Altria Group Inc. (NYSE:MO)

The financial data over the five-year period demonstrates several notable trends in the company’s leverage and solvency metrics.

Debt to equity ratio

This ratio increased sharply from 4.51 in 2019 to 10.38 in 2020, indicating a significant rise in debt relative to shareholders' equity. Data for the years following 2020 is not available, preventing assessment of subsequent trends.

Debt to capital ratio

This metric shows a consistent upward movement from 0.82 in 2019 to 1.17 in 2022, followed by a slight decline to 1.16 in 2023. This progression suggests an increasing reliance on debt financing relative to total capital over the period, peaking in 2022.

Debt to assets ratio

The ratio rose steadily from 0.57 in 2019 to 0.72 in 2022 before decreasing slightly to 0.68 in 2023. This indicates that the proportion of assets financed by debt increased over most of the period, with a marginal reduction at the end, implying some deleveraging or asset growth.

Financial leverage

Available data shows a marked increase from 7.92 in 2019 to 16.7 in 2020, doubling within one year. Absence of data afterwards limits further analysis, but the initial rise points to much higher use of debt relative to equity capital.

Interest coverage ratio

This indicator improved overall, rising from 1.58 in 2019 to 10.51 in 2023, notwithstanding a dip in 2021 to 4.22. The substantial increase reflects strengthening ability to cover interest expenses through operating earnings, suggesting enhanced financial stability and improved earnings capacity over the period.

In summary, the company experienced an increase in financial leverage and debt ratios primarily until 2022, accompanied by improved interest coverage. This pattern indicates growing indebtedness paired with improved capacity to service that debt, reflecting potentially purposeful financial strategy adjustments and operational performance enhancements.

The financial data demonstrates several noteworthy trends over the five-year period ending in 2023. The total debt of the entity showed fluctuations but overall a marginal decrease, beginning at $28,042 million in 2019, peaking at $29,471 million in 2020, then gradually declining to $26,233 million by 2023. This indicates a moderate reduction in debt levels following the 2020 peak.

Stockholders' equity attributable to the entity experienced a significant downward trend. Starting from a positive equity of $6,222 million in 2019, equity sharply declined to $2,839 million in 2020 and turned negative thereafter, reaching a deficit of $1,606 million in 2021. This negative trajectory continued with equity deficits of $3,973 million and $3,540 million recorded in 2022 and 2023, respectively, signaling deteriorating net asset value and potentially rising financial risk.

The debt to equity ratio increased substantially from 4.51 in 2019 to 10.38 in 2020, reflecting increased financial leverage primarily due to the steep decline in equity rather than a large change in total debt. Data for this ratio is unavailable for the subsequent years, but given the continued decline and negative equity values, it can be inferred that the leverage likely remained at high and possibly unstable levels.

Total Debt

Fluctuated with a peak in 2020, then declined steadily through 2023.

Stockholders’ Equity

Declined sharply from positive to negative territory post-2020, indicating increasing financial vulnerability.

Debt to Equity Ratio

Increased markedly in 2020 due to equity decline, suggesting higher leverage; no data available for later years but likely remained elevated.

Total Debt

The total debt shows a fluctuating but generally declining trend over the five-year period. It increased slightly from 28,042 million USD in 2019 to 29,471 million USD in 2020, then decreased to 28,044 million USD in 2021. This downward trend continued in the subsequent years, falling to 26,680 million USD in 2022 and further to 26,233 million USD in 2023.

Total Capital

Total capital presents a consistent downward trajectory throughout the period. Starting at 34,264 million USD in 2019, it declined steadily each year, reaching 32,310 million USD in 2020, then dropping sharply to 26,438 million USD in 2021. The decrease continued, with values of 22,707 million USD in 2022 and a slight further reduction to 22,693 million USD in 2023.

Debt to Capital Ratio

The debt to capital ratio demonstrates a persistent increase over the five years, indicating a rising proportion of debt relative to total capital. It started at 0.82 in 2019 and increased to 0.91 in 2020, surpassing the threshold of 1.0 in 2021 at 1.06. This upward movement continued, peaking at 1.17 in 2022 and holding nearly steady at 1.16 in 2023. The ratio above 1.0 in recent years suggests that debt exceeds total capital.

Total debt

The total debt exhibited a fluctuating but overall declining trend from 2019 to 2023. It increased slightly from 28,042 million US dollars in 2019 to 29,471 million US dollars in 2020, then decreased steadily each subsequent year, reaching 26,233 million US dollars by the end of 2023.

Total assets

Total assets showed a consistent downward trend over the five-year period. Beginning at 49,271 million US dollars in 2019, the total assets decreased each year, hitting a low of 36,954 million US dollars in 2022, before slightly increasing to 38,570 million US dollars in 2023. Despite the minor rebound in 2023, the overall asset base shrank substantially compared to the start of the period.

Debt to assets ratio

The debt to assets ratio increased noticeably from 0.57 in 2019 to a peak of 0.72 in 2022, indicating that debt was growing relative to assets during this time. In 2023, the ratio decreased somewhat to 0.68, reflecting the combined effects of reduced total debt and a slight increase in assets. The elevated ratio over the later years suggests a higher leverage position compared to the beginning of the period.

Total Assets

The total assets of the company demonstrated a declining trend from 2019 to 2022, decreasing from approximately US$49.3 billion to US$37.0 billion. In 2023, there was a slight increase to about US$38.6 billion, indicating a minor recovery following the previous downward trajectory.

Stockholders’ Equity (Deficit) Attributable to Altria

Stockholders' equity showed a significant decline over the analyzed period. Starting at US$6.2 billion in 2019, it dropped sharply to US$2.8 billion in 2020. Subsequently, the equity turned negative in 2021, reaching a deficit of US$1.6 billion, and further worsened to a deficit of approximately US$4.0 billion and US$3.5 billion in 2022 and 2023, respectively. This shift from positive equity to a sustained deficit suggests considerable financial deterioration and potential solvency concerns.

Financial Leverage

The financial leverage ratio doubled from 7.92 in 2019 to 16.7 in 2020. Data for subsequent years are not provided, limiting the ability to assess ongoing leverage trends. The sharp increase in leverage within one year reflects a substantial rise in the company's financial obligations relative to equity, consistent with the observed decrease in equity and assets.

Earnings before interest and tax (EBIT)

The EBIT demonstrated significant volatility over the five-year period. Starting at 2,088 million US dollars in 2019, it surged to a peak of 8,113 million in 2020. This was followed by a decline to 5,012 million in 2021, before rising again to 8,517 million in 2022 and reaching the highest value of 12,077 million in 2023. Overall, the trend reflects strong growth and recovery after a drop in 2021.

Interest expense

Interest expense exhibited a slight downward trend from 1,322 million US dollars in 2019 to a low of 1,128 million in 2022. In 2023, the interest expense increased marginally to 1,149 million. The overall change in interest expense was relatively moderate compared to fluctuations in EBIT.

Interest coverage ratio

The interest coverage ratio showed a continuous improvement throughout the period. Starting at a low 1.58 in 2019, it increased substantially to 6.63 in 2020, then declined moderately to 4.22 in 2021, and subsequently increased again to 7.55 in 2022 and 10.51 in 2023. This trend indicates a strengthening ability to cover interest expenses with earnings, which aligns with the increasing EBIT values and relatively stable interest expense.