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)
Parker-Hannifin Corp., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30).
The analysis of the quarterly financial ratios reveals several notable trends and fluctuations over the observed periods.
- Debt to Equity Ratio
- The debt to equity ratio exhibits considerable variability. Initially, the ratio increased sharply from 0.7 in September 2016 to a peak of 1.54 in December 2019. Subsequently, there was a consistent decline reaching a low of 0.77 in September 2021, followed by another increase nearing 1.5 in September 2022. This oscillation suggests fluctuating reliance on debt relative to shareholders' equity, with periods of increased leverage followed by deleveraging phases.
- Debt to Capital Ratio
- This ratio mirrors the debt to equity ratio to some extent, starting at 0.41 in September 2016 and rising to a high around 0.61 in December 2019. After a downward correction to about 0.44 by September 2021, it increased again toward 0.6 by the end of 2022. The pattern indicates changes in the composition of the company's capital structure, with a varying proportion of debt financing over time.
- Debt to Assets Ratio
- The debt to assets ratio similarly shows an upward trend from 0.27 in September 2016 to nearly 0.47 in September 2019. It then decreases to about 0.32 by September 2021, only to rise again to approximately 0.46 by December 2022. This ratio movement highlights the extent of the company's debt financing relative to its total asset base, with moderate cyclical adjustments.
- Financial Leverage
- Financial leverage followed a similar trajectory, rising from 2.58 in September 2016 to peaks around 3.3 in late 2019. After a subsequent decline to roughly 2.38 in September 2021, the leverage ratio increased again to over 3.2 by the end of 2022. This indicates significant changes in the company’s use of debt to amplify equity returns, with periods of stronger and weaker leverage.
- Interest Coverage Ratio
- The interest coverage ratio, available from March 2017 onward, generally displays a declining pattern. Starting at 9.18 in March 2017, it improved to a peak of about 11.17 by June 2019, showing strong earnings relative to interest expense. Thereafter, the ratio declines notably to 4.94 by December 2022, implying a reduced buffer to cover interest payments, which may reflect increased debt levels or reduced profitability.
Overall, the financial ratios suggest alternating periods of increased and decreased debt usage, with leverage and debt-related metrics peaking around late 2019 before declining and then rising again toward late 2022. The decreasing trend in interest coverage since mid-2019 raises concerns about the company’s capacity to meet interest obligations comfortably, underscoring the importance of monitoring operational earnings alongside debt management.
Debt Ratios
Coverage Ratios
Debt to Equity
Parker-Hannifin Corp., debt to equity calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||||||
| Notes payable and long-term debt payable within one year | ||||||||||||||||||||||||||||||||||
| Long-term debt, excluding payable within one year | ||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30).
1 Q2 2023 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals significant fluctuations in the company’s leverage and capital structure over the periods considered.
- Total Debt
- The total debt shows considerable variation throughout the timeframe. Initially, from September 2016 to December 2016, debt was relatively stable around 3.2 billion USD. A sharp increase is observed in the first quarter of 2017, reaching over 6 billion USD, which almost doubled the previous levels. After this peak, debt levels fluctuated but mostly trended downward until the first half of 2018, followed by a period of increases and decreases. From 2019 through the second quarter of 2020, total debt remained somewhat volatile but generally stayed below the earlier high. However, starting mid-2021, there was a marked increase culminating in a peak of approximately 14 billion USD by the end of 2022, indicating a renewed and significant rise in borrowing or liabilities.
- Shareholders’ Equity
- Shareholders’ equity demonstrated a generally positive trend over the periods analyzed. Beginning at approximately 4.65 billion USD in late 2016, the equity base gradually expanded, reaching upward of 6.3 billion USD by the end of 2019. There was a slight dip around mid-2020, likely correlating with economic disruptions during that period, but the equity resumed an upward trajectory from late 2020 onward. By the end of 2022, equity surpassed 9.3 billion USD, representing consistent growth in net assets.
- Debt to Equity Ratio
- The debt to equity ratio displayed notable volatility, reflecting changes in both debt and equity positions. Initially, the ratio hovered around 0.7 in 2016, increasing sharply through early 2017 to as high as 1.54 by the end of 2019. This indicates that debt levels overtook equity during this period, suggesting increased leverage. The ratio then decreased significantly to below 1.0 around mid-2021, aligning with periods of reduced borrowing relative to equity growth. However, again by late 2022, the ratio rose steeply to 1.5, underscoring a substantial increase in leverage consistent with the notable rise in total debt recorded at that time.
In summary, the company exhibited dynamic capital management with episodes of high leverage interspersed with periods of deleveraging. The overall equity growth reflects a strengthening financial base, yet the sharp increases in debt, particularly towards the end of the period, suggest a strategic increase in indebtedness that may warrant further monitoring for risk and capital structure implications.
Debt to Capital
Parker-Hannifin Corp., debt to capital calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||||||
| Notes payable and long-term debt payable within one year | ||||||||||||||||||||||||||||||||||
| Long-term debt, excluding payable within one year | ||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30).
1 Q2 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The data indicates fluctuations in the debt levels and capital structure of the company over the examined periods. Total debt experienced a significant increase starting from around the first quarter of 2017, rising from approximately 3.23 billion US dollars at the end of 2016 to a peak exceeding 14 billion US dollars by the fourth quarter of 2022. This represents a notable upward trend in indebtedness over the years, despite some periods of reduction.
Total capital showed an overall increasing trend as well, growing from about 7.76 billion US dollars at the end of 2016 to over 23 billion US dollars by late 2022. This growth in capital indicates expansion or accumulation of financial resources alongside the increasing debt.
The debt to capital ratio exhibits variability aligned with changes in both debt and capital. Initially, the ratio hovered around 0.41 to 0.42 at the end of 2016, then increased markedly in early 2017 reaching around 0.56, followed by a period of slight decline and stabilization in the 0.46 to 0.48 range through 2018 and 2019. Entering 2020 and onward, there is a notable upward trend in the ratio, reaching approximately 0.61 in the second and third quarters of 2022 before a slight decrease to 0.60 at the end of that year. This indicates an increasing proportion of debt within the company's total capital, suggesting a higher leverage level in recent years.
Overall, the financial trends point to a strategy or circumstance involving increased borrowing relative to total capital, especially after 2016. This rising leverage may reflect attempts to finance growth or other capital-intensive activities but could also imply higher financial risk due to greater debt obligations relative to total capital.
- Total Debt
- Significant increase from about 3.2 billion USD at end of 2016 to over 14 billion USD by end of 2022, with some fluctuations.
- Total Capital
- Steady growth from approximately 7.7 billion USD in late 2016 to above 23 billion USD by late 2022, indicating expansion of financial resources.
- Debt to Capital Ratio
- Started near 0.41-0.42 in late 2016, rose to around 0.56 in early 2017, stabilized around 0.46-0.48 during 2018-2019, and increased to nearly 0.61 in 2022, reflecting rising leverage.
Debt to Assets
Parker-Hannifin Corp., debt to assets calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||||||
| Notes payable and long-term debt payable within one year | ||||||||||||||||||||||||||||||||||
| Long-term debt, excluding payable within one year | ||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30).
1 Q2 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt shows a fluctuating trend over the observed periods. Initially, it remained relatively stable around 3.2 million thousand US dollars through the end of 2016, then sharply increased to exceed 6 million by the first quarter of 2017. Subsequently, it exhibited some volatility, peaking close to 9.7 million at the end of 2019. Following this peak, total debt decreased steadily through 2020, reaching a low near 6.5 million by late 2021. In 2022, total debt rose significantly again, reaching over 14 million by the final quarter. Overall, the debt level demonstrates periods of both considerable growth and decline, suggesting variable leverage or financing activities.
- Total Assets
- Total assets steadily increased over the reported timeframe. Beginning just below 12 million thousand US dollars at the end of 2016, assets grew consistently, rising above 15 million in 2017 and surpassing 21 million by the end of 2019. Despite a slight dip in 2020, total assets continued an upward trajectory, culminating in nearly 31 million by the end of 2022. This positive trend reflects ongoing asset accumulation or valuation growth throughout the period studied.
- Debt to Assets Ratio
- The debt to assets ratio fluctuated alongside changes in total debt and asset levels. It commenced around 0.27 to 0.28 in 2016, then increased significantly to approximately 0.38 to 0.39 during 2017. This elevated ratio persisted until early 2018 before declining to the low 0.30s mid-2018 through 2019. In the latter part of 2019 and early 2020, the ratio again rose to about 0.46, indicating increased leverage. A gradual decline followed through 2020 and into 2021, reaching around 0.32. The ratio surged once more in 2022 to approach 0.46 by year-end, reflecting increased borrowing relative to asset size. The alternating pattern suggests cycles of leveraging and deleveraging corresponding to changing financial strategies or external conditions.
Financial Leverage
Parker-Hannifin Corp., financial leverage calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||||||||
| Shareholders’ equity | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30).
1 Q2 2023 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
- The total assets showed a general upward trend over the analyzed period, increasing from approximately 11.97 billion USD in September 2016 to around 30.52 billion USD by December 2022. Despite some fluctuations, notably a dip during mid-2018 and mid-2020, the overall growth indicates expansion and accumulation of resources. The increase was particularly pronounced from mid-2021 onward, reflecting accelerated asset growth in this later stage.
- Shareholders’ Equity
- Shareholders’ equity also experienced growth throughout the period, rising from about 4.65 billion USD in September 2016 to approximately 9.32 billion USD in December 2022. However, the equity growth was less consistent than total assets, with some minor declines observed around late 2018 and mid-2020. The trend resumed upward momentum after these periods, reaching a peak in the latter part of the dataset. This pattern suggests a strengthening equity base, albeit with intermittent periods of retraction.
- Financial Leverage
- Financial leverage, defined as the ratio of total assets to shareholders' equity, exhibited variability across the timeframe. Starting at 2.58 in September 2016, the leverage ratio peaked at 3.32 by December 2019, indicating an increase in debt relative to equity. Thereafter, a decline occurred until mid-2021, dropping to approximately 2.38, which implies a reduction in leverage or relatively stronger equity growth compared to assets. However, leverage rose again towards the end of the period, reaching above 3.2 in December 2022. This cyclical pattern of leverage suggests alternating phases of capital structure adjustments involving debt and equity financing.
Interest Coverage
Parker-Hannifin Corp., interest coverage calculation (quarterly data)
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | ||||||||||||||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||||||||||||
| Add: Interest expense | ||||||||||||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-K (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-Q (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-K (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-K (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-K (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-K (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-K (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30).
1 Q2 2023 Calculation
Interest coverage
= (EBITQ2 2023
+ EBITQ1 2023
+ EBITQ4 2022
+ EBITQ3 2022)
÷ (Interest expenseQ2 2023
+ Interest expenseQ1 2023
+ Interest expenseQ4 2022
+ Interest expenseQ3 2022)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The data reveals several notable trends in the company's financial performance from September 2016 through December 2022, particularly concerning earnings before interest and tax (EBIT), interest expense, and interest coverage ratios.
- Earnings Before Interest and Tax (EBIT)
-
EBIT demonstrates a generally positive trajectory with fluctuations reflective of operational performance variations over the quarters. From September 2016 to mid-2018, EBIT increased markedly, peaking around June 2018. This upward trend suggests periods of strengthened operational earnings during this timeframe.
Post-2018, EBIT saw a decline around late 2019 and early 2020, reaching a trough by late 2020. This downturn likely correlates with external challenges impacting earnings. From late 2020 onwards, EBIT recovered sharply, achieving higher levels than in previous years, particularly in 2021 and early 2022, before a significant drop in late 2022.
- Interest Expense
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Interest expense exhibits a gradual increasing trend over the reported periods. Starting from roughly US$34 million in late 2016, it rose modestly into late 2018 and early 2019. A notable acceleration in interest expenses is observed from late 2019 onward, peaking significantly in the last two quarters of 2022, reaching levels above US$100 million.
This upward pressure on interest expense may reflect increased borrowing costs or higher debt levels, indicating a rising financial burden in terms of interest obligations.
- Interest Coverage Ratio
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The interest coverage ratio, which measures the company's ability to meet interest payments from operating earnings, shows an initial increase from mid-2017, suggesting improved capacity to cover interest expenses during that period. The ratio peaked around late 2018 and early 2019, reflecting stronger earnings relative to interest costs.
Subsequently, a declining trend is evident from mid-2019 through late 2020, indicating a reduction in the company's ability to comfortably cover interest expenses, coinciding with the aforementioned decrease in EBIT and rise in interest costs.
Although some recovery is noted through 2021, the interest coverage ratio declines again toward the end of 2022, reaching its lowest point in the timeframe. This pattern points to increasing financial risk related to servicing debt due to either increased interest expenses, lower earnings, or both.
In summary, while operational earnings have generally trended upwards with periodic volatility, rising interest expenses and a coinciding decline in interest coverage ratios in recent years highlight growing financial leverage and potential vulnerability in debt servicing capacity. The significant drop in EBIT and coverage ratio in late 2022 warrants attention as it could signal emerging financial stress.