Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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Solvency Ratios (Summary)
Caterpillar Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Debt to Equity
- The debt to equity ratio demonstrates a gradual decline beginning at 2.61 in March 2020 and decreasing to a low of 1.81 by September 2023. Subsequently, this ratio experiences minor fluctuations, ending at 2.14 in March 2025. This trend suggests a general reduction in reliance on debt relative to shareholders' equity over the observed period, with some variability toward the later quarters.
- Debt to Capital
- This ratio remains relatively stable throughout the time frame, mostly oscillating between 0.64 and 0.74. A slight decrease is noted from 0.72 in March 2020 to a low near 0.64 in September 2023, followed by a moderate increase to 0.68 in March 2025. The trend indicates consistent use of debt within the capital structure with minor adjustments.
- Debt to Assets
- Debt to assets ratio shows modest decline from 0.49 in March 2020 to 0.43 by September 2023, maintaining a nearly steady level thereafter, ending at 0.45 in March 2025. This pattern reflects a slight reduction in total liabilities relative to total assets, implying marginally lower leverage on asset base over time.
- Financial Leverage
- Financial leverage exhibits a declining trend overall, starting at 5.35 in March 2020, reaching its lowest point at 4.24 in September 2023, then slightly increasing again to 4.70 by March 2025. This decrease signifies a reduction in the company’s use of debt financing relative to equity, enhancing the equity cushion against liabilities before a small reversal in the latest periods.
- Interest Coverage
- Interest coverage ratio data, available starting from September 2020, shows a strong upward trajectory from 8.80 to a peak of 27.68 by June 2024, with minor decreases following. This significant increase indicates improved ability to meet interest obligations through operating earnings, reflecting strengthening operational performance and/or reduced interest expense burden.
Debt Ratios
Coverage Ratios
Debt to Equity
Caterpillar Inc., debt to equity calculation (quarterly data)
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||
| Long-term debt due within one year | ||||||||||||||||||||||||||||
| Long-term debt due after one year | ||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||
| Shareholders’ equity attributable to common shareholders | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity attributable to common shareholders
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly data reveals several notable trends in the financial structure over the observed period. Total debt has exhibited fluctuations with a general pattern of stability within the range of approximately 36,000 to 39,000 US$ million. Early periods show a slight increase peaking around June 2020, followed by minor decreases and rebounds through 2021 and 2022. The figures taper between 37,000 and 38,000 in more recent quarters, indicating a relatively stable debt level without significant expansions or reductions.
Shareholders' equity attributable to common shareholders demonstrates a more variable trend, characterized initially by moderate growth from around 14,000 US$ million to levels exceeding 18,000 by late 2022. This growth continues into 2023, peaking near 20,400 US$ million during the third quarter. However, subsequent data points reveal a decline in equity values in late 2023 and early 2024, suggesting some contraction or valuation adjustments. By the first quarter of 2025, shareholders’ equity reduces to approximately 18,000 US$ million, indicating a potential reversion towards earlier equity levels.
The debt to equity ratio, reflecting leverage, has shown a meaningful downward trend from early 2020 through mid-2023. Starting at a high point of 2.81 in mid-2020, the ratio generally decreases to a low of 1.81 by the third quarter of 2023. This suggests an improvement in capital structure with either rising equity levels outpacing debt increments or effective debt management. However, after this low point, the ratio begins to increase again, moving back towards approximately 2.14 by early 2025, implying a relative increase in leverage or a decrease in equity in the later periods.
Overall, the data reflects a phase of deleveraging and strengthened equity base over the medium term, followed by a partial reversal in leverage ratios in recent quarters. While total debt remains mostly constant, variations in equity have a significant impact on financial leverage, indicating shifting investor equity values or retained earnings. These dynamics suggest the company has experienced periods of strengthening financial resilience, yet recent trends call for monitoring to ensure that leverage remains within desirable limits.
- Total Debt
- Relatively stable with minor fluctuations around 37,000-39,000 US$ million throughout the period.
- Shareholders’ Equity
- General upward movement with a peak near 20,400 US$ million in late 2023 followed by a decline toward 18,000 US$ million by early 2025.
- Debt to Equity Ratio
- Decreased from 2.81 in mid-2020 to 1.81 in late 2023, then rose again to around 2.14 by early 2025, indicating shifts in capital structure and leverage.
Debt to Capital
Caterpillar Inc., debt to capital calculation (quarterly data)
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||
| Long-term debt due within one year | ||||||||||||||||||||||||||||
| Long-term debt due after one year | ||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||
| Shareholders’ equity attributable to common shareholders | ||||||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
-
The total debt amount exhibits moderate fluctuations over the reported periods. Starting at approximately $37.1 billion in the first quarter of 2020, the debt level peaked slightly above $38.6 billion by mid-2020 before easing back to a range between $36.5 billion and $38.0 billion during most subsequent quarters. Noticeable increases occurred in the last quarter of 2023 and the first quarter of 2025, where debt levels reached about $37.9 billion and $38.6 billion respectively. Overall, the total debt pattern reflects relative stability with periodic minor upswings, without any drastic shifts.
- Total Capital
-
Total capital showed a generally upward trend across the quarters reviewed. Beginning near $51.3 billion in early 2020, the capital base gradually expanded to peak around $57.6 billion by late 2023. Subsequent quarters to early 2025 revealed some volatility, with capital levels fluctuating roughly between $54.4 billion and $58.0 billion. Despite these variations, the general trajectory points to incremental growth in total capital over the long term, indicating an expansion of the company’s financial base.
- Debt to Capital Ratio
-
The debt to capital ratio demonstrated a slight downward trend over the period under review. In early 2020, the ratio was approximately 0.72 to 0.74, suggesting a relatively high leverage position. This ratio steadily declined through 2023, reaching a lower bound around 0.64, implying a modest improvement in capital structure with relatively less reliance on debt. However, the ratio experienced some increase again towards early 2025, stabilizing near 0.68. The overall pattern suggests a cautious management of leverage with a tendency to reduce debt intensity within the capital mix, albeit with some temporal reversals.
Debt to Assets
Caterpillar Inc., debt to assets calculation (quarterly data)
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||
| Long-term debt due within one year | ||||||||||||||||||||||||||||
| Long-term debt due after one year | ||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's balance sheet composition over the observed periods.
- Total Debt
- The total debt exhibited moderate fluctuations without a definitive long-term trend. Initially, from the first quarter of 2020 through the end of 2020, there was a slight increase followed by stabilization around the mid-37000 million US dollar range. During 2021, debt levels showed minor declines and rebounds, generally oscillating between approximately 36700 and 37800 million US dollars. In 2022 and 2023, the total debt remained relatively steady with small oscillations around the 37000 million mark. Entering 2024, the level of total debt increased incrementally, reaching near 38600 million US dollars by the first quarter of 2025, indicating a modest upward pressure on leverage.
- Total Assets
- Total assets demonstrated an overall upward trend over the timeframe. Starting from nearly 75894 million US dollars in early 2020, assets grew steadily, peaking around 87800 million US dollars towards the end of 2024. Some minor volatility was observed, including a temporary decline in mid-2024, but the general direction was growth. This increase suggests ongoing asset accumulation or revaluation, which supports operational expansion or investment activities.
- Debt to Assets Ratio
- The debt to assets ratio gradually declined from 0.49 in the first quarter of 2020 to a low point near 0.43 during 2023 and early 2024, indicating a marginal reduction in leverage relative to the asset base. This improvement suggests a slight strengthening of the financial position or an increased cushioning of debt by assets. However, the ratio returned to approximately 0.44–0.45 in the last periods observed, reflecting a minor increase in leverage. Overall, the ratio has shown stability in a narrow band, signaling consistent leverage management.
In summary, while total debt has fluctuated modestly, total assets trended upwards, resulting in a generally stable to slightly improving debt-to-assets ratio. The company appears to maintain consistent leverage with some recent increases in debt levels balanced by asset growth, reflecting steady financial management in terms of capitalization.
Financial Leverage
Caterpillar Inc., financial leverage calculation (quarterly data)
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||
| Shareholders’ equity attributable to common shareholders | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity attributable to common shareholders
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the presented periods reveals notable trends in the company's asset base, equity position, and financial leverage.
- Total Assets
-
Total assets demonstrated gradual growth from March 2020 through December 2021, increasing from approximately US$75.9 billion to US$82.8 billion. Subsequently, there was a stabilization and slight fluctuation around the US$81 billion to US$87.4 billion range through to December 2024, before a moderate decline to US$84.9 billion in March 2025. The overall trend indicates growth in asset base with some short-term fluctuations in recent quarters.
- Shareholders’ Equity Attributable to Common Shareholders
-
Shareholders’ equity showed an upward trajectory from March 2020 (around US$14.2 billion) through September 2023, peaking at approximately US$20.5 billion. Following this peak, the equity value saw some volatility and a decline, ending at about US$18.1 billion by March 2025. The initial growth suggests retention of earnings or successful equity enhancement initiatives, whereas the later periods indicate some contraction or distribution effects impacting equity.
- Financial Leverage
-
The financial leverage ratio, calculated as total assets divided by shareholders’ equity, moved inversely to the equity trend. It started high at around 5.35 in March 2020, decreased steadily reaching a low point near 4.24 in September 2023, then increased again to about 4.7 by March 2025. This pattern reflects initial deleveraging aligned with equity growth, followed by increased leverage consistent with the equity decline or asset-base variability in the latter periods.
In summary, the company experienced steady asset growth accompanied by strengthening equity through approximately late 2023, leading to reduced financial leverage. Post this period, the contraction in equity and fluctuations in total assets corresponded with increased leverage, highlighting a possible shift in capital structure or financial strategy. These shifts may warrant further examination to understand underlying operational or market factors influencing equity and leverage levels.
Interest Coverage
Caterpillar Inc., interest coverage calculation (quarterly data)
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Profit attributable to common stockholders | ||||||||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||||||
| Add: Interest expense excluding Financial Products | ||||||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Interest coverage
= (EBITQ1 2025
+ EBITQ4 2024
+ EBITQ3 2024
+ EBITQ2 2024)
÷ (Interest expenseQ1 2025
+ Interest expenseQ4 2024
+ Interest expenseQ3 2024
+ Interest expenseQ2 2024)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the analyzed periods. Earnings before interest and tax (EBIT) show a degree of volatility with an overall upward trajectory from March 2020 through March 2025. Initial quarters in 2020 presented relatively modest EBIT levels, with a dip during the second quarter. This was followed by a significant increase moving into 2021, where EBIT consistently remained above 1900 million US dollars and peaked in the fourth quarter of 2021 at 2661 million USD. Afterward, EBIT levels remained variable but generally strong, reaching another peak in the third quarter of 2023 at 3803 million USD. Subsequent quarters indicate some decline but still maintaining substantial EBIT values above 2500 million USD, indicating resilience and strong operational performance despite fluctuations.
Interest expense excluding Financial Products exhibited less volatility, ranging roughly between 100 and 140 million USD throughout the analyzed period. This cost remained relatively stable, showing minor fluctuations but no significant trend either upwards or downwards. The stability of interest expense in the face of EBIT fluctuations suggests effective management of financing costs relative to operational income.
The interest coverage ratio, a key indicator of the firm's ability to meet interest obligations from its operating earnings, demonstrated a strong and clear improvement over time. Starting with limited data for early 2020, the ratio showed a steady increase from March 2020 onward. By the end of 2020, the coverage ratio was near 9, and it continued to rise consistently each quarter. By March 2025, it reached values above 26, indicating a solid buffer of earnings relative to interest expense. This reflects enhanced financial health and declining risk related to debt servicing capabilities, which complements the increased EBIT figures.
- Summary of Key Financial Trends:
- EBIT showed significant growth with cyclical fluctuations, peaking in late 2023.
- Interest expense was relatively stable, with no substantial increases despite EBIT growth.
- Interest coverage ratio steadily improved, demonstrating stronger ability to cover interest obligations over time.
- The combination of rising EBIT and stable interest costs led to a marked improvement in financial stability as evidenced by increasing interest coverage.