Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Stryker Corp., solvency ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
An analysis of solvency metrics between 2017 and 2021 reveals a period of increasing leverage that peaked in 2020, followed by a notable stabilization in 2021. The overall trajectory indicates a strategic increase in debt utilization through the first four years of the period, with a subsequent correction that returned most ratios to levels seen in 2018.
- Debt-to-Equity and Capital Ratios
- The debt to equity ratio rose progressively from 0.72 in 2017 to a peak of 1.07 in 2020, before reverting to 0.84 in 2021. A consistent pattern is observed in the debt to capital and debt to assets ratios, which reached their maximums in 2020 at 0.52 and 0.41, respectively. The inclusion of operating lease liabilities resulted in only marginal increases to these figures, indicating that lease obligations do not fundamentally alter the company's solvency profile.
- Financial Leverage
- Financial leverage exhibited a steady upward trend, moving from 2.23 in 2017 to a high of 2.62 in 2020. This growth reflects a heightened reliance on borrowed funds to finance assets. However, this trend reversed in 2021, with the ratio declining to 2.33, effectively normalizing the leverage position to 2018 levels.
- Interest and Fixed Charge Coverage
- Coverage ratios remained strong throughout the period but experienced a distinct contraction in 2020. Interest coverage peaked at 9.93 in 2019 before declining to 7.20 in 2020. Similarly, the fixed charge coverage ratio reached 7.10 in 2019 before dropping to 5.39 in 2020. Despite these decreases, both ratios remained well above critical thresholds, ensuring the capacity to service debt obligations, with a modest recovery observed by the end of 2021.
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Debt Ratios
Coverage Ratios
Debt to Equity
Stryker Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of debt | 7) | 761) | 859) | 1,373) | 632) | |
| Long-term debt, excluding current maturities | 12,472) | 13,230) | 10,231) | 8,486) | 6,590) | |
| Total debt | 12,479) | 13,991) | 11,090) | 9,859) | 7,222) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.84 | 1.07 | 0.87 | 0.84 | 0.72 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Abbott Laboratories | 0.50 | — | — | — | — | |
| Elevance Health Inc. | 0.64 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.00 | — | — | — | — | |
| Medtronic PLC | 0.51 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.64 | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Health Care Equipment & Services | 0.55 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Health Care | 0.80 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Total Stryker shareholders’ equity
= 12,479 ÷ 14,877 = 0.84
2 Click competitor name to see calculations.
The solvency profile demonstrates a period of increasing financial leverage from 2017 through 2020, followed by a reduction in 2021. Total debt grew consistently from US$ 7,222 million in 2017 to a peak of US$ 13,991 million in 2020, before declining to US$ 12,479 million in the final year of the analysis. Throughout this same period, total shareholders' equity maintained a steady upward trajectory, increasing from US$ 9,966 million to US$ 14,877 million.
- Debt to Equity Ratio Progression
- The debt to equity ratio rose from 0.72 in 2017 to a peak of 1.07 in 2020. This trend indicates that the accumulation of debt outpaced the growth of equity for several years, reaching a point where total debt exceeded total equity in 2020.
- Analysis of the 2021 Reversion
- A significant reduction in the debt to equity ratio is observed in 2021, with the value returning to 0.84. This improvement in the solvency ratio was driven by a simultaneous decrease in total debt and a continued increase in shareholders' equity, effectively reverting the leverage levels to those seen in 2018.
- Capital Structure Stability
- The consistent growth of shareholders' equity provided a buffer against the increasing debt levels between 2017 and 2020. The overall trend suggests a strategic shift toward debt reduction or deleveraging in 2021, enhancing the solvency position relative to the peak leverage recorded in 2020.
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Debt to Equity (including Operating Lease Liability)
Stryker Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of debt | 7) | 761) | 859) | 1,373) | 632) | |
| Long-term debt, excluding current maturities | 12,472) | 13,230) | 10,231) | 8,486) | 6,590) | |
| Total debt | 12,479) | 13,991) | 11,090) | 9,859) | 7,222) | |
| Current operating lease liabilities (recorded in Accrued expenses and other liabilities) | 112) | 109) | 86) | —) | —) | |
| Noncurrent operating lease liabilities (recorded in Other noncurrent liabilities) | 310) | 325) | 301) | —) | —) | |
| Total debt (including operating lease liability) | 12,901) | 14,425) | 11,477) | 9,859) | 7,222) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.87 | 1.10 | 0.90 | 0.84 | 0.72 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.54 | — | — | — | — | |
| Elevance Health Inc. | 0.67 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.01 | — | — | — | — | |
| Medtronic PLC | 0.53 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.70 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.58 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.83 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Stryker shareholders’ equity
= 12,901 ÷ 14,877 = 0.87
2 Click competitor name to see calculations.
An analysis of the solvency position from 2017 to 2021 reveals a period of increasing leverage that peaked in 2020, followed by a corrective reduction in the final year of the period.
- Total Debt Trajectory
- Total debt, including operating lease liabilities, exhibited a consistent upward trend for four consecutive years, rising from 7,222 million US$ in 2017 to a peak of 14,425 million US$ in 2020. This represents a nearly twofold increase in total obligations over that timeframe. However, this trend reversed in 2021, with total debt decreasing to 12,901 million US$.
- Shareholders' Equity Growth
- Shareholders' equity demonstrated steady and uninterrupted growth throughout the five-year period. Starting at 9,966 million US$ in 2017, equity increased annually to reach 14,877 million US$ by December 31, 2021. This consistent growth suggests a stable accumulation of retained earnings or capital injections.
- Debt to Equity Ratio Dynamics
- The debt to equity ratio mirrors the divergence between the growth rates of liabilities and equity. The ratio climbed steadily from 0.72 in 2017 to 1.10 in 2020, indicating that debt was accumulating faster than the equity base. The 2020 peak represents the only instance in the period where total debt exceeded total shareholders' equity. By 2021, the ratio declined significantly to 0.87, driven by the simultaneous reduction in total debt and the continued expansion of equity.
The overall solvency profile suggests a strategic increase in leverage leading up to 2020, followed by a deleveraging phase in 2021 that improved the balance sheet structure and reduced the company's reliance on borrowed capital relative to its equity.
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Debt to Capital
Stryker Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of debt | 7) | 761) | 859) | 1,373) | 632) | |
| Long-term debt, excluding current maturities | 12,472) | 13,230) | 10,231) | 8,486) | 6,590) | |
| Total debt | 12,479) | 13,991) | 11,090) | 9,859) | 7,222) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Total capital | 27,356) | 27,075) | 23,897) | 21,589) | 17,188) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.46 | 0.52 | 0.46 | 0.46 | 0.42 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Abbott Laboratories | 0.34 | — | — | — | — | |
| Elevance Health Inc. | 0.39 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.00 | — | — | — | — | |
| Medtronic PLC | 0.34 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.39 | — | — | — | — | |
| Debt to Capital, Sector | ||||||
| Health Care Equipment & Services | 0.35 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Health Care | 0.44 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 12,479 ÷ 27,356 = 0.46
2 Click competitor name to see calculations.
Between 2017 and 2021, a general expansion in both total debt and total capital was observed, although the growth of debt exhibited more volatility toward the end of the period. Total capital demonstrated consistent year-over-year growth, increasing from 17,188 million US dollars in 2017 to 27,356 million US dollars in 2021.
- Total Debt Trends
- Total debt rose steadily from 7,222 million US dollars in 2017 to a peak of 13,991 million US dollars in 2020. A reversal occurred in 2021, with total debt decreasing to 12,479 million US dollars, representing a reduction in nominal leverage.
- Debt to Capital Ratio Analysis
- The debt to capital ratio increased from 0.42 in 2017 to a peak of 0.52 in 2020, indicating a higher proportion of debt within the capital structure. In 2021, the ratio moderated to 0.46, which corresponds with the simultaneous decrease in total debt and continued growth in total capital.
- Solvency and Capital Structure Observations
- The capital structure experienced a period of increasing leverage through 2020, followed by a correction in 2021. The return to a ratio of 0.46 in 2021 aligns the company's solvency profile with the levels maintained during 2018 and 2019, suggesting a stabilization of the debt-to-capital balance.
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Debt to Capital (including Operating Lease Liability)
Stryker Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of debt | 7) | 761) | 859) | 1,373) | 632) | |
| Long-term debt, excluding current maturities | 12,472) | 13,230) | 10,231) | 8,486) | 6,590) | |
| Total debt | 12,479) | 13,991) | 11,090) | 9,859) | 7,222) | |
| Current operating lease liabilities (recorded in Accrued expenses and other liabilities) | 112) | 109) | 86) | —) | —) | |
| Noncurrent operating lease liabilities (recorded in Other noncurrent liabilities) | 310) | 325) | 301) | —) | —) | |
| Total debt (including operating lease liability) | 12,901) | 14,425) | 11,477) | 9,859) | 7,222) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Total capital (including operating lease liability) | 27,778) | 27,509) | 24,284) | 21,589) | 17,188) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.46 | 0.52 | 0.47 | 0.46 | 0.42 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.35 | — | — | — | — | |
| Elevance Health Inc. | 0.40 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.01 | — | — | — | — | |
| Medtronic PLC | 0.35 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.41 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.37 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.45 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 12,901 ÷ 27,778 = 0.46
2 Click competitor name to see calculations.
The company's solvency position from 2017 to 2021 is characterized by a period of increasing leverage that peaked in 2020, followed by a moderate deleveraging phase in 2021.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trajectory from US$ 7,222 million in 2017 to a peak of US$ 14,425 million in 2020. A subsequent reduction was observed in 2021, where the balance decreased to US$ 12,901 million.
- Total Capital Expansion
- Total capital showed steady growth throughout the entire analysis period, increasing from US$ 17,188 million in 2017 to US$ 27,778 million in 2021. This indicates a continuous expansion of the overall capital base supporting the company's operations.
- Debt to Capital Ratio Analysis
- The debt to capital ratio increased progressively from 0.42 in 2017 to a high of 0.52 in 2020, signaling an increasing reliance on debt relative to total capital. This trend reversed in 2021, with the ratio falling to 0.46. The decline in 2021 suggests a strategic reduction in debt levels or a shift in capital allocation, effectively returning the leverage ratio to levels similar to those seen in 2018.
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Debt to Assets
Stryker Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of debt | 7) | 761) | 859) | 1,373) | 632) | |
| Long-term debt, excluding current maturities | 12,472) | 13,230) | 10,231) | 8,486) | 6,590) | |
| Total debt | 12,479) | 13,991) | 11,090) | 9,859) | 7,222) | |
| Total assets | 34,631) | 34,330) | 30,167) | 27,229) | 22,197) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.36 | 0.41 | 0.37 | 0.36 | 0.33 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Abbott Laboratories | 0.24 | — | — | — | — | |
| Elevance Health Inc. | 0.24 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.00 | — | — | — | — | |
| Medtronic PLC | 0.28 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.22 | — | — | — | — | |
| Debt to Assets, Sector | ||||||
| Health Care Equipment & Services | 0.23 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Health Care | 0.30 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 12,479 ÷ 34,631 = 0.36
2 Click competitor name to see calculations.
Between 2017 and 2021, there was a significant expansion of the balance sheet, characterized by a consistent increase in total assets and a fluctuating trajectory of total debt. The solvency position, as measured by the debt-to-assets ratio, experienced a gradual increase for four consecutive years before correcting in the final period.
- Total Debt Trends
- Total debt grew substantially from US$ 7,222 million in 2017 to a peak of US$ 13,991 million in 2020. This period of accumulation was followed by a reduction in 2021, where debt decreased to US$ 12,479 million, indicating a shift toward deleveraging.
- Total Asset Growth
- Total assets exhibited uninterrupted growth over the five-year span, rising from US$ 22,197 million in 2017 to US$ 34,631 million by the end of 2021. This steady increase suggests continuous expansion of the asset base.
- Debt to Assets Ratio Analysis
- The debt-to-assets ratio climbed from 0.33 in 2017 to 0.41 in 2020, signaling that debt obligations were increasing at a faster rate than the total assets. However, the ratio declined to 0.36 in 2021, returning to a level comparable to 2018. This movement reflects a simultaneous decrease in total debt and a continued increase in total assets, which improved the overall solvency profile in the final year of the analysis.
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Debt to Assets (including Operating Lease Liability)
Stryker Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of debt | 7) | 761) | 859) | 1,373) | 632) | |
| Long-term debt, excluding current maturities | 12,472) | 13,230) | 10,231) | 8,486) | 6,590) | |
| Total debt | 12,479) | 13,991) | 11,090) | 9,859) | 7,222) | |
| Current operating lease liabilities (recorded in Accrued expenses and other liabilities) | 112) | 109) | 86) | —) | —) | |
| Noncurrent operating lease liabilities (recorded in Other noncurrent liabilities) | 310) | 325) | 301) | —) | —) | |
| Total debt (including operating lease liability) | 12,901) | 14,425) | 11,477) | 9,859) | 7,222) | |
| Total assets | 34,631) | 34,330) | 30,167) | 27,229) | 22,197) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.37 | 0.42 | 0.38 | 0.36 | 0.33 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | 0.26 | — | — | — | — | |
| Elevance Health Inc. | 0.25 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.01 | — | — | — | — | |
| Medtronic PLC | 0.29 | — | — | — | — | |
| UnitedHealth Group Inc. | 0.24 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | 0.25 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.31 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 12,901 ÷ 34,631 = 0.37
2 Click competitor name to see calculations.
The solvency profile indicates a period of increasing leverage from 2017 through 2020, followed by a corrective reduction in the debt-to-assets ratio in 2021. While total assets expanded consistently throughout the five-year period, total debt experienced more aggressive growth until 2020, after which a downward adjustment occurred.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, increased from US$ 7,222 million in 2017 to a peak of US$ 14,425 million in 2020. This represents a significant expansion of liabilities over a four-year window. This trend reversed in 2021, with total debt decreasing to US$ 12,901 million.
- Asset Accumulation
- Total assets exhibited a consistent upward trajectory, rising from US$ 22,197 million in 2017 to US$ 34,631 million by the end of 2021. The growth was steady across the analyzed period, providing a larger capital base to support the company's obligations.
- Debt-to-Assets Ratio Analysis
- The debt-to-assets ratio rose incrementally from 0.33 in 2017 to 0.42 in 2020, signaling that debt accumulation outpaced asset growth during this timeframe. In 2021, the ratio declined to 0.37, reflecting the combined impact of a reduction in total debt and continued asset growth, which improved the overall solvency position relative to the 2020 peak.
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Financial Leverage
Stryker Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 34,631) | 34,330) | 30,167) | 27,229) | 22,197) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.33 | 2.62 | 2.36 | 2.32 | 2.23 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Abbott Laboratories | 2.10 | — | — | — | — | |
| Elevance Health Inc. | 2.70 | — | — | — | — | |
| Intuitive Surgical Inc. | 1.14 | — | — | — | — | |
| Medtronic PLC | 1.81 | — | — | — | — | |
| UnitedHealth Group Inc. | 2.96 | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Health Care Equipment & Services | 2.37 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Health Care | 2.69 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Total Stryker shareholders’ equity
= 34,631 ÷ 14,877 = 2.33
2 Click competitor name to see calculations.
An examination of the financial position from 2017 to 2021 reveals a consistent expansion of the asset base coupled with a steady increase in shareholders' equity.
- Asset and Equity Expansion
- Total assets experienced a continuous upward trajectory, rising from US$ 22,197 million in 2017 to US$ 34,631 million by the end of 2021. This growth was mirrored by total shareholders' equity, which climbed from US$ 9,966 million to US$ 14,877 million over the same period, indicating a sustained increase in the company's net worth.
- Financial Leverage Dynamics
- The financial leverage ratio exhibited a steady upward trend between 2017 and 2020, increasing from 2.23 to a peak of 2.62. This progression suggests an increasing reliance on borrowed funds to finance asset growth during this interval. However, a correction is observed in 2021, as the ratio declined to 2.33, reflecting a reduction in relative leverage and a shift toward a more conservative solvency profile.
- Capital Structure Correlation
- While assets grew by approximately 56% over the five-year period, equity grew by approximately 49%. The divergence between these two growth rates accounts for the fluctuation in the leverage ratio, specifically the peak in 2020 followed by the deleveraging observed in 2021.
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Interest Coverage
Stryker Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | 1,994) | 1,599) | 2,083) | 3,553) | 1,020) | |
| Add: Income tax expense | 287) | 355) | 479) | (1,197) | 1,043) | |
| Add: Interest expense | 337) | 315) | 287) | 264) | 247) | |
| Earnings before interest and tax (EBIT) | 2,618) | 2,269) | 2,849) | 2,620) | 2,310) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 7.77 | 7.20 | 9.93 | 9.92 | 9.35 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Abbott Laboratories | 16.41 | — | — | — | — | |
| Elevance Health Inc. | 10.93 | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | 5.21 | — | — | — | — | |
| UnitedHealth Group Inc. | 14.44 | — | — | — | — | |
| Interest Coverage, Sector | ||||||
| Health Care Equipment & Services | 12.30 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Health Care | 14.14 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,618 ÷ 337 = 7.77
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a period of relative stability followed by a contraction in interest coverage capacity, primarily driven by volatile operating earnings and a consistent rise in interest obligations. Between 2017 and 2019, the ability to service debt improved, but a significant dip occurred in 2020, followed by a partial recovery in 2021.
- Earnings Before Interest and Tax (EBIT)
- EBIT showed a steady upward trajectory from 2017 to 2019, increasing from US$ 2,310 million to a peak of US$ 2,849 million. This growth was reversed in 2020, when EBIT fell sharply to US$ 2,269 million, before rebounding to US$ 2,618 million in 2021.
- Interest Expense
- A continuous increase in interest expenses is observed throughout the entire period. The expense grew every year, starting at US$ 247 million in 2017 and reaching US$ 337 million by December 31, 2021, suggesting an expansion of the debt burden or an increase in borrowing costs.
- Interest Coverage Ratio
- The interest coverage ratio mirrored the EBIT trend, peaking at 9.93 in 2019. The ratio declined to 7.20 in 2020, reflecting the simultaneous impact of reduced earnings and increased interest costs. By 2021, the ratio improved to 7.77, though it remained below the levels observed prior to 2020.
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Fixed Charge Coverage
Stryker Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings | 1,994) | 1,599) | 2,083) | 3,553) | 1,020) | |
| Add: Income tax expense | 287) | 355) | 479) | (1,197) | 1,043) | |
| Add: Interest expense | 337) | 315) | 287) | 264) | 247) | |
| Earnings before interest and tax (EBIT) | 2,618) | 2,269) | 2,849) | 2,620) | 2,310) | |
| Add: Operating lease expense | 133) | 130) | 133) | 138) | 125) | |
| Earnings before fixed charges and tax | 2,751) | 2,399) | 2,982) | 2,758) | 2,435) | |
| Interest expense | 337) | 315) | 287) | 264) | 247) | |
| Operating lease expense | 133) | 130) | 133) | 138) | 125) | |
| Fixed charges | 470) | 445) | 420) | 402) | 372) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 5.85 | 5.39 | 7.10 | 6.86 | 6.55 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Abbott Laboratories | 10.21 | — | — | — | — | |
| Elevance Health Inc. | 8.48 | — | — | — | — | |
| Intuitive Surgical Inc. | 93.66 | — | — | — | — | |
| Medtronic PLC | 4.31 | — | — | — | — | |
| UnitedHealth Group Inc. | 8.80 | — | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Health Care Equipment & Services | 8.36 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Health Care | 10.48 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,751 ÷ 470 = 5.85
2 Click competitor name to see calculations.
An analysis of the solvency position from 2017 to 2021 reveals a period of initial expansion followed by a contraction and subsequent partial recovery in coverage capacity. While the ability to meet fixed obligations remains strong, there is a visible trend of increasing fixed costs against fluctuating earnings.
- Earnings Before Fixed Charges and Tax
- Earnings exhibited a growth trajectory from 2017 to 2019, peaking at US$ 2,982 million. A significant contraction occurred in 2020, with earnings falling to US$ 2,399 million, before rebounding to US$ 2,751 million in 2021.
- Fixed Charges
- A consistent upward trend is observed in fixed charges, which increased annually from US$ 372 million in 2017 to US$ 470 million in 2021. This linear growth indicates a steady increase in mandatory financial obligations over the five-year period.
- Fixed Charge Coverage Ratio
- The coverage ratio improved from 6.55 in 2017 to a peak of 7.10 in 2019, indicating an increasing safety margin. A sharp decline to 5.39 was recorded in 2020, driven by the simultaneous impact of decreased earnings and rising fixed charges. By 2021, the ratio recovered to 5.85, although it remained below the levels seen between 2017 and 2019.
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