Activision Versus Electronics Arts: Who’s More Leveraged?
- The comparison reveals that Activision is more leveraged than Electronic Arts.
- Activision has been more aggressive in financing its growth through debt and a notable portion of its assets appear to have been generated through debt.
- On the other hand, Electronic Arts has financed most of its growth through equity which makes its earnings less susceptible to volatility on account of interest expense
- In fact, Electronic Arts’ Debt/Equity ratio is about 40% below the industry average (according to Morningstar), which suggests that the company can raise debt relatively easily, if and when it needs to finance its growth
- On the other hand, Activision’s Debt/Equity ratio is about 20% above the industry average, which reflects more volatility in its earnings compared to its peers.
Have more questions on Activision Blizzard (NASDAQ: ATVI)? See the links below.
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