SLB N.V. (NYSE:SLB)

Solvency ratios demonstrate a generally improving financial position over the five-year period. A consistent decrease is observed across most debt-related metrics, indicating a reduction in financial risk. However, a slight weakening in some coverage ratios towards the end of the period warrants attention.

Debt Levels

The Debt to Equity ratio decreased from 0.95 in 2021 to 0.45 in 2025, suggesting a strengthening capital structure with a reduced reliance on debt financing. A similar downward trend is evident in the Debt to Capital ratio, moving from 0.49 to 0.31 over the same period. The Debt to Assets ratio also exhibits a consistent decline, from 0.34 to 0.21. Inclusion of operating lease liabilities results in slightly higher ratios, but these also demonstrate a similar decreasing trend.

Leverage

Financial leverage, measured as total assets to equity, decreased from 2.77 in 2021 to 2.10 in 2025. This indicates a diminishing degree of leverage employed by the company, further supporting the observation of a strengthening financial position.

Coverage Ratios

Interest Coverage improved significantly from 5.40 in 2021 to 12.08 in 2024, indicating a greater ability to meet interest obligations from earnings. However, it decreased to 8.69 in 2025. Fixed Charge Coverage followed a similar pattern, increasing from 2.37 to 3.97 before declining to 3.09 in 2025. The decline in these coverage ratios in the final year, while still above one, suggests a potential weakening in the capacity to cover fixed charges and interest expenses, and should be monitored.

Overall, the trend suggests a deliberate and successful strategy to reduce debt and improve the company’s solvency. The recent dip in coverage ratios, however, suggests a need for continued monitoring of earnings performance relative to fixed obligations.

The debt to equity ratio demonstrates a consistent downward trend over the five-year period. This indicates a strengthening of the company’s financial position with respect to its leverage.

Debt to Equity Ratio Trend

In 2021, the debt to equity ratio was 0.95. This decreased to 0.69 in 2022, representing a significant reduction in leverage. The decline continued, albeit at a slower pace, to 0.59 in 2023 and 0.57 in 2024. By 2025, the ratio reached 0.45, the lowest value observed within the analyzed timeframe.

The observed decrease in the debt to equity ratio is attributable to a combination of factors. Total debt experienced a moderate decrease over the period, falling from US$14,195 million in 2021 to US$11,636 million in 2025. However, the primary driver of the ratio’s decline is the substantial growth in total stockholders’ equity, which increased from US$15,004 million in 2021 to US$26,109 million in 2025.

Total Debt

Total debt decreased from US$14,195 million to US$11,636 million over the period. The largest reduction occurred between 2021 and 2022, with subsequent years showing more modest declines. Fluctuations were relatively small between 2023 and 2025.

Total Stockholders’ Equity

Total stockholders’ equity exhibited consistent growth throughout the period, increasing from US$15,004 million to US$26,109 million. The rate of increase accelerated in later years, particularly between 2024 and 2025.

The decreasing debt to equity ratio suggests the company is relying less on debt financing and more on equity financing. This could indicate improved profitability, effective capital management, or a strategic shift in financial policy. A lower ratio generally implies a reduced risk of financial distress and increased financial flexibility.

The debt to equity ratio, including operating lease liabilities, demonstrates a consistent downward trend over the five-year period. Total debt decreased from US$15,009 million in 2021 to US$12,541 million in 2025, while total stockholders’ equity increased substantially from US$15,004 million to US$26,109 million over the same timeframe. This divergence in the growth of debt and equity is the primary driver of the observed ratio decline.

Debt to Equity Ratio Trend

The ratio began at 1.00 in 2021, indicating that total debt and stockholders’ equity were approximately equal. A significant decrease was observed in 2022, falling to 0.73. This downward trend continued, with the ratio reaching 0.63 in 2023, 0.61 in 2024, and further decreasing to 0.48 in 2025. This suggests a strengthening financial position with a decreasing reliance on debt financing relative to equity.

The rate of decline in the debt to equity ratio slowed between 2022 and 2025. While the initial decrease from 2021 to 2022 was substantial, subsequent yearly reductions were more moderate. This is attributable to the increasing equity base, which requires larger absolute debt reductions to achieve the same proportional decrease in the ratio.

Debt Evolution

Total debt experienced a decrease of approximately 16.7% between 2021 and 2025. The largest single-year reduction occurred between 2021 and 2022, with a decrease of US$2,084 million. Subsequent yearly changes in total debt were relatively small, indicating a stabilization of debt levels.

Equity Evolution

Total stockholders’ equity increased by 73.3% between 2021 and 2025. The growth in equity accelerated over the period, with larger increases observed in 2024 and 2025 compared to earlier years. This suggests increasing profitability and/or significant equity issuance contributing to the growth of the equity base.

The consistent decline in the debt to equity ratio, coupled with the increasing equity base, indicates an improving solvency position. The company appears to be reducing its financial leverage and strengthening its capital structure over the analyzed period.

The debt to capital ratio demonstrates a consistent downward trend over the five-year period. This indicates a decreasing reliance on debt financing relative to the company’s total capital structure.

Total Debt

Total debt decreased from US$14,195 million in 2021 to US$11,636 million in 2025. While there were minor fluctuations between 2021 and 2023, the overall trend is one of reduction. The decrease from 2022 to 2023 was minimal, and a slight increase occurred between 2023 and 2024, before resuming a downward trajectory in 2025.

Total Capital

Total capital exhibited a steady increase throughout the period, rising from US$29,199 million in 2021 to US$37,745 million in 2025. This growth suggests an expansion of the company’s capital base, potentially through retained earnings or equity issuance.

Debt to Capital Ratio

The debt to capital ratio declined from 0.49 in 2021 to 0.31 in 2025. This consistent decrease signifies an improvement in the company’s solvency position. The ratio’s reduction is attributable to the combination of decreasing total debt and increasing total capital. The most significant decrease occurred between 2021 and 2022, followed by more moderate declines in subsequent years.

The observed trend suggests the company is becoming less leveraged and potentially less risky from a financial perspective. The increasing capital base provides a stronger foundation to support its debt obligations.

The Debt to Capital ratio, inclusive of operating lease liabilities, demonstrates a consistent downward trend over the five-year period. Total debt, including operating lease liability, experienced a decrease from 2021 to 2023, followed by slight increases in 2024 and a further decrease in 2025. Simultaneously, Total Capital, inclusive of operating lease liability, exhibited a steady increase throughout the period.

Debt to Capital Ratio Trend

The ratio decreased from 0.50 in 2021 to 0.32 in 2025. This indicates a diminishing proportion of debt financing relative to the company’s total capital structure. The most significant decrease occurred between 2021 and 2022, followed by more moderate declines in subsequent years.

Total Debt (including operating lease liability)

Total debt decreased from US$15,009 million in 2021 to US$12,775 million in 2023, representing a reduction of approximately 15%. A slight increase to US$12,816 million was observed in 2024, followed by a further decrease to US$12,541 million in 2025. This suggests active debt management, with periods of reduction potentially driven by debt repayment or refinancing.

Total Capital (including operating lease liability)

Total capital increased consistently from US$30,013 million in 2021 to US$38,650 million in 2025, representing an overall increase of approximately 29%. This growth in capital suggests potential reinvestment of earnings, equity issuance, or other factors contributing to an expanded capital base.

The combined effect of decreasing debt and increasing capital is a strengthening of the company’s solvency position, as indicated by the declining Debt to Capital ratio. This trend suggests reduced financial risk and increased capacity for future investment or shareholder returns.

The debt to assets ratio demonstrates a consistent downward trend over the five-year period. This indicates a decreasing reliance on debt financing relative to the company’s total asset base.

Debt to Assets Ratio Trend

In 2021, the debt to assets ratio was 0.34. This value decreased to 0.28 in 2022, representing a notable reduction in leverage. The decline continued through 2023, reaching 0.25. The ratio remained stable at 0.25 in 2024 before further decreasing to 0.21 in 2025.

The consistent reduction in the debt to assets ratio suggests improved financial stability and a stronger equity position. The company appears to be managing its debt levels effectively in relation to its growing asset base. The stabilization in 2024, followed by a further decrease in 2025, indicates a continued commitment to reducing financial risk.

Total Debt and Total Assets Relationship

While total debt decreased modestly from 2021 to 2025, total assets experienced a more substantial increase. This divergence is the primary driver of the declining debt to assets ratio. The increase in total assets from US$41,511 million in 2021 to US$54,868 million in 2025 suggests growth in the company’s operations and investments.

The observed trend implies that the company is becoming less financially leveraged over time, potentially enhancing its ability to withstand economic downturns and pursue future growth opportunities.

The debt to assets ratio, including operating lease liabilities, demonstrates a consistent downward trend over the five-year period. Total debt decreased from US$15,009 million in 2021 to US$12,541 million in 2025, while total assets increased from US$41,511 million to US$54,868 million over the same timeframe. This combination resulted in a decreasing ratio, indicating a strengthening solvency position.

Debt to Assets Ratio Trend

The ratio declined from 0.36 in 2021 to 0.23 in 2025. The most significant decrease occurred between 2021 and 2022, dropping by 0.06. Subsequent annual decreases were more moderate, ranging from 0.01 to 0.03.

The observed reduction in the debt to assets ratio suggests a decreasing reliance on debt financing relative to the company’s asset base. This could be attributed to debt repayment, increased profitability leading to retained earnings used for funding, or asset growth outpacing debt accumulation. The consistent decline indicates a sustained effort to improve the financial leverage profile.

Total Debt

Total debt experienced a decrease of approximately 16.7% between 2021 and 2025. The largest single-year reduction in total debt was observed between 2021 and 2022, with a decrease of US$2,084 million. The decrease from 2023 to 2025 was US$37 million.

Total Assets

Total assets increased by approximately 32.1% between 2021 and 2025. The largest single-year increase in total assets was observed between 2024 and 2025, with an increase of US$5,933 million. This growth in assets contributes to the declining debt to assets ratio.

The combined effect of decreasing debt and increasing assets has resulted in a more conservative capital structure, as reflected by the declining ratio. This trend generally suggests reduced financial risk and improved capacity to meet long-term obligations.

An analysis of the provided financial information reveals trends in the company’s financial leverage over a five-year period. Total assets have generally increased throughout the period, while stockholders’ equity has also shown consistent growth. However, the rate of increase in assets appears to be accelerating more rapidly than that of equity in the later years.

Financial Leverage

The financial leverage ratio demonstrates a consistent downward trend from 2.77 in 2021 to 2.10 in 2025. This indicates a decreasing reliance on debt financing relative to equity. The most significant decrease occurred between 2021 and 2022, dropping to 2.44. Subsequent declines were more moderate, with decreases of 0.06 between 2022 and 2023, 0.06 between 2023 and 2024, and 0.22 between 2024 and 2025. This suggests a strengthening financial position as the company relies less on debt to fund its assets.

The growth in stockholders’ equity contributes to the declining leverage ratio. While total assets increased by approximately 32.1% over the five-year period, total stockholders’ equity increased by approximately 73.3%. This disparity suggests the company is effectively increasing its equity base, which in turn reduces its financial risk and reliance on external financing.

The observed trend in financial leverage suggests improved solvency and a more conservative capital structure. Continued monitoring of these trends, alongside other financial metrics, is recommended to assess the long-term sustainability of this financial position.

The interest coverage ratio demonstrates a generally positive trend from 2021 to 2024, followed by a decline in the most recent year presented. Earnings before interest and tax (EBIT) increased consistently over the period, while interest expense remained relatively stable for the first three years before experiencing a moderate increase in 2024 and 2025. These movements significantly impacted the company’s ability to meet its interest obligations from operating income.

Interest Coverage Trend

The interest coverage ratio increased from 5.40 in 2021 to a peak of 12.08 in 2024. This indicates a strengthening ability to cover interest expenses with earnings. However, the ratio decreased to 8.69 in 2025, suggesting a weakening in this capacity despite still representing a healthy coverage level.

EBIT Performance

EBIT exhibited substantial growth, rising from US$2,913 million in 2021 to US$6,184 million in 2024. This growth contributed significantly to the improved interest coverage during those years. The subsequent decline in EBIT to US$4,849 million in 2025 partially explains the decrease in the interest coverage ratio.

Interest Expense Evolution

Interest expense remained relatively consistent between 2021 and 2023, fluctuating between US$490 million and US$539 million. A noticeable increase occurred in 2024, reaching US$512 million, and continued into 2025 with a further rise to US$558 million. This increase in interest expense, coupled with the decline in EBIT in 2025, contributed to the reduced interest coverage.

Overall, the company demonstrated a strong ability to cover its interest obligations for most of the analyzed period. The recent decline in the interest coverage ratio warrants monitoring, particularly in relation to future EBIT performance and potential changes in interest expense.

The company demonstrates a generally positive trend in its ability to meet fixed financial obligations between 2021 and 2024, followed by a decline in the most recent year presented. Earnings before fixed charges and tax increased significantly over the period, while fixed charges remained relatively stable until 2025. This resulted in improving fixed charge coverage ratios for the first four years, before decreasing in 2025.

Earnings before Fixed Charges and Tax

Earnings before fixed charges and tax increased from US$4,113 million in 2021 to US$7,584 million in 2024, representing a substantial increase over the period. However, a decrease to US$6,349 million is observed in 2025. This suggests a potential weakening in core profitability in the latest year.

Fixed Charges

Fixed charges remained relatively consistent between 2021 and 2024, fluctuating between US$1,690 million and US$1,912 million. A notable increase to US$2,058 million is observed in 2025, contributing to the decline in fixed charge coverage.

Fixed Charge Coverage

The fixed charge coverage ratio improved from 2.37 in 2021 to 3.97 in 2024, indicating a strengthening ability to cover fixed charges with available earnings. However, the ratio decreased to 3.09 in 2025. While still above 3.0, this represents a reduction in the cushion available to meet these obligations and warrants further investigation into the drivers of both the earnings decline and the fixed charge increase.

Overall, the company’s solvency position, as indicated by fixed charge coverage, strengthened considerably between 2021 and 2024. The decrease in the ratio during 2025 suggests a potential shift in the company’s financial risk profile, requiring monitoring in subsequent periods.