Honeywell International Inc. (NASDAQ:HON)

The financial ratios reveal notable trends in the company's capital structure and its ability to meet interest obligations over the periods analyzed.

Debt to Equity

This ratio exhibits some fluctuations but a clear upward trend over the longer term. Starting from 0.91, it peaked above 2.2 in the final quarters, indicating that the company increasingly relied on debt financing relative to equity. The ratio generally remained between 1.0 and 1.3 during the middle periods before climbing significantly toward the end, suggesting a shift toward higher financial risk.

Debt to Capital

The debt to capital ratio shows a gradual increase from around 0.48 to nearly 0.70 over the time horizon. This upward trend aligns with the debt to equity ratio, confirming an increased proportion of debt within the company's overall capital structure. This rising leverage points toward a strategic choice or necessity to finance the operations and growth through borrowing more extensively.

Debt to Assets

Debt to assets ratio moves upward from 0.28 to approximately 0.46. This suggests that a growing share of the company's total assets are financed through debt, reinforcing the pattern of increasing leverage. While moderate increases occurred in earlier periods, the acceleration in later periods signals a more significant shift to debt financing against the asset base.

Financial Leverage

Financial leverage rose steadily from 3.25 to about 4.8, underscoring the trend of heightened use of debt relative to equity. The increase is consistent with other leverage ratios, encapsulating the company’s growing financial risk exposure and possible efforts to amplify returns through borrowed funds.

Interest Coverage

Interest coverage ratios display a declining trend from very high levels (above 20) in earlier periods to under 7 in the most recent quarters. Despite initial strong capacity to cover interest expenses from operating earnings, the decrease reveals diminishing buffer and increased risk of financial strain in meeting interest payments. This pattern could be linked to the increased debt levels documented in the leverage ratios.

In summary, the data indicate a strategic pivot toward greater reliance on debt financing over this period, accompanied by a reducing margin of safety in interest coverage. This evolution in financial structure heightens financial risk and warrants monitoring to ensure that earnings capacity remains sufficient to service debt.

The financial data reveals notable fluctuations in the company's total debt and shareholders' equity over the observed periods, impacting the overall capital structure stability as reflected by the debt-to-equity ratio.

Total Debt

The total debt exhibited an overall increasing trend with some oscillations. Beginning at approximately $16.1 billion in early 2020, it surged sharply to over $22 billion by mid-2020 and remained relatively stable in the range of $21-22 billion through the end of 2021. From 2022 onward, a pattern of volatility is apparent. Notable decreases were recorded in the first three quarters of 2022, reaching a low near $17 billion, followed by a recovery towards nearly $20 billion at the end of that year. Subsequently, a consistent rise is observed, with debt levels climbing steadily each quarter from 2023 through to the later part of 2025, reaching above $37 billion. This suggests an increased reliance on debt financing in recent periods.

Total Shareowners’ Equity

Shareowners' equity displayed less pronounced volatility compared to total debt. Starting around $17.6 billion at the beginning of 2020, it experienced minor fluctuations generally within the $16-18.5 billion range until 2022. However, a downward trend became evident between late 2022 and mid-2025, with equity falling to a low of about $16.1 billion before a slight rebound near $16.8 billion by late 2025. The overall stability is punctuated by a modest decline, indicating potential erosion of net assets over the latter periods.

Debt to Equity Ratio

The debt-to-equity ratio vividly illustrates the changing leverage profile of the company. Initially under 1.0 in early 2020, the ratio rose sharply to approximately 1.28 by year-end 2020, reflecting growing indebtedness relative to equity. This ratio stabilized near 1.1 through 2021 but then displayed an upward trajectory from 2022 onward, increasing steadily and significantly surpassing 2.0 by late 2025. This trend points to a notably higher financial leverage, indicating that debt growth has outpaced equity consistently in recent years.

In summary, the company has experienced considerable growth in total debt alongside a relatively stable to slightly declining equity base, resulting in a marked increase in financial leverage. This trend towards higher indebtedness may imply greater risk exposure related to debt servicing and financial obligations. Monitoring the sustainability of this leverage and assessing the impact on financial flexibility should be prioritized in future analyses.

The financial analysis over the covered periods reveals important trends in the company's leverage and capital structure.

Total Debt

Total debt exhibited an overall increasing trend from March 31, 2020, through September 30, 2025. Starting at approximately $16.1 billion, total debt rose sharply to a peak of about $22.3 billion toward the end of 2020. There was a subsequent decline in 2021 and early 2022, with debt decreasing to a low near $16.9 billion in the third quarter of 2022. From late 2022 onward, total debt steadily increased once again, reaching its highest level of approximately $37 billion by the third quarter of 2025. This pattern indicates periods of debt reduction followed by aggressive debt accumulation in more recent years.

Total Capital

Total capital followed a fluctuating but generally upward trajectory across the time frame. Beginning just below $33.8 billion in early 2020, total capital increased steadily to a peak close to $40.3 billion at mid-2020, before experiencing a gradual decline toward a trough near $34.7 billion by the third quarter of 2022. From late 2022 onward, total capital rebounded significantly, culminating in a high of approximately $53.8 billion by the third quarter of 2025. This suggests capital base expansion over the longer term, particularly in the more recent periods.

Debt to Capital Ratio

The debt to capital ratio ranged between approximately 0.48 and 0.69, indicating variation in financial leverage. The ratio increased from 0.48 in the first quarter of 2020 to a high of around 0.56 by the end of 2020, suggesting a rise in the proportion of debt within the capital structure initially. A modest decline followed in 2021, with the ratio fluctuating between 0.51 and 0.54, reflecting a slight deleveraging phase. However, starting in 2023, the ratio again climbed steadily, reaching its peak near 0.69 by the third quarter of 2025. This upward trend highlights a growing reliance on debt financing relative to total capital in more recent years, denoting increased financial leverage and potentially greater financial risk.

In summary, the data demonstrates dynamic management of capital and debt levels, with notable fluctuations correlating with economic or strategic shifts. The recent sustained increase in both total debt and the debt to capital ratio points to an intensified leverage strategy, which may warrant closer monitoring for its implications on financial stability and cost of capital going forward.

Debt Levels Trend

The total debt exhibited an overall upward trajectory over the reported periods. Starting at approximately $16.1 billion, it rose significantly, peaking around $22.2 billion in late 2020, then fluctuated slightly before decreasing notably by the end of 2022. However, from early 2023 onward, debt levels increased sharply again, reaching above $37 billion by late 2025. This pattern indicates periods of both debt reduction and substantial borrowing activities in recent years.

Assets Movements

Total assets showed moderate fluctuations within a relatively narrow range from $57.4 billion in early 2020 to around $81 billion at the end of 2025. The asset base experienced minor declines and recoveries but maintained a generally stable upward trend in the long term. This stability suggests consistent asset management despite changes in debt levels.

Debt to Asset Ratio Dynamics

The debt to assets ratio mirrored the debt trends but highlighted evolving leverage conditions. It began at 0.28, increased to a high of 0.35 by late 2020, then decreased to about 0.28 near the end of 2022, reflecting deleveraging during that interval. Following this period, the ratio rose steadily, reaching close to 0.47 by late 2025. The rising leverage in the later years signals a greater reliance on debt relative to the asset base, possibly indicating more aggressive financing or investment strategies.

Overall Insights

The data reveal an initial phase of rising debt and leverage followed by a temporary reduction in both debt levels and leverage around 2022. Subsequently, the company resumed its debt accumulation, increasing financial leverage to levels nearly double those at the outset of the period measured. Assets have remained comparatively stable, emphasizing that changes in leverage are primarily driven by debt fluctuations. This pattern may warrant attention concerning risk management and capital structure strategy going forward.

The analysis of the company's quarterly financial data over multiple periods reveals several key trends in total assets, shareholders' equity, and financial leverage.

Total Assets

Total assets exhibited an overall upward trend from March 2020 through the end of 2025. Beginning at approximately $57.4 billion in the first quarter of 2020, assets increased steadily with some fluctuations, reaching above $80.9 billion by the third quarter of 2025. The growth was moderate during 2020, slow in 2021 and early 2022, followed by more pronounced increases from mid-2023 through the end of the period, reflecting possible expansion or acquisition activities contributing to asset accumulation.

Total Shareowners’ Equity

Shareholders' equity showed moderate fluctuations and a slight overall decline relative to total assets. Starting at about $17.6 billion in early 2020, equity values experienced minor variations but generally hovered around $16 billion to $18.5 billion. Notably, there was a downward trend beginning late 2022 through 2023, with equity dropping to near $15.8 billion by the fourth quarter of 2023. A brief recovery occurred afterward but equity remained somewhat volatile and ended slightly below the early 2020 levels by 2025. This trend suggests potential share buybacks, dividend payments, or accumulated losses impacting equity levels.

Financial Leverage

The financial leverage ratio demonstrated a clear increasing trend throughout the period analyzed. Starting at approximately 3.25 in the first quarter of 2020, the ratio climbed steadily to values exceeding 4.8 by 2025. This rising leverage indicates increasing use of debt relative to equity in the company's capital structure. The upward trend is particularly notable in the latter half of the period, implying growing financial risk and potential reliance on external financing sources for asset growth or operational needs.

In summary, the company's asset base expanded consistently over the timeline, while shareholders' equity remained relatively stable but experienced some decline phases. The steady rise in financial leverage suggests an increasing dependence on debt financing, which may warrant further scrutiny regarding the company's risk profile and cost of capital management going forward.

EBIT Performance

The earnings before interest and tax (EBIT) demonstrated notable fluctuations over the observed quarters. Initially, EBIT decreased sharply from 2008 million USD in the first quarter of 2020 to 1249 million USD by September 2020, reflecting a contraction perhaps related to external economic pressures early in the period. Subsequently, there was a recovery to 1805 million USD by the end of 2020. In 2021, EBIT showed relative stability around the 1800-1960 million USD range, peaking toward the end of the year. In 2022, the EBIT exhibited volatility with values ranging from 1333 million USD in December to a peak of 2079 million USD in September, followed by a drop at the year's end. The period from 2023 through early 2024 saw EBIT values mostly above 2000 million USD, reaffirming a period of improved operational earnings compared to the early pandemic quarters. However, the last few quarters show renewed variability and no clear sustained upward trend. Overall, EBIT demonstrated resilience but with significant short-term volatility.

Interest and Other Financial Charges

Interest and financial expenses increased consistently over the period analyzed. Starting at 73 million USD in the first quarter of 2020, financial charges rose steadily, reaching 354 million USD by the third quarter of 2025. This upward trend in financial charges indicates increased borrowing costs or higher levels of debt financing, which could exert pressure on profitability. The increase was gradual but consistent, with no periods of significant reduction, signifying a continuous growth in interest obligations.

Interest Coverage Ratio

The interest coverage ratio, which measures the company's ability to meet interest payments from EBIT, declined steadily over the period. In 2020 and part of 2021, this ratio was relatively high, exceeding 16, indicating strong capacity to cover interest charges. However, from early 2022 onward, the ratio fell progressively, reaching below 7 by late 2025. This decline suggests diminishing buffer and a tightening capacity to meet interest expenses, mainly driven by rising interest charges alongside fluctuating and occasionally declining EBIT levels. The trend signals increased financial risk and underscores the need for careful monitoring of leverage and operating profitability.