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Financial health: Fair6.5/10

6 strengths, 3 concerns. Weakest points: debt to equity, net debt vs cash flow, current ratio.

• Debt to equity: 1.07 (Concern, benchmark < 0.5) — Debt of 1.07x equity is high against the 0.5x benchmark. It has improved over the last 4 years.
• Net debt vs cash flow: 6.0y (Concern, benchmark < 4 years) — Net debt of $116.5B is 6.0x annual free cash flow — about 6 years of cash flow to repay.
• Current ratio: 0.91 (Concern, benchmark > 1.5) — Short-term assets cover only 0.91x short-term liabilities — below 1.0, meaning bills due this year exceed the assets on hand to pay them. It has improved over the last 4 years.
• Return on equity: 19.5% (Strong, benchmark > 15%) — Earns 19.5% on shareholder equity, comfortably past the > 15% mark.
• Gross margin: 59.7% (Strong, benchmark > 40%) — Keeps 59.7% of revenue after the direct cost of sales, comfortably past the > 40% mark.
• Net margin: 17.5% (Strong, benchmark > 10%) — Turns 17.5% of revenue into profit, comfortably past the > 10% mark.
• Free cash flow: $19.4B (Strong, benchmark positive) — Generated $19.4B of free cash flow after capital spending. It has improved over the last 4 years.
• Revenue growth: 2.7% (Watch, benchmark > 10%) — Revenue changed 2.7% year on year, short of the > 10% mark.
• Earnings growth: 100.5% (Strong, benchmark > 10%) — Earnings changed 100.5% year on year, comfortably past the > 10% mark.
• Payout ratio: 37.3% (Strong, benchmark < 60%) — Pays out 37.3% of earnings as dividends, leaving room to keep paying.