Ross Stores Inc. (NASDAQ:ROST)

The financial ratios exhibit distinct trends over the analyzed periods, highlighting changes in the company's capital structure, leverage, and coverage capacities.

Debt to Equity and Related Ratios

The standard debt to equity ratio remained relatively low and stable from 2017 through 2020, fluctuating modestly between 0.09 and 0.14. However, a significant increase is observed in 2021, where it surged to 0.76, before slightly decreasing to 0.6 in 2022, indicating increased reliance on debt financing relative to equity.

When including operating lease liabilities, this ratio reveals a more pronounced increase, rising from 0.14 in 2017 to 1.04 in 2020, peaking at 1.74 in 2021, then declining to 1.38 in 2022. This suggests that lease obligations have become a substantial component of the company's total liabilities in recent years.

Debt to Capital and Debt to Assets Ratios

Debt to capital (excluding leases) remained steady at low levels, similar to debt to equity, with a sharp rise noted in 2021 (0.43) and a slight decrease in 2022 (0.38). Including operating leases, the ratio increased considerably from 0.09 in 2019 to 0.51 in 2020, continuing upward to 0.64 in 2021, before reducing to 0.58 in 2022, reinforcing the trend of increasing lease-related liabilities.

Debt to assets (excluding leases) shows a modest decline from 0.07 in 2017 to 0.03 in 2020, then a noteworthy increase to 0.2 in 2021, slightly decreasing to 0.18 in 2022. Including leases, this ratio surged from 0.05 in 2019 to 0.37 in 2020, peaking at 0.45 in 2021 and reducing slightly to 0.41 in 2022. Again, this evidences growing lease obligations impacting overall asset financing.

Financial Leverage

Financial leverage was relatively constant and moderate between 2017 and 2019 (around 1.8 to 1.9), increasing sharply in 2020 (2.78), further rising to 3.86 in 2021 and subsequently decreasing to 3.36 in 2022. This pattern suggests a growing use of debt or other liabilities in the capital structure, with some reduction in the latest year.

Interest and Fixed Charge Coverage

Interest coverage ratios were exceptionally high from 2017 through 2020, indicating strong income relative to interest expenses. However, a dramatic decline to 2.21 is observed in 2021, followed by partial recovery to 31.05 in 2022. This sharp volatility suggests a significant fluctuation in earnings or interest obligations during this time frame.

Fixed charge coverage remained stable around 4.3 to 4.7 from 2017 to 2020, then dropped to 1.14 in 2021, recovering to 3.96 in 2022. This trend aligns with the interest coverage pattern, indicating temporary stress or restructuring of fixed charge commitments in 2021.

Overall, the data portrays increasing indebtedness and reliance on leased liabilities starting around 2020 into 2021, accompanied by decreased coverage ratios during the same period, suggesting a phase of elevated financial risk or operational challenges. Partial improvement in 2022 indicates some stabilization but leverage remains significantly higher compared to earlier years.

The financial data over the six-year period reveals notable fluctuations in the debt and equity structure. Total debt showed relative stability from 2017 through 2020, ranging between approximately $312 million and $397 million. However, starting in 2021, there was a significant increase in total debt, reaching over $2.5 billion, which was maintained at a slightly lower but still elevated level in 2022.

Stockholders’ equity demonstrated a consistent upward trend across the entire period. Beginning at about $2.75 billion in 2017, equity grew steadily each year, surpassing $4 billion by 2022. This continuous growth indicates strengthening of the company's net asset base.

The debt-to-equity ratio remained low and stable from 2017 to 2020, fluctuating slightly between 0.09 and 0.14, suggesting a conservative leverage approach with debt representing a small portion of the capital structure. However, in 2021, the ratio sharply increased to 0.76, reflecting the substantial rise in total debt relative to equity. The ratio decreased slightly to 0.6 in 2022 but stayed notably higher than in previous years.

Total Debt

Relatively stable through 2017-2020, with a substantial increase in 2021 and slight decrease in 2022.

Stockholders’ Equity

Consistent growth throughout the entire period, increasing from approximately $2.7 billion to over $4 billion.

Debt to Equity Ratio

Low and stable in early years, with a significant rise in 2021 indicating increased leverage, followed by a small reduction in 2022.

The financial data reveals notable shifts in the company's capital structure over the six-year period ending in January 2022.

Total debt (including operating lease liability)

The total debt remained relatively stable from January 2017 through February 2019, fluctuating slightly between approximately $312 million and $397 million. However, beginning in February 2020, there was a substantial increase in total debt, surging to approximately $3.49 billion, followed by further growth to around $5.73 billion in January 2021. By January 2022, total debt slightly declined to $5.62 billion but remained significantly elevated compared to prior years.

Stockholders’ equity

Stockholders’ equity demonstrated a consistent upward trend from January 2017 to January 2022. Starting at approximately $2.75 billion, equity gradually increased each year, reaching around $4.06 billion by the end of the period. This indicates steady accumulation of net assets over time despite fluctuations in debt levels.

Debt to equity (including operating lease liability)

The debt to equity ratio was relatively low and stable from January 2017 through February 2019, ranging from 0.09 to 0.14, indicating conservative leverage. In February 2020, the ratio escalated sharply to 1.04, reflecting the significant rise in debt relative to equity. This upward trend continued, peaking at 1.74 in January 2021, before declining to 1.38 by January 2022. Despite the slight reduction in the most recent year, leverage remained high compared to earlier periods.

Overall, the data suggests that the company significantly increased its reliance on debt starting in 2020, which coincided with a notable rise in financial leverage. Meanwhile, stockholders’ equity grew steadily throughout the entire period, partially offsetting the increased debt. The elevated leverage ratios in recent years may warrant further examination of the company's risk profile and debt servicing capacity.

The analysis of the financial data over the six-year period reveals notable trends in the company's capital structure and debt management. There is evidence of a substantial increase in total debt and total capital in recent years, which significantly impacts the debt to capital ratio.

Total Debt

The total debt remained relatively stable from 2017 through 2020, fluctuating slightly around the low 300,000s (in thousands of US dollars). However, from 2021 onwards, there was a dramatic increase in total debt, exceeding 2.5 million by 2021 and maintaining a similar level in 2022, representing a significant rise compared to previous years.

Total Capital

Total capital displayed a consistent upward trend throughout the period, increasing from approximately 3.1 million in 2017 to over 6.5 million in 2022. The growth pace was moderate between 2017 and 2020, but it accelerated sharply from 2021 to 2022.

Debt to Capital Ratio

The debt to capital ratio was relatively low and stable in the initial years, ranging from 0.09 to 0.13 between 2017 and 2020. From 2021, this ratio surged substantially to 0.43, before slightly declining to 0.38 in 2022. This increase correlates directly with the sharp rise in total debt, despite the growth in total capital.

Overall, the data suggests a strategic shift in the company's financing approach starting in 2021, marked by increased leveraging through higher debt levels. While total capital continues to grow, the company's reliance on debt financing has intensified, resulting in a significantly higher debt to capital ratio. This could imply greater financial risk and changes in capital structure strategy in recent years.

The data indicates significant changes in the company’s debt and capital structure over the analyzed periods.

Total Debt (Including Operating Lease Liability)

The total debt remained relatively stable from 2017 through 2019, fluctuating around 312,000 to 396,000 thousand USD. However, there was a sharp increase in 2020, with debt rising dramatically to approximately 3,487,900 thousand USD, and it continued to grow until 2021, reaching over 5,732,799 thousand USD before slightly declining in 2022 to approximately 5,622,139 thousand USD.

Total Capital (Including Operating Lease Liability)

Total capital showed a steady upward trend between 2017 and 2019, increasing from approximately 3,144,510 thousand USD to 3,618,186 thousand USD. From 2020 onward, this growth accelerated markedly, with total capital nearly doubling in 2020 to about 6,847,149 thousand USD. It continued to grow through 2021 and 2022, reaching around 9,682,189 thousand USD by the last reported period.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio was relatively low and stable from 2017 to 2019, remaining below 0.15 and indicating conservative leverage levels. Starting in 2020, the ratio increased sharply to 0.51, demonstrating a substantial increase in leverage. The ratio further increased to 0.64 in 2021, reaching its highest point in the series, before slightly decreasing to 0.58 in 2022. This trend reflects a strategic decision to take on significantly more debt relative to capital during and after 2020.

The financial data reveals a notable evolution in the company's capital structure and asset base over the analyzed periods.

Total debt

The total debt remained relatively stable from 2017 through 2020, fluctuating slightly but maintaining a range between approximately 312,000 and 397,000 thousand US dollars. There is a pronounced increase in total debt in 2021, where debt escalates sharply to over 2.5 million thousand US dollars and remains at a comparable level in 2022.

Total assets

Total assets demonstrated a consistent upward trend throughout the periods, starting from approximately 5.3 million thousand US dollars in 2017 and climbing steadily each year. The asset base experiences a significant boost starting in 2020, with values rising markedly to over 9.3 million thousand US dollars, continuing to grow to more than 13.6 million thousand US dollars by 2022.

Debt to assets ratio

The debt to assets ratio initially decreased from 0.07 in the 2017-2018 period to a low of 0.03 in 2020, suggesting a reduction in leverage relative to asset growth. In 2021, the ratio spikes to 0.20, reflecting the sharp increase in total debt relative to assets, but slightly declines to 0.18 in 2022. Overall, the firm’s leverage was low and declining before 2021 but rose substantially afterward, indicating a shift towards higher indebtedness in recent years.

In summary, while the company steadily increased its asset base over the entire timeline, the leverage profile remained conservative until a significant increase in debt occurred in 2021. This surge in debt caused a corresponding jump in the debt to assets ratio, demonstrating a material change in the firm's capital structure in the latter periods under review.

The data indicates a pronounced increase in total debt from 2017 through 2022, with a significant spike occurring between 2019 and 2020. Specifically, total debt rose modestly from approximately $396 million in early 2017 and 2018 to $312 million in 2019, followed by a dramatic escalation to about $3.49 billion in 2020. This upward trend continued, albeit at a slower pace, reaching over $5.6 billion by early 2022.

Total assets have shown steady growth throughout the analyzed years. Starting at approximately $5.3 billion in 2017, assets increased gradually to about $6.07 billion by 2019, then surged to nearly $9.35 billion in 2020. Asset growth persisted, hitting around $12.7 billion in 2021 and climbing further to approximately $13.6 billion by 2022.

The debt-to-assets ratio reflects these changes closely. It remained relatively low and stable at 0.07 in 2017 and 2018, decreasing slightly to 0.05 in 2019. However, a marked increase occurred in 2020 alongside the jump in debt, with the ratio rising sharply to 0.37. This elevation continued to 0.45 in 2021, indicating a higher leverage position, before easing somewhat to 0.41 in 2022.

Total Debt

Exhibits a sharp rise starting in 2020, implying increased reliance on borrowed funds or financing obligations, including operating lease liabilities.

Total Assets

Show consistent growth over the period, with accelerated expansion from 2020 onward, potentially reflecting investments, acquisitions, or asset revaluation.

Debt-to-Assets Ratio

Remained low and stable until 2019, followed by a significant increase from 2020, denoting a shift toward higher leverage and potentially increased financial risk, though a slight improvement is seen by 2022.

Overall, the financial data reveal a transition from a low-leverage position to substantially greater indebtedness relative to asset size starting in 2020. This shift may be associated with strategic financial decisions or external circumstances affecting capital structure, warranting close monitoring of subsequent financial risk and asset performance.

The analysis of the financial data reveals significant trends in the company's asset base, equity position, and leverage over the six-year period from early 2017 to early 2022.

Total Assets

Total assets showed a consistent upward trajectory throughout the period under review. Starting at approximately $5.3 billion in early 2017, total assets increased steadily each year, reaching about $6.1 billion by early 2019. Thereafter, a marked acceleration occurred, with assets rising sharply to nearly $9.3 billion in early 2020, and continuing strong growth to reach over $13.6 billion by early 2022. This pattern indicates aggressive asset expansion, especially in the latter half of the period.

Stockholders’ Equity

Stockholders’ equity grew at a more moderate, steady pace relative to total assets. Beginning around $2.75 billion in early 2017, equity expanded gradually to $3.3 billion by early 2019 and remained relatively stable through early 2021, hovering just above $3.2 billion. A noticeable increase occurred in the final reported year, with equity rising significantly to about $4.06 billion in early 2022. This suggests a strengthening equity base in the most recent period, albeit growing less rapidly than total assets overall.

Financial Leverage

The financial leverage ratio exhibited variability over the timeframe. Initially, it decreased slightly from 1.93 in early 2017 to 1.84 by early 2019, indicating a reduction in reliance on debt relative to equity. However, a sharp increase followed in 2020, with leverage jumping to 2.78, then peaking significantly at 3.86 in early 2021. In early 2022, leverage moderated somewhat to 3.36 but remained substantially higher than in previous years. The increase in leverage corresponds with the accelerated growth in total assets, suggesting increased use of debt financing to support expansion.

Overall, the data points to a strategic expansion phase characterized by rapid asset growth primarily financed through increased leverage, while stockholders’ equity demonstrated more moderate growth with a notable uptick in the final year. The elevated leverage ratios in the recent years raise considerations regarding financial risk and capital structure management.

Earnings before interest and tax (EBIT)

The EBIT shows a general upward trend from 2017 to 2020, increasing from approximately 1.81 billion to 2.17 billion US dollars. However, in 2021, there is a significant and abrupt decrease to about 194 million, representing a sharp deviation from the prior increasing pattern. This low level is followed by a recovery in 2022, with EBIT rising back to approximately 2.33 billion US dollars, the highest value observed in the period.

Interest expense

Interest expense exhibits a decreasing trend from 2017 through 2020, falling from roughly 19.6 million US dollars to 9.7 million US dollars. Contrarily, in 2021, the interest expense rises sharply to about 88.1 million US dollars, which aligns temporally with the EBIT decline. In 2022, the interest expense decreases again to approximately 75.2 million US dollars, remaining elevated relative to the pre-2021 period.

Interest coverage ratio

The interest coverage ratio, which measures the company's ability to meet interest obligations from EBIT, generally improves significantly from 2017 through 2020, increasing from 92.27 to 223.21 times. In 2021, the ratio dramatically decreases to 2.21, reflecting the combined effect of the drastic EBIT reduction and the spike in interest expense that year. By 2022, the ratio recovers to 31.05, still substantially lower than the earlier peak values, indicating a more constrained ability to cover interest expenses than in previous years before 2021.

The financial data presents several important trends over the analyzed periods. Earnings before fixed charges and tax showed a general upward trajectory from 2017 through 2020, increasing from approximately 2.31 billion to about 2.81 billion US dollars. However, there was a notable decline in 2021, with earnings dropping significantly to 863.7 million US dollars, before rebounding again in 2022 to around 3.02 billion US dollars, the highest value recorded in the period under review.

Fixed charges consistently increased over the six years, starting at roughly 524.8 million US dollars in 2017 and rising steadily to approximately 762.3 million US dollars in 2022. This indicates a growing burden of fixed costs on the company's operations.

As a result of the interplay between earnings and fixed charges, the fixed charge coverage ratio demonstrated variability. Coverage was relatively stable and strong from 2017 to 2020, fluctuating between 4.33 and 4.7. However, it sharply declined in 2021 to 1.14, reflecting reduced earnings relative to fixed charges during that year. Recovery was evident in 2022 with the ratio rising to 3.96, indicating improved ability to cover fixed charges but still below the levels seen prior to 2021.

Earnings before fixed charges and tax

Steady growth from 2017 to 2020; sharp decline in 2021; strong recovery in 2022 to highest level.

Fixed charges

Consistent upward trend throughout the period, increasing fixed cost obligations.

Fixed charge coverage ratio

Stable and strong coverage between 2017 and 2020; significant decrease in 2021 reflecting earnings stress; partial recovery in 2022 but not to pre-2021 levels.