Thermo Fisher Scientific Inc. (NYSE:TMO)

Debt Ratios

Over the five-year period, the debt to equity ratio initially increased from 0.63 in 2020 to a peak of 0.85 in 2021, indicating a rise in leverage relative to shareholders’ equity. Subsequently, it declined to 0.78 in 2022, 0.75 in 2023, and further to 0.63 in 2024, returning to the level observed at the start of the period. Including operating lease liabilities, the debt to equity ratio followed a similar trend, peaking slightly higher at 0.89 in 2021 before decreasing to 0.66 by 2024.

The debt to capital ratio mirrored this pattern, rising from 0.39 in 2020 to a high of 0.46 in 2021, then gradually decreasing back to 0.39 in 2024. When including operating lease liabilities, the ratio was marginally higher but showed the same trajectory, peaking at 0.47 and then declining to 0.40.

Debt to assets ratios also exhibited comparable behavior. The ratio increased from 0.31 in 2020 to approximately 0.37-0.38 between 2021 and 2023, before declining to 0.32 in 2024. The inclusion of operating lease liabilities resulted in slightly higher ratios but followed the same trend over the period.

Financial Leverage

Financial leverage rose from 2.00 in 2020 to 2.33 in 2021, indicating increased use of debt in the capital structure. There was a steady decline in subsequent years to 2.21 in 2022, 2.11 in 2023, and 1.96 in 2024, suggesting a reduction in reliance on borrowed funds relative to equity.

Interest and Fixed Charge Coverage

Interest coverage showed high values in 2020 and 2021, with ratios of 14.07 and 17.49 respectively, indicating strong capacity to meet interest obligations from operating earnings. However, it dropped sharply to 11.56 in 2022 and plummeted further to 5.54 in 2023, before a slight recovery to 6.03 in 2024. This decline signals decreasing earnings relative to interest expenses and potentially reduced financial flexibility.

The fixed charge coverage ratio followed a similar trajectory, decreasing from 10.3 in 2020 and 12.19 in 2021 to 8.12 in 2022, reaching a low of 4.61 in 2023, and modestly increasing to 5.01 in 2024. This indicates reduced ability to cover fixed financial obligations overall, reflecting the trend seen in interest coverage.

Summary Insights

The data reveals that leverage metrics peaked in 2021, followed by a deliberate deleveraging phase through 2024, returning to or slightly below the initial leverage levels. Despite the reduction in leverage, coverage ratios deteriorated significantly after 2021, implying either increased interest expenses, declining operating income, or both. The slight uptick in coverage ratios in the final year suggests early signs of operational improvement or cost control efforts, but coverage remains substantially weaker than at the start of the period. Overall, the company appears to have responded to increased leverage by reducing debt exposure, while working to stabilize profitability and financial stability.

Total debt

From 2020 to 2021, total debt experienced a significant increase from 21,735 million US dollars to 34,870 million US dollars. In 2022 and 2023, total debt remained relatively stable around the mid-34,000 million US dollars range, specifically 34,488 million and 34,917 million US dollars respectively. In 2024, a noticeable decline occurred, with total debt dropping to 31,275 million US dollars.

Total shareholders’ equity

Shareholders’ equity showed a consistent upward trend throughout the period under review. Starting at 34,507 million US dollars in 2020, it increased steadily each year to reach 49,584 million US dollars by 2024. This pattern indicates an ongoing accumulation of equity capital or retained earnings.

Debt to equity ratio

The debt to equity ratio initially rose sharply from 0.63 in 2020 to 0.85 in 2021, reflecting the significant increase in debt relative to equity during that year. Subsequently, the ratio decreased gradually over the next three years—dropping to 0.78 in 2022, 0.75 in 2023, and returning to the initial level of 0.63 by 2024. This suggests improved balance between debt levels and equity, driven by the combined effect of stable or reduced debt and increasing equity.

Total debt (including operating lease liability)

The total debt exhibited a significant increase from US$22,545 million in 2020 to US$36,339 million in 2021, representing a substantial rise. However, from 2021 to 2024, total debt showed a relatively stable pattern with slight fluctuations, peaking again marginally in 2023 at US$36,424 million before declining to US$32,775 million in 2024. Overall, the debt level in 2024 remains notably higher than in 2020 despite the reduction from the peak years.

Total shareholders’ equity

Shareholders’ equity consistently increased each year across the entire period. Starting at US$34,507 million in 2020, it rose steadily through subsequent years to reach US$49,584 million in 2024. This represents a continuous strengthening of the equity base without any observed decline or stagnation.

Debt to equity ratio (including operating lease liability)

The debt to equity ratio rose sharply from 0.65 in 2020 to 0.89 in 2021, reflecting the sharp increase in debt relative to equity during that year. Following 2021, the ratio showed a downward trend each year, decreasing to 0.66 by 2024. This movement suggests an improvement in the capital structure, with debt levels becoming more balanced or reduced relative to equity after the 2021 peak.

Total Debt

There was a significant increase in total debt from 21,735 million USD in 2020 to a peak of 34,917 million USD in 2023. However, in 2024, total debt decreased notably to 31,275 million USD, indicating a reduction effort in that period after several years of elevated debt levels.

Total Capital

Total capital showed a consistent upward trend from 56,242 million USD at the end of 2020 to 81,652 million USD in 2023. The capital slightly declined in 2024 to 80,859 million USD but remained above previous years' levels, indicating growth with a small recent pullback.

Debt to Capital Ratio

The debt to capital ratio increased from 0.39 in 2020 to a high of 0.46 in 2021, followed by a gradual decline over the subsequent years to 0.39 in 2024. This pattern suggests that although debt grew considerably, total capital also increased, leading to a moderation in financial leverage and a return to the initial ratio level by 2024.

Total Debt (including operating lease liability)

The total debt exhibits a significant increase from 22,545 million USD in 2020 to a peak of 36,424 million USD in 2023. However, in 2024, there is a notable decline to 32,775 million USD, indicating a reduction in the company's leverage or repayment of debt towards the end of the period.

Total Capital (including operating lease liability)

Total capital shows a consistent upward trend over the five-year period, starting at 57,052 million USD in 2020 and reaching a higher level of 82,359 million USD by 2024. This indicates overall growth in the company's capital base despite minor fluctuations in debt levels.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio rises from 0.40 in 2020 to a maximum of 0.47 in 2021, reflecting increased leverage relative to the capital base. This ratio then gradually decreases in subsequent years to 0.40 by 2024, suggesting an improvement in the capital structure with a reduction in the relative proportion of debt.

Total Debt

The total debt increased substantially from 21,735 million US dollars in 2020 to a peak of 34,917 million US dollars in 2023, indicating a significant rise in the company's leverage over this period. In 2024, the total debt showed a noticeable reduction to 31,275 million US dollars, suggesting a strategic effort to deleverage or manage debt more conservatively after several years of accumulation.

Total Assets

Total assets demonstrated consistent growth from 69,052 million US dollars in 2020 to 98,726 million US dollars in 2023. However, a slight decline was observed in 2024, with total assets decreasing to 97,321 million US dollars. Overall, the asset base expanded significantly over the analyzed period, though the 2024 dip may warrant further examination.

Debt to Assets Ratio

The debt to assets ratio rose from 0.31 in 2020 to a peak of 0.37 in 2021, reflecting an increase in the proportion of debt financing relative to the company's asset base. The ratio then decreased gradually, stabilizing at 0.35 in 2022 and 2023, before declining further to 0.32 in 2024. This trend indicates a moderation in leverage risk, aligning with the observed reduction in total debt in 2024 alongside a still elevated asset base.

Summary

The company experienced a notable increase in financial leverage between 2020 and 2023, as evidenced by rising total debt and an increasing debt to assets ratio. Asset growth accompanied the increased debt, although asset growth slowed and slightly reversed in 2024. The subsequent decrease in total debt and improvement in the debt to assets ratio in 2024 suggest efforts toward reducing leverage and enhancing financial stability. Close attention should be given to the factors influencing the asset base decline and the company's future debt management strategies.

The financial data demonstrates key trends in the company's leverage and asset base over the five-year period ending in 2024.

Total debt (including operating lease liability)

The total debt increased significantly from 22,545 million US dollars at the end of 2020 to a peak of 36,424 million US dollars in 2023, reflecting an upward trend in borrowing over the first four years. However, there is a noticeable reduction in 2024 to 32,775 million US dollars, indicating a partial deleveraging or repayment of debt in the most recent period.

Total assets

Total assets grew markedly from 69,052 million US dollars in 2020 to 98,726 million US dollars in 2023, showing consistent asset expansion. In 2024, total assets slightly decreased to 97,321 million US dollars, suggesting either asset sales, depreciation, or other adjustments.

Debt to assets (including operating lease liability)

The debt to assets ratio increased from 0.33 in 2020 to 0.38 in 2021, indicating a higher leverage position relative to the asset base. Subsequently, it remained relatively stable around 0.37 through 2022 and 2023, before declining to 0.34 in 2024. This decline corresponds with the simultaneous reduction in total debt and slight contraction in total assets, reflecting an improvement in capital structure.

Overall, the data indicate that the company increased its leverage substantially between 2020 and 2021, maintaining that elevated debt level over the next two years while growing assets. The reduction in debt and the resulting decrease in the debt to assets ratio in 2024 may suggest a strategic focus on strengthening the balance sheet or managing financial risk. Asset growth plateaued in the last year, which may warrant attention to its drivers in the future.

The financial data reflects notable trends in the company's asset base, equity position, and leverage over the period from December 31, 2020, through December 31, 2024.

Total Assets

Total assets show significant growth from US$69,052 million in 2020 to a peak of US$98,726 million in 2023, representing an approximate 43% increase over three years. However, a slight decrease is observed in 2024 to US$97,321 million, indicating a potential stabilization or minor contraction in asset accumulation.

Shareholders’ Equity

The shareholders' equity increased steadily throughout the observed period, rising from US$34,507 million in 2020 to US$49,584 million in 2024. This growth of about 44% over five years indicates consistent strengthening of the company’s net asset position and retained earnings or capital contributions.

Financial Leverage

Financial leverage, measured as the ratio of total assets to shareholders’ equity, increased from 2.00 in 2020 to a peak of approximately 2.33 in 2021, suggesting a higher relative amount of debt or liabilities compared to equity. Subsequently, a declining trend is evident, with the ratio decreasing to 1.96 by 2024. This decline implies a gradual reduction in reliance on debt financing or an improvement in equity base relative to total assets, enhancing financial stability.

Overall, the data indicates a period of asset growth accompanied by a consistent increase in equity, with financial leverage peaking early in the period and then progressively declining. This suggests a strategic management focus on strengthening the equity base and potentially deleveraging over the latest years, which may improve the company's financial risk profile.

Over the analyzed period from 2020 through 2024, several notable trends emerge regarding the company’s earnings before interest and tax (EBIT), interest expense, and interest coverage ratio.

Earnings Before Interest and Tax (EBIT)

The EBIT shows fluctuation over the years. Starting at 7,780 million US dollars in 2020, it increased significantly in 2021 to 9,373 million. However, this positive momentum did not continue steadily, as EBIT decreased in 2022 to 8,389 million and further declined to 7,614 million in 2023. In 2024, EBIT rebounded slightly to 8,385 million. Overall, this pattern indicates periods of volatility in operating profitability with a notable dip after 2021 followed by a modest recovery in 2024.

Interest Expense

Interest expense remained relatively stable between 2020 and 2021, at 553 million and 536 million respectively. However, there was a sharp increase beginning in 2022, rising to 726 million, and then nearly doubling in 2023 to 1,375 million. It further increased marginally to 1,390 million in 2024. This trend points to significantly higher financing costs or increased debt levels particularly after 2021.

Interest Coverage Ratio

The interest coverage ratio, reflecting the company's ability to meet interest obligations from EBIT, decreased consistently from 14.07 in 2020 to 17.49 in 2021 but then dropped significantly to 11.56 in 2022. This decline continued sharply to 5.54 in 2023 and slightly increased to 6.03 in 2024. The substantial reduction indicates growing pressure on the company's earnings relative to its interest expenses, primarily driven by rising interest costs combined with fluctuating EBIT.

In summary, while the company experienced a peak in EBIT in 2021, subsequent years were marked by declining operating profitability and sharply increased interest expenses. This combination led to a worsening interest coverage ratio, signaling a reduced buffer to cover interest demands. The slight improvement in 2024 EBIT and interest coverage is positive but does not fully offset prior declines. Careful attention to managing debt levels and improving operating income may be warranted to restore financial stability in terms of interest obligations.

The financial data reveals notable trends in earnings, fixed charges, and coverage ratios over the five-year period ending in 2024.

Earnings before fixed charges and tax

There is an initial upward trend in earnings from 8,004 million USD in 2020 to a peak of 9,627 million USD in 2021. However, this is followed by a decline to 8,740 million USD in 2022 and a further decrease to 7,969 million USD in 2023. The earnings modestly recover to 8,738 million USD in 2024 but do not return to the peak levels observed in 2021.

Fixed charges

Fixed charges show a steady rise over the entire period. Starting at 777 million USD in 2020, they experience a slight increase to 790 million USD in 2021 and then escalate more sharply to 1,077 million USD in 2022. This upward trajectory continues with a significant jump to 1,730 million USD in 2023, followed by a marginal rise to 1,743 million USD in 2024.

Fixed charge coverage ratio

This ratio, which measures the company's ability to cover fixed charges with earnings before fixed charges and tax, shows a declining trend. It peaks at 12.19 in 2021, indicating strong coverage relative to fixed charges. Subsequently, the ratio drops considerably to 8.12 in 2022 and declines further to 4.61 in 2023. A slight improvement to 5.01 is observed in 2024, but the ratio remains substantially lower than the early period levels.

In summary, earnings before fixed charges and tax exhibit volatility, peaking in 2021 and falling in subsequent years with a slight recovery in 2024. Fixed charges consistently increase, placing greater pressure on the company's earnings. This dynamic is reflected in the fixed charge coverage ratio, which deteriorates markedly over the period, indicating reduced ability to comfortably meet fixed obligations despite some improvement in the final year reported.