Broadcom (NASDAQ:AVGO) Inc.'s financial health has been in spotlight recently, with a detailed examination of key factors such as debt levels, interest cover ratio, EBIT growth rate, and conversion of EBIT to free cash flow, among others. The analysis revealed a promising outlook for the company's debt repayment prospects.
As of Friday, Broadcom's total debt stands at US$39.3b, with a net debt of US$27.2b after accounting for cash reserves of US$12.1b. The company's liabilities comprise short-term liabilities of US$7.35b and long-term liabilities of US$42.2b. These are offset by liquid assets totaling US$14.01b. This leaves Broadcom with a total liability of $34.5b more than its liquid assets.
Broadcom's significant market capitalization of US$358.2b, as reported by InvestingPro, ensures these liabilities do not pose a substantial risk. The company's net debt to EBITDA ratio is a healthy 1.3 times, suggesting a strong capability to manage its debt levels.
Broadcom's financial health is further underscored by its impressive EBIT growth rate and strong free cash flow production. The company's EBIT grew by 26% in the previous year and it generated more free cash flow than EBIT over the past three years. This aligns with an InvestingPro Tip that highlights Broadcom's high earnings quality, with free cash flow consistently exceeding net income.
In addition, Broadcom's interest cover ratio is sound at 10.6 times its interest expense, indicating that the company is well-positioned to meet its interest obligations on outstanding debt. This is reinforced by another InvestingPro Tip stating that the company operates with a moderate level of debt.
Broadcom's substantial market capitalization and healthy financial indicators bode well for its future debt repayment prospects. This is further supported by a high return on assets of 19.48% as reported by InvestingPro, suggesting efficient use of its resources. The company's P/E ratio stands at 27.11, which, coupled with a strong EPS of 32.72 USD, underscores its profitability.
With 14 analysts revising their earnings upwards for the upcoming period, as per InvestingPro Tips, Broadcom's financial future seems promising. The company has also seen a large price uptick over the last six months, with a year-to-date price total return of 58.02%, further indicating a positive market response.
For more insightful tips like these, check out InvestingPro, which offers 21 additional tips on Broadcom and other companies.
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