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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- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
- Analysis of Debt
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Solvency Ratios (Summary)
Norfolk Southern Corp., solvency ratios (quarterly data)
Based on: 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), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The analysis of the financial ratios over the observed periods reveals several notable trends related to leverage and coverage metrics.
- Debt to Equity Ratio
- This ratio shows a consistent upward trend throughout the period, increasing from 0.63 to 1.1. Such a rise indicates a gradual increase in reliance on debt financing relative to shareholders' equity. The steady growth especially after 2020 highlights a shift towards greater leverage.
- Debt to Capital Ratio
- The debt to capital ratio also exhibits an increasing trajectory, moving from 0.39 in early 2018 to 0.52 by the first quarter of 2022. This gradual progression signals an expanding proportion of debt within the company's overall capital structure.
- Debt to Assets Ratio
- This ratio shows a similar upward pattern, rising moderately from 0.28 to 0.38 over the analyzed timeframe. The increase suggests a rising portion of total assets being financed through debt, consistent with trends in other leverage ratios.
- Financial Leverage Ratio
- The financial leverage ratio steadily climbs from 2.2 to 2.92, reflecting an increase in the use of debt relative to equity. This metric's growth corroborates the shifts observed in the debt-related ratios, pointing to more aggressive financial structuring.
- Interest Coverage Ratio
- The interest coverage ratio initially fluctuates around values greater than 7 up to the end of 2019, indicating strong earnings relative to interest expenses. However, from 2020 onwards, this ratio experiences a decline to as low as approximately 5, followed by a partial recovery to around 7 by early 2022. This pattern points to a temporary reduction in the company's ability to cover interest expenses, potentially influenced by increased debt levels or earnings variability during that period.
Overall, the data suggests an increasing reliance on debt financing over the observed periods, accompanied by a temporarily reduced interest coverage capacity in the recent years. The trends indicate a strategic shift toward higher leverage, which may imply higher financial risk but also potential for enhanced returns depending on operational performance.
Debt Ratios
Coverage Ratios
Debt to Equity
Norfolk Southern Corp., debt to equity calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Short-term debt | |||||||||||||||||||||||
| Current maturities of long-term debt | |||||||||||||||||||||||
| Long-term debt, excluding current maturities | |||||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Stockholders’ equity | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Debt to equity1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Debt to Equity, Competitors2 | |||||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q1 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibits a generally increasing trend over the observed periods. Beginning at approximately $10.3 billion, the debt remains relatively stable with minor fluctuations until late 2018. From 2019 onward, the total debt shows a consistent upward trajectory, rising from about $11.4 billion in early 2019 to approximately $14.8 billion by early 2022. This increase appears steady, with noticeable increments during 2021 and early 2022, suggesting heightened borrowing or other liabilities during this timeframe.
- Stockholders’ Equity
- Stockholders’ equity demonstrates a gradual decline during the same period. Starting from about $16.4 billion in early 2018, equity decreases over time, with minor fluctuations, reaching roughly $13.5 billion by the first quarter of 2022. The most pronounced reductions seem to occur from mid-2020 onwards, indicating diminished net asset value or possible share repurchases, dividend payments, or losses impacting equity balances.
- Debt to Equity Ratio
- The debt to equity ratio displays a clear upward trend throughout the periods. Initially, it was below 0.7 in early 2018, increasing steadily and reaching parity around 1.0 by late 2021. By early 2022, the ratio surpasses 1.0, indicating that total debt exceeds stockholders’ equity. The rising ratio signals a shift towards higher financial leverage over time, which could reflect strategic borrowing or changes in capital structure.
- Overall Analysis
- The data reveals a company increasing its leverage by raising total debt while experiencing a decline in stockholders’ equity. The rising debt to equity ratio highlights a trend towards greater reliance on debt financing relative to equity. This change may affect the company’s financial risk profile, potentially increasing vulnerability to interest rate changes and debt servicing obligations. Management’s strategy appears to focus on leveraging debt to fund operations or growth, but the declining equity base could warrant further examination concerning asset returns and shareholder value.
Debt to Capital
Norfolk Southern Corp., debt to capital calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Short-term debt | |||||||||||||||||||||||
| Current maturities of long-term debt | |||||||||||||||||||||||
| Long-term debt, excluding current maturities | |||||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Stockholders’ equity | |||||||||||||||||||||||
| Total capital | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Debt to capital1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Debt to Capital, Competitors2 | |||||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
-
Total debt demonstrated a general upward trend over the observed period from March 2018 to March 2022. Initially, debt levels showed some fluctuations, starting at approximately $10.3 billion in the first quarter of 2018, with a slight decline in the second quarter before rising again towards the end of 2018. From 2019 onward, total debt consistently increased, reaching about $14.8 billion by the first quarter of 2022, reflecting an approximate 44% increase over four years. Notably, the increase accelerated in the latter part of 2021 and early 2022.
- Total Capital
-
Total capital remained relatively stable throughout the period, fluctuating slightly but without a clear upward or downward trajectory. Starting near $26.7 billion in the first quarter of 2018, total capital showed minor variations across quarters, peaking slightly above $28.3 billion in March 2022. The variations are moderate, indicating that changes in total debt were not uniformly accompanied by proportional changes in total capital.
- Debt to Capital Ratio
-
The debt to capital ratio exhibited a gradual upward trend over the five-year period. Beginning at 0.39 in March 2018, the ratio increased intermittently but steadily, reaching 0.52 by March 2022. This steady rise points to a growing proportion of debt within the company’s capital structure. The trend implies increasing leverage levels, with the ratio crossing the 0.45 mark in mid-2019 and maintaining an upward momentum, particularly notable from mid-2021 onwards.
- Overall Analysis
-
The data reflects a deliberate increase in financial leverage, as evidenced by the rise in total debt and the corresponding increase in the debt to capital ratio. Despite this, total capital remained largely stable, suggesting that equity levels have not grown significantly relative to debt. The increasing leverage could indicate strategic financing choices, potentially to support growth initiatives or capital expenditures. However, the steady increase in leverage warrants monitoring for potential impacts on financial risk and credit metrics going forward.
Debt to Assets
Norfolk Southern Corp., debt to assets calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Short-term debt | |||||||||||||||||||||||
| Current maturities of long-term debt | |||||||||||||||||||||||
| Long-term debt, excluding current maturities | |||||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Debt to assets1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Debt to Assets, Competitors2 | |||||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the observed quarters reveals the following patterns and trends related to total debt, total assets, and the debt to assets ratio.
- Total Debt
- Total debt demonstrates a generally increasing trend throughout the period. Starting at approximately $10.3 billion in March 2018, total debt increased gradually with minor fluctuations, reaching around $14.8 billion by March 2022. The most notable increments appear in the latter part of the timeline, especially from mid-2021 onwards, indicating a rising leverage or possibly increased financing activities.
- Total Assets
- Total assets show a relatively stable pattern with mild growth. The asset base ranged from about $36.2 billion in early 2018 to nearly $39.4 billion by March 2022. While there were small fluctuations quarter to quarter, the overall growth rate is modest. This stability suggests controlled asset acquisition or steady operational scale during these years.
- Debt to Assets Ratio
- The debt to assets ratio exhibits a gradual upward trend. It began at 0.28 in March 2018, indicating that 28% of assets were financed by debt. By March 2022, this ratio increased to 0.38, showing a higher proportion of debt relative to assets. This growing leverage ratio signals increased financial risk or a strategic shift towards debt financing. The incremental increases, particularly noticeable after 2019, imply that the rise in debt has outpaced asset growth during the recent years.
In summary, the company has progressively increased its total debt at a faster pace than its asset base, leading to a higher debt to assets ratio over the observed period. This trend points to a potential increase in financial leverage and possibly greater interest obligations, which could affect the company's financial stability and risk profile going forward.
Financial Leverage
Norfolk Southern Corp., financial leverage calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Stockholders’ equity | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Financial leverage1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Financial Leverage, Competitors2 | |||||||||||||||||||||||
| FedEx Corp. | |||||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q1 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
-
Total assets demonstrated a generally stable to slightly increasing trend over the period analyzed. Starting at approximately 36,162 million USD in early 2018, the assets remained within a range close to this value, showing incremental increases toward the end of the observation period.
Notable increases are observed particularly from late 2020 through early 2022, culminating in a total asset value nearing 39,361 million USD by the first quarter of 2022. Overall, the asset base grew steadily, indicating potential expansion or acquisition activities.
- Stockholders’ Equity
-
Stockholders’ equity portrayed a declining trajectory during the same timeframe, starting at about 16,418 million USD in the first quarter of 2018 and decreasing gradually to approximately 13,461 million USD by the first quarter of 2022.
This reduction was consistent throughout many quarters, with some periods showing notable declines, especially in the latter half of 2021 and into 2022, suggesting possible distributions, stock buybacks, or accumulated losses affecting shareholder value.
- Financial Leverage
-
Financial leverage, expressed as a ratio, exhibited a continuous rising trend across the quarters. It increased from 2.20 in early 2018 to a ratio of about 2.92 by the first quarter of 2022.
This increase in financial leverage indicates that the company became more reliant on debt relative to equity in financing its assets. The consistent upward trend reflects growing use of liabilities and possibly a strategic shift towards higher leverage.
Interest Coverage
Norfolk Southern Corp., interest coverage calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Add: Income tax expense | |||||||||||||||||||||||
| Add: Interest expense on debt | |||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Interest coverage1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Interest Coverage, Competitors2 | |||||||||||||||||||||||
| Uber Technologies Inc. | |||||||||||||||||||||||
| Union Pacific Corp. | |||||||||||||||||||||||
| United Airlines Holdings Inc. | |||||||||||||||||||||||
| United Parcel Service Inc. | |||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q1 2022 Calculation
Interest coverage
= (EBITQ1 2022
+ EBITQ4 2021
+ EBITQ3 2021
+ EBITQ2 2021)
÷ (Interest expenseQ1 2022
+ Interest expenseQ4 2021
+ Interest expenseQ3 2021
+ Interest expenseQ2 2021)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT values exhibit a generally stable pattern with some fluctuations across the quarters. Beginning at 843 million US dollars in the first quarter of 2018, EBIT increased to a peak of 1087 million by mid-2019. However, a notable decline occurred in the first quarter of 2020, dropping sharply to 590 million. Post this decline, a recovery trend is observed, with EBIT rising steadily through 2020 and reaching around 1150 million by the end of 2021, before a slight decrease to 1080 million in early 2022.
- Interest expense on debt
- The interest expense on debt shows a consistent upward trajectory over the period analyzed. Starting at 136 million US dollars in early 2018, this expense gradually increased each quarter, reaching 168 million by the first quarter of 2022. The increase appears steady, with no significant drops or volatility detected.
- Interest coverage ratio
- The interest coverage ratio, which measures the ability to meet interest obligations from EBIT, declines from a high of approximately 7.32 in late 2018 to a low of around 5.04 in the third quarter of 2020. This decline corresponds with the observed drop in EBIT and the steady increase in interest expense, highlighting a period of reduced coverage strength. Following this trough, the ratio improves steadily, reaching nearly 7 by early 2022, reflecting a strengthening financial position with EBIT recovering faster than the interest expense is growing.