Baxter International Inc. (NYSE:BAX)

Debt to equity

The ratio increased steadily from 0.79 in 2011 to a peak of 1.15 in 2014, indicating a growing reliance on debt relative to equity during this period. However, in 2015, the ratio decreased significantly to 0.74, suggesting a reduction in leverage or an increase in equity financing.

Debt to capital

This ratio followed a similar pattern to debt to equity, rising from 0.44 in 2011 to 0.53 in 2014, then declining to 0.42 in 2015. The increase implies a higher proportion of debt in the company's capital structure, with a subsequent shift towards a more balanced or equity-focused approach by the end of the period.

Debt to assets

The ratio grew from 0.27 in 2011 to 0.36 in 2014, reflecting increased debt financing relative to total assets. In 2015, the ratio decreased to 0.31, indicating either asset growth outpacing debt or a reduction in total debt.

Financial leverage

Financial leverage ratios showed a gradual rise from 2.9 in 2011 to 3.19 in 2014, suggesting growing use of debt to finance assets. This was followed by a notable decline to 2.37 in 2015, consistent with the observed reductions in debt ratios.

Interest coverage

The interest coverage ratio declined sharply over the period, from a high of 31.53 in 2011 down to 3.93 in 2015. This significant reduction suggests increasing difficulty in covering interest expenses from operating earnings, with potential implications for financial risk and creditworthiness.

Fixed charge coverage

Similar to interest coverage, the fixed charge coverage ratio decreased from 10.52 in 2011 to 2.3 in 2015. This downward trend indicates a growing strain in meeting fixed financial obligations, reflecting pressures on the company's earnings relative to fixed charges.

The financial data over the period from 2011 to 2015 reveals several notable trends associated with the debt levels, shareholders' equity, and leverage as measured by the debt-to-equity ratio.

Total Debt

Total debt exhibited a rising trend from 2011 through 2014, increasing from 5,195 million US dollars in 2011 to a peak of 9,305 million US dollars in 2014. This represents an approximate 79% increase over the four-year span. However, in 2015, total debt declined substantially to 6,520 million US dollars, marking a 30% reduction from the prior year's peak.

Total Shareholders’ Equity

Shareholders' equity steadily increased throughout the entire period, beginning at 6,585 million US dollars in 2011 and rising to 8,846 million US dollars by 2015. The increase was relatively consistent year-over-year, with some slight fluctuation in 2014 where equity slightly decreased from the 2013 level. Overall, equity grew by approximately 34% over the five-year period.

Debt to Equity Ratio

The debt-to-equity ratio started at a moderate level of 0.79 in 2011 and increased steadily each year to reach a peak of 1.15 in 2014, indicating that total debt exceeded shareholders' equity for that year. This trend reflects a growing reliance on debt financing through 2014. However, this trend reversed in 2015, with the ratio declining sharply to 0.74, the lowest point in the five-year period and below the initial 2011 ratio. This decrease corresponds with the significant reduction in total debt observed in the same year combined with continued growth in equity.

Overall, the company’s financial structure showed increased leverage and debt accumulation during the early part of the period, peaking in 2014. The substantial reduction in debt in 2015 alongside continued equity growth points toward a strategic effort to strengthen the balance sheet and reduce financial risk. The consistently rising equity base provides a solid foundation for financial stability despite earlier increases in debt financing.

The financial data reveals several notable trends concerning the company's debt structure and overall capital composition over the five-year period ending December 31, 2015.

Total debt

This figure increased significantly from US$5,195 million in 2011 to a peak of US$9,305 million in 2014, indicating a substantial rise in the company’s borrowing over the first four years. However, in 2015, total debt decreased noticeably to US$6,520 million, suggesting a strategic effort to reduce leverage or repay portions of debt.

Total capital

Total capital followed a similar trajectory, rising from US$11,780 million in 2011 to a high of US$17,629 million in 2013, before slightly declining to US$17,425 million in 2014, and then further decreasing to US$15,366 million in 2015. This pattern indicates that the company's overall capital base expanded notably until 2013 but contracted somewhat in the last two years of the period.

Debt to capital ratio

The debt to capital ratio rose steadily from 0.44 in 2011 to 0.53 in 2014, signifying that the company increasingly relied on debt financing relative to its total capital. The ratio’s decline to 0.42 in 2015 aligns with the observed reduction in total debt and capital, pointing to an improved balance sheet structure or a shift toward equity or alternative financing sources.

In summary, over the analyzed timeframe, there was an initial phase of increasing leverage indicated by higher debt and debt-to-capital ratios, culminating in 2014. Subsequently, the company appears to have taken steps to deleverage in 2015, reducing both total debt and leverage ratio. The overall capital base showed growth early in the period but faced contraction in the final years assessed.

Total Debt

The total debt of the company increased notably from 5,195 million US dollars in 2011 to a peak of 9,305 million US dollars in 2014. However, in 2015, there was a significant reduction in total debt to 6,520 million US dollars. This indicates a substantial debt accumulation phase followed by deleveraging within the period analyzed.

Total Assets

Total assets showed a rising trend from 19,073 million US dollars in 2011 to 25,917 million US dollars in 2014, representing growth over the four-year span. Nevertheless, in 2015, total assets declined to 20,975 million US dollars, nearing the 2012 level. This pattern suggests asset expansion that peaked in 2014 before contracting in the subsequent year.

Debt to Assets Ratio

The debt to assets ratio increased steadily from 0.27 in 2011 to 0.36 in 2014, reflecting a growing proportion of debt relative to total assets. In 2015, this ratio decreased to 0.31, in line with the reduction in total debt and assets. The trend indicates increased leverage through 2014 with a subsequent moderation in 2015.

Overall Analysis

Over the five-year period, the company exhibited a phase of growth in assets accompanied by increased leverage, as total debt rose more sharply than assets. The peak levels of both total debt and assets in 2014 were followed by a contraction in 2015, suggesting a strategic shift possibly focused on debt reduction and asset optimization. The partial deleveraging in 2015 implies attention to financial stability after a period of aggressive expansion.

Total Assets

Total assets exhibited a rising trend from 2011 to 2014, increasing from 19,073 million USD to a peak of 25,917 million USD. However, in 2015, total assets declined to 20,975 million USD, indicating a reversal in the previous growth trend.

Total Shareholders’ Equity

Shareholders’ equity showed consistent growth throughout the period, increasing from 6,585 million USD in 2011 to 8,846 million USD in 2015. This indicates strengthening equity capital over the five years.

Financial Leverage

Financial leverage, defined as the ratio of total assets to shareholders’ equity, increased gradually from 2.9 in 2011 to a high of 3.19 in 2014, suggesting a growing reliance on debt or other liabilities relative to equity. In 2015, the leverage ratio decreased sharply to 2.37, reflecting a reduction in financial leverage, potentially due to either a decrease in total assets or an increase in equity.

Earnings before interest and tax (EBIT)

The EBIT shows a declining trend over the examined period. Starting at 2,901 million US dollars in 2011, it slightly increased to 3,002 million in 2012. However, thereafter it consistently decreased, reaching 2,704 million in 2013, 2,606 million in 2014, and sharply dropping to 574 million in 2015. This significant reduction in 2015 indicates a marked decline in operating profitability.

Interest expense

Interest expense exhibited an increasing pattern from 2011 to 2014, rising from 92 million US dollars in 2011 to a peak of 167 million in 2014. In 2015, there was a moderate decrease to 146 million. The overall increase in interest expense over the initial four years suggests growing borrowing costs or higher debt levels during that time.

Interest coverage ratio

Interest coverage ratio, which measures the ability to cover interest expenses with EBIT, declined considerably across the period. From a high of 31.53 in 2011, it fell gradually to 26.57 in 2012, 17.45 in 2013, 15.6 in 2014, and then dropped sharply to 3.93 in 2015. This downward trend reflects decreasing protection against interest obligations and potentially increased financial risk, especially pronounced in 2015 due to the combined effect of reduced EBIT and sustained interest expenses.

Earnings before Fixed Charges and Tax

The earnings before fixed charges and tax demonstrated a general downward trend over the observed period. Starting at 3104 million US dollars at the end of 2011, the figure peaked slightly in 2012 at 3204 million before generally declining in subsequent years to 2918 million in 2013, 2856 million in 2014, and sharply dropping to 758 million by the end of 2015. This represents a significant reduction in operational earnings within the last year of the period under review.

Fixed Charges

Fixed charges increased steadily from 295 million US dollars at the end of 2011 to 417 million by the end of 2014, indicating rising fixed financial obligations. However, there was a noticeable decrease in 2015, with fixed charges falling to 330 million. This reduction may have been a response to lower earnings or an adjustment in financial structuring.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio showed a clear declining pattern through the years, highlighting a decreasing ability to cover fixed charges with earnings before fixed charges and tax. Starting at a strong 10.52 in 2011, the ratio decreased slightly to 10.17 in 2012, followed by a more pronounced drop to 7.91 in 2013 and further down to 6.85 in 2014. By 2015, this ratio declined sharply to 2.3, indicating a significant weakening in financial coverage and potentially higher risk in meeting fixed financial commitments.