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.
- What Is Activision Blizzard’s Revenue & EBITDA Breakdown?
- By What Percentage Have Activision Blizzard’s Revenues And EBITDA Grown Over The Last Five Years?
- What’s Activision Blizzard’s Fundamental Value Based On Expected 2016 Results?
- How Has Activision Blizzard’s Revenue And EBITDA Composition Changed Over 2011-2015?
- Where Will Activision Blizzard’s Revenue And Gross Profit Growth Come From Over The Next Three Years?
- Activision Blizzard’s Console Market Share Witnessed A Decline In 2015; Digital Channels Provide Respite
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Notes:
1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Activision Blizzard
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