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What You Must Know About Intel Corporation’s (NASDAQ:INTC) Financial Strength

Bruce Howe

There are a number of reasons that attract investors towards large-cap companies such as Intel Corporation (NASDAQ:INTC), with a market cap of $202.36B. Big corporations are much sought after by risk-averse investors who find diversified revenue streams and strong capital returns attractive. However, the health of the financials determines whether the company continues to succeed. This article will examine Intel’s financial liquidity and debt levels to get an idea of whether the company can deal with cyclical downturns and maintain funds to accommodate strategic spending for future growth. Note that this commentary is very high-level and solely focused on financial health, so I suggest you dig deeper yourself into INTC here. View our latest analysis for Intel

How much cash does INTC generate through its operations?

Over the past year, INTC has ramped up its debt from $22,670.0M to $25,283.0M , which comprises of short- and long-term debt. With this rise in debt, INTC currently has $17,099.0M remaining in cash and short-term investments , ready to deploy into the business. Additionally, INTC has generated cash from operations of $21,808.0M in the last twelve months, resulting in an operating cash to total debt ratio of 86.26%, signalling that INTC’s debt is appropriately covered by operating cash. This ratio can also be a sign of operational efficiency as an alternative to return on assets. In INTC’s case, it is able to generate 0.86x cash from its debt capital.

Can INTC meet its short-term obligations with the cash in hand?

Looking at INTC’s most recent $20,302.0M liabilities, it appears that the company has been able to meet these commitments with a current assets level of $35,508.0M, leading to a 1.75x current account ratio. Usually, for Semiconductor companies, this is a suitable ratio as there’s enough of a cash buffer without holding too capital in low return investments.

NasdaqGS:INTC Historical Debt Jan 17th 18

Can INTC service its debt comfortably?

With debt reaching 44.60% of equity, INTC may be thought of as relatively highly levered. This is not unusual for large-caps since debt tends to be less expensive than equity because interest payments are tax deductible. Accordingly, large companies often have lower cost of capital due to easily obtained financing, providing an advantage over smaller companies. By measuring how many times INTC’s earnings can cover interest payments, we can evaluate whether its level of debt is sustainable or not. As a rule of thumb, a company should have earnings before interest and tax (EBIT) of at least three times the size of net interest. For INTC, the ratio of 72.07x suggests that interest is amply covered. High interest coverage serves as an indication of the safety of a company, which highlights why many large organisations like INTC are considered a risk-averse investment.

Next Steps:

INTC’s high cash coverage means that, although its debt levels are high, the company is able to utilise its borrowings efficiently in order to generate cash flow. Since there is also no concerns around INTC’s liquidity needs, this may be its optimal capital structure for the time being. I admit this is a fairly basic analysis for INTC’s financial health. Other important fundamentals need to be considered alongside. I suggest you continue to research Intel to get a better picture of the large-cap by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for INTC’s future growth? Take a look at our free research report of analyst consensus for INTC’s outlook.

2. Valuation: What is INTC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether INTC is currently mispriced by the market.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.