the dual impact of increasing total debt and declining stockholders' equity, signifying a heightened reliance on debt financing relative to equity during the final two years of the analyzed period.
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Debt to Capital
Twitter Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Convertible notes, short-term | —) | 917,866) | —) | 897,328) | —) | |
| Finance lease liabilities, short-term | —) | 567) | 23,476) | 68,046) | 84,976) | |
| Convertible notes, long-term | 3,559,023) | 1,875,878) | 1,816,833) | 1,730,922) | 1,627,460) | |
| Senior notes, long-term | 693,996) | 692,994) | 691,967) | —) | —) | |
| Finance lease liabilities, long-term | —) | —) | 205) | 24,394) | 81,308) | |
| Total debt | 4,253,019) | 3,487,305) | 2,532,481) | 2,720,690) | 1,793,744) | |
| Stockholders’ equity | 7,307,199) | 7,970,082) | 8,704,386) | 6,805,594) | 5,047,218) | |
| Total capital | 11,560,218) | 11,457,387) | 11,236,867) | 9,526,284) | 6,840,962) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.37 | 0.30 | 0.23 | 0.29 | 0.26 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | — | — | — | — | |
| Comcast Corp. | 0.50 | — | — | — | — | |
| Meta Platforms Inc. | 0.00 | — | — | — | — | |
| Netflix Inc. | 0.49 | — | — | — | — | |
| Walt Disney Co. | 0.38 | 0.41 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Media & Entertainment | 0.24 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Communication Services | 0.40 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 4,253,019 ÷ 11,560,218 = 0.37
2 Click competitor name to see calculations.
An analysis of solvency metrics between December 31, 2017, and December 31, 2021, reveals a general increase in financial leverage. While total capital expanded throughout the period, the growth in total debt accelerated in the later years, leading to a higher dependency on borrowed funds relative to the total capital structure.
- Total Debt Trend
- Total debt exhibited a significant upward trajectory, rising from 1,793,744 thousand US$ in 2017 to 4,253,019 thousand US$ by 2021. Despite a marginal contraction in 2019, the debt load grew consistently, with the most substantial increases occurring between 2019 and 2021.
- Total Capital Progression
- Total capital grew from 6,840,962 thousand US$ in 2017 to 11,560,218 thousand US$ in 2021. The most rapid expansion occurred between 2017 and 2019, after which the growth rate slowed, resulting in a relatively stable capital base during the 2020 and 2021 fiscal years.
- Debt to Capital Ratio Analysis
- The debt to capital ratio fluctuated between a low of 0.23 and a high of 0.37. Following a dip to 0.23 in 2019, the ratio trended upward to 0.30 in 2020 and reached its peak of 0.37 in 2021. This progression indicates that debt grew at a faster rate than total capital in the final two years of the period, thereby increasing the company's overall financial leverage.
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Debt to Capital (including Operating Lease Liability)
Twitter Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Convertible notes, short-term | —) | 917,866) | —) | 897,328) | —) | |
| Finance lease liabilities, short-term | —) | 567) | 23,476) | 68,046) | 84,976) | |
| Convertible notes, long-term | 3,559,023) | 1,875,878) | 1,816,833) | 1,730,922) | 1,627,460) | |
| Senior notes, long-term | 693,996) | 692,994) | 691,967) | —) | —) | |
| Finance lease liabilities, long-term | —) | —) | 205) | 24,394) | 81,308) | |
| Total debt | 4,253,019) | 3,487,305) | 2,532,481) | 2,720,690) | 1,793,744) | |
| Operating lease liabilities, short-term | 222,346) | 177,147) | 146,959) | —) | —) | |
| Operating lease liabilities, long-term | 1,071,209) | 819,748) | 609,245) | —) | —) | |
| Total debt (including operating lease liability) | 5,546,574) | 4,484,200) | 3,288,685) | 2,720,690) | 1,793,744) | |
| Stockholders’ equity | 7,307,199) | 7,970,082) | 8,704,386) | 6,805,594) | 5,047,218) | |
| Total capital (including operating lease liability) | 12,853,773) | 12,454,282) | 11,993,071) | 9,526,284) | 6,840,962) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.43 | 0.36 | 0.27 | 0.29 | 0.26 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.10 | — | — | — | — | |
| Comcast Corp. | 0.52 | — | — | — | — | |
| Meta Platforms Inc. | 0.10 | — | — | — | — | |
| Netflix Inc. | 0.53 | — | — | — | — | |
| Walt Disney Co. | 0.40 | 0.43 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.28 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.44 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 5,546,574 ÷ 12,853,773 = 0.43
2 Click competitor name to see calculations.
An analysis of the solvency position from 2017 to 2021 reveals a consistent increase in financial leverage. The company has demonstrated a growing reliance on debt as a component of its capital structure, with total debt increasing more rapidly than the total capital base over the observed period.
- Total Debt Accumulation
- Total debt, including operating lease liabilities, experienced uninterrupted annual growth. The balance increased from US$ 1,793,744 thousand in 2017 to US$ 5,546,574 thousand in 2021, representing a total increase of approximately 209% over five years.
- Total Capital Expansion
- Total capital grew from US$ 6,840,962 thousand in 2017 to US$ 12,853,773 thousand in 2021. While the growth was substantial, the rate of expansion decelerated after 2019, with the increase between 2020 and 2021 being significantly more modest than in the preceding years.
- Debt to Capital Ratio Trends
- The debt to capital ratio shifted from 0.26 in 2017 to 0.43 in 2021. A period of relative stability was observed between 2017 and 2019, where the ratio fluctuated slightly between 0.26 and 0.29. However, a marked upward trend emerged starting in 2020, with the ratio climbing to 0.36 and reaching 0.43 by the end of 2021, indicating a higher proportion of debt relative to total capital.
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Debt to Assets
Twitter Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Convertible notes, short-term | —) | 917,866) | —) | 897,328) | —) | |
| Finance lease liabilities, short-term | —) | 567) | 23,476) | 68,046) | 84,976) | |
| Convertible notes, long-term | 3,559,023) | 1,875,878) | 1,816,833) | 1,730,922) | 1,627,460) | |
| Senior notes, long-term | 693,996) | 692,994) | 691,967) | —) | —) | |
| Finance lease liabilities, long-term | —) | —) | 205) | 24,394) | 81,308) | |
| Total debt | 4,253,019) | 3,487,305) | 2,532,481) | 2,720,690) | 1,793,744) | |
| Total assets | 14,059,516) | 13,379,090) | 12,703,389) | 10,162,572) | 7,412,477) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.30 | 0.26 | 0.20 | 0.27 | 0.24 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Alphabet Inc. | 0.04 | — | — | — | — | |
| Comcast Corp. | 0.34 | — | — | — | — | |
| Meta Platforms Inc. | 0.00 | — | — | — | — | |
| Netflix Inc. | 0.35 | — | — | — | — | |
| Walt Disney Co. | 0.27 | 0.29 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Media & Entertainment | 0.17 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Communication Services | 0.27 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 4,253,019 ÷ 14,059,516 = 0.30
2 Click competitor name to see calculations.
Between 2017 and 2021, the solvency profile is characterized by a general increase in leverage despite a consistent expansion of the total asset base. While assets grew steadily throughout the period, total debt experienced more volatility, leading to an overall increase in the proportion of assets financed by debt by the end of the analyzed timeframe.
- Total Debt Trends
- Total debt increased from US$ 1,793,744 thousand in 2017 to US$ 4,253,019 thousand by 2021. A significant increase was observed between 2017 and 2018, followed by a marginal reduction in 2019, and subsequent accelerated growth through 2020 and 2021.
- Asset Base Expansion
- Total assets demonstrated a continuous upward trajectory, rising from US$ 7,412,477 thousand in 2017 to US$ 14,059,516 thousand in 2021. This steady growth indicates a substantial expansion of the resource base over the five-year period.
- Debt to Assets Ratio Dynamics
- The debt-to-assets ratio fluctuated between 0.20 and 0.30. An initial rise to 0.27 in 2018 was followed by a decline to a period low of 0.20 in 2019, as asset growth outpaced debt accumulation. However, a subsequent upward trend emerged in 2020 and 2021, culminating in a ratio of 0.30, the highest leverage level recorded in the period.
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Debt to Assets (including Operating Lease Liability)
Twitter Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Convertible notes, short-term | —) | 917,866) | —) | 897,328) | —) | |
| Finance lease liabilities, short-term | —) | 567) | 23,476) | 68,046) | 84,976) | |
| Convertible notes, long-term | 3,559,023) | 1,875,878) | 1,816,833) | 1,730,922) | 1,627,460) | |
| Senior notes, long-term | 693,996) | 692,994) | 691,967) | —) | —) | |
| Finance lease liabilities, long-term | —) | —) | 205) | 24,394) | 81,308) | |
| Total debt | 4,253,019) | 3,487,305) | 2,532,481) | 2,720,690) | 1,793,744) | |
| Operating lease liabilities, short-term | 222,346) | 177,147) | 146,959) | —) | —) | |
| Operating lease liabilities, long-term | 1,071,209) | 819,748) | 609,245) | —) | —) | |
| Total debt (including operating lease liability) | 5,546,574) | 4,484,200) | 3,288,685) | 2,720,690) | 1,793,744) | |
| Total assets | 14,059,516) | 13,379,090) | 12,703,389) | 10,162,572) | 7,412,477) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.39 | 0.34 | 0.26 | 0.27 | 0.24 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.08 | — | — | — | — | |
| Comcast Corp. | 0.37 | — | — | — | — | |
| Meta Platforms Inc. | 0.09 | — | — | — | — | |
| Netflix Inc. | 0.41 | — | — | — | — | |
| Walt Disney Co. | 0.29 | 0.31 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.21 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.33 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 5,546,574 ÷ 14,059,516 = 0.39
2 Click competitor name to see calculations.
An analysis of the solvency position from 2017 to 2021 reveals a consistent increase in financial leverage. While both total assets and total debt grew throughout the period, the rate of debt accumulation accelerated more rapidly than asset expansion, resulting in a higher proportion of assets being financed through debt obligations.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited an uninterrupted upward trajectory, rising from US$ 1,793,744 thousand in 2017 to US$ 5,546,574 thousand by the end of 2021. This represents a significant increase in total liabilities over the five-year window.
- Asset Growth Patterns
- Total assets grew steadily from US$ 7,412,477 thousand in 2017 to US$ 14,059,516 thousand in 2021. However, the growth rate showed signs of deceleration in the latter two years, as the increase between 2020 and 2021 was more modest compared to the rapid expansion observed between 2017 and 2019.
- Debt to Assets Ratio Evolution
- The debt to assets ratio remained relatively stable between 0.24 and 0.27 from 2017 through 2019. A notable shift occurred in 2020, where the ratio climbed to 0.34, followed by a further increase to 0.39 in 2021. This indicates that by the end of the period, approximately 39% of total assets were funded by debt, marking a clear trend toward higher financial leverage and a relative decline in solvency margins compared to the 2017 baseline.
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Financial Leverage
Twitter Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 14,059,516) | 13,379,090) | 12,703,389) | 10,162,572) | 7,412,477) | |
| Stockholders’ equity | 7,307,199) | 7,970,082) | 8,704,386) | 6,805,594) | 5,047,218) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.92 | 1.68 | 1.46 | 1.49 | 1.47 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Alphabet Inc. | 1.43 | — | — | — | — | |
| Comcast Corp. | 2.87 | — | — | — | — | |
| Meta Platforms Inc. | 1.33 | — | — | — | — | |
| Netflix Inc. | 2.81 | — | — | — | — | |
| Walt Disney Co. | 2.30 | 2.41 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Media & Entertainment | 1.82 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Communication Services | 2.43 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 14,059,516 ÷ 7,307,199 = 1.92
2 Click competitor name to see calculations.
Between 2017 and 2021, a divergent trend is observed between the growth of total assets and the trajectory of stockholders' equity, which directly impacted the company's financial leverage. While total assets expanded consistently throughout the period, stockholders' equity experienced an initial growth phase followed by a contraction in the final two years.
- Total Asset Expansion
- Total assets increased steadily from 7.41 billion US$ in 2017 to 14.06 billion US$ by 2021. This represents a consistent upward trajectory, with the asset base nearly doubling over the analyzed five-year interval.
- Stockholders' Equity Volatility
- Equity grew from 5.05 billion US$ in 2017 to a peak of 8.70 billion US$ in 2019. However, a subsequent reversal is noted, with equity decreasing to 7.97 billion US$ in 2020 and continuing its decline to 7.31 billion US$ by 2021.
- Financial Leverage Trend
- The financial leverage ratio remained stable between 2017 and 2019, ranging from 1.46 to 1.49. A significant upward shift occurred in 2020, with the ratio rising to 1.68, and further increasing to 1.92 in 2021. This indicates an increasing reliance on debt or other liabilities to support asset growth.
The simultaneous decline in stockholders' equity and the rise in the financial leverage ratio starting in 2020 suggests a fundamental shift in the capital structure. The expansion of assets alongside a reducing equity base resulted in the leverage ratio increasing by approximately 31% between 2019 and 2021, reflecting a more leveraged financial position.
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Interest Coverage
Twitter Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | (221,409) | (1,135,626) | 1,465,659) | 1,205,596) | (108,063) | |
| Add: Income tax expense | (189,704) | 1,084,687) | (1,075,520) | (782,052) | 12,645) | |
| Add: Interest expense | 51,186) | 152,878) | 138,180) | 132,606) | 105,237) | |
| Earnings before interest and tax (EBIT) | (359,927) | 101,939) | 528,319) | 556,150) | 9,819) | |
| Solvency Ratio | ||||||
| Interest coverage1 | -7.03 | 0.67 | 3.82 | 4.19 | 0.09 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Alphabet Inc. | 263.24 | — | — | — | — | |
| Comcast Corp. | 5.46 | — | — | — | — | |
| Meta Platforms Inc. | 3,153.27 | — | — | — | — | |
| Netflix Inc. | 8.63 | — | — | — | — | |
| Walt Disney Co. | 2.66 | -0.06 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Media & Entertainment | 24.80 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Communication Services | 11.90 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= -359,927 ÷ 51,186 = -7.03
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates significant volatility in its ability to service debt obligations through operating profits between 2017 and 2021. The capacity to cover interest expenses shifted from a critical deficiency to a period of stability, followed by a severe decline into negative territory.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating performance experienced a sharp increase between 2017 and 2018, rising from 9,819 thousand US$ to a peak of 556,150 thousand US$. This growth remained relatively stable through 2019. However, a precipitous decline occurred in 2020, with EBIT dropping to 101,939 thousand US$, eventually culminating in an operating loss of 359,927 thousand US$ by the end of 2021.
- Interest Expense Trajectory
- Interest obligations showed a steady upward trend from 2017 through 2020, increasing from 105,237 thousand US$ to a maximum of 152,878 thousand US$. A significant reduction is noted in 2021, where expenses fell to 51,186 thousand US$, suggesting a restructuring of debt or a reduction in total borrowings.
- Interest Coverage Ratio Analysis
- The interest coverage ratio reflects the underlying instability of the operating income. In 2017, the ratio of 0.09 indicated an inability to meet interest payments from EBIT. A period of solvency was achieved in 2018 and 2019, with ratios of 4.19 and 3.82, respectively. This trend reversed in 2020 as the ratio fell to 0.67, and reached a critical low of -7.03 in 2021, driven by the transition to negative operating earnings.
The synthesis of these metrics indicates a deteriorating solvency position. While the reduction in interest expense in 2021 provided some relief, it was insufficient to offset the substantial operating loss, resulting in a total inability to cover interest costs from current earnings.
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Fixed Charge Coverage
Twitter Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income (loss) | (221,409) | (1,135,626) | 1,465,659) | 1,205,596) | (108,063) | |
| Add: Income tax expense | (189,704) | 1,084,687) | (1,075,520) | (782,052) | 12,645) | |
| Add: Interest expense | 51,186) | 152,878) | 138,180) | 132,606) | 105,237) | |
| Earnings before interest and tax (EBIT) | (359,927) | 101,939) | 528,319) | 556,150) | 9,819) | |
| Add: Operating lease cost | 256,388) | 201,386) | 173,005) | 138,800) | 117,900) | |
| Earnings before fixed charges and tax | (103,539) | 303,325) | 701,324) | 694,950) | 127,719) | |
| Interest expense | 51,186) | 152,878) | 138,180) | 132,606) | 105,237) | |
| Operating lease cost | 256,388) | 201,386) | 173,005) | 138,800) | 117,900) | |
| Fixed charges | 307,574) | 354,264) | 311,185) | 271,406) | 223,137) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | -0.34 | 0.86 | 2.25 | 2.56 | 0.57 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Alphabet Inc. | 30.80 | — | — | — | — | |
| Comcast Corp. | 4.48 | — | — | — | — | |
| Meta Platforms Inc. | 31.41 | — | — | — | — | |
| Netflix Inc. | 5.46 | — | — | — | — | |
| Walt Disney Co. | 2.07 | 0.32 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Media & Entertainment | 13.00 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Communication Services | 6.03 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= -103,539 ÷ 307,574 = -0.34
2 Click competitor name to see calculations.
The analysis of fixed charge coverage reveals significant volatility in solvency capacity between 2017 and 2021. The company transitioned from an initial state of insufficiency to a period of strong coverage, followed by a sharp decline into a deficit by the end of the period.
- Earnings before fixed charges and tax
- A substantial increase in earnings is observed between 2017 and 2018, with values rising from 127.7 million to 695.0 million. This performance remained relatively stable through 2019 before entering a period of steep contraction, ultimately resulting in a negative balance of 103.5 million by December 31, 2021.
- Fixed charges
- Fixed obligations demonstrated a consistent upward trajectory from 2017 to 2020, increasing from 223.1 million to 354.3 million. A slight reduction occurred in 2021, bringing charges down to 307.6 million, although the overall expenditure remained significantly higher than the 2017 baseline.
- Fixed charge coverage ratio
- The coverage ratio reflects the diverging trends between operational earnings and fixed costs. The ratio improved from 0.57 in 2017 to a peak of 2.56 in 2018, indicating a strong capacity to meet obligations. However, a rapid deterioration followed, with the ratio falling to 0.86 in 2020 and concluding at -0.34 in 2021, signaling an inability to cover fixed charges from earnings.
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