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)
Trane Technologies plc, solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 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).
The financial leverage ratio exhibits a gradual increase over the analyzed periods, rising from 2.55 in 2018 to 2.97 in 2022. This indicates a steady growth in the company's use of debt relative to equity to finance its assets.
Debt-related ratios generally show an upward trend from 2018 through 2020, followed by some stabilization thereafter. Specifically, the debt to equity ratio increased from 0.58 in 2018 to 0.82 in 2020, then slightly decreased and stabilized around 0.77 to 0.79 by 2022. When including operating lease liabilities, this ratio was marginally higher, indicating that lease obligations contribute to the overall leverage but followed a similar pattern.
Similarly, the debt to capital ratio rose from 0.37 in 2018 to 0.45 in 2020, remaining relatively flat around 0.44 to 0.47 through 2022. Including operating lease liabilities slightly increased these figures but did not affect the overall trend. The debt to assets ratio followed a comparable pattern, climbing from 0.23 in 2018 to 0.29 in 2020 and then holding stable at around 0.27 to 0.29 subsequently, both including and excluding lease liabilities.
Interest coverage ratio shows some variability but reflects an overall improvement between 2020 and 2022. Initially, it declined from 8.52 in 2018 to 6.18 in 2020, suggesting reduced ability to cover interest expenses with earnings during that period. However, it rebounded to 8.66 in 2021 and further improved to 10.72 in 2022, indicating enhanced financial health and increased earnings in relation to interest obligations.
Fixed charge coverage ratio demonstrates a similar pattern, decreasing from 4.44 in 2018 to 4.05 in 2020, then increasing to 5.45 in 2021 and further to 6.39 in 2022. This suggests improved capacity to cover fixed financial charges such as interest and lease payments over the later years.
Overall, the company’s leverage ratios increased moderately until 2020 and then stabilized, while coverage ratios experienced a dip through 2020 but exhibited strong recovery and improvement thereafter. The data implies prudent management of debt levels combined with improving earnings to service debt obligations in the most recent periods.
- Leverage Ratios
- Gradual increase in financial leverage and debt to equity ratios until 2020, then stabilization through 2022.
- Inclusion of operating lease liabilities raises leverage ratios marginally but with consistent trends.
- Debt to capital and debt to assets ratios follow similar patterns of increase and subsequent stabilization.
- Coverage Ratios
- Interest coverage declined until 2020, indicating tightened earnings relative to interest, before strengthening notably by 2022.
- Fixed charge coverage mirrored this trend, reflecting improved capacity to meet fixed financial commitments post-2020.
Debt Ratios
Coverage Ratios
Debt to Equity
Trane Technologies plc, debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings and current maturities of long-term debt | 1,048,000) | 350,400) | 775,600) | 650,500) | 350,600) | |
| Long-term debt,excluding current maturities | 3,788,300) | 4,491,700) | 4,496,500) | 4,922,900) | 3,740,700) | |
| Total debt | 4,836,300) | 4,842,100) | 5,272,100) | 5,573,400) | 4,091,300) | |
| Total Trane Technologies plc shareholders’ equity | 6,088,600) | 6,255,900) | 6,407,700) | 7,267,600) | 7,022,700) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.79 | 0.77 | 0.82 | 0.77 | 0.58 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.33 | 2.29 | 2.42 | — | — | |
| Eaton Corp. plc | 0.51 | 0.52 | 0.54 | — | — | |
| GE Aerospace | 0.89 | 0.87 | 2.11 | — | — | |
| Honeywell International Inc. | 1.17 | 1.06 | 1.28 | — | — | |
| Lockheed Martin Corp. | 1.68 | 1.07 | 2.02 | — | — | |
| RTX Corp. | 0.44 | 0.43 | 0.44 | — | — | |
| Debt to Equity, Sector | ||||||
| Capital Goods | 1.33 | 1.26 | 1.75 | — | — | |
| Debt to Equity, Industry | ||||||
| Industrials | 1.42 | 1.37 | 1.82 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Trane Technologies plc shareholders’ equity
= 4,836,300 ÷ 6,088,600 = 0.79
2 Click competitor name to see calculations.
- Total Debt
-
The total debt increased significantly from 4,091,300 thousand US dollars in 2018 to a peak of 5,573,400 thousand US dollars in 2019. After 2019, the total debt exhibited a decreasing trend, falling to 5,272,100 thousand in 2020 and further declining to approximately 4,842,100 thousand and 4,836,300 thousand US dollars in 2021 and 2022, respectively.
- Total Shareholders’ Equity
-
The shareholders' equity followed a generally declining pattern over the period. Starting at 7,022,700 thousand US dollars in 2018, it increased slightly to 7,267,600 thousand in 2019 but subsequently decreased each year to 6,407,700 in 2020, 6,255,900 in 2021, and further to 6,088,600 thousand US dollars in 2022.
- Debt to Equity Ratio
-
The debt to equity ratio rose from 0.58 in 2018 to its highest point at 0.82 in 2020, indicating an increased reliance on debt financing relative to equity during this period. Afterwards, the ratio showed a slight decline to 0.77 in 2021 but increased marginally again to 0.79 in 2022.
- Overall Analysis
-
Overall, the data suggests that the company initially increased its debt substantially between 2018 and 2019, while the equity remained relatively stable. From 2020 onwards, the company made efforts to reduce its total debt, although the shareholders' equity continued to decline steadily year over year after 2019. The debt to equity ratio's peak in 2020 reflects a period of heightened financial leverage, followed by a slight improvement but still indicating a higher debt reliance relative to the start of the period.
These patterns may signal strategic borrowing initially to finance operations or investments, followed by a partial deleveraging phase. However, the continuous drop in equity warrants attention, as it may affect the company's financial stability and capital structure in the longer term.
Debt to Equity (including Operating Lease Liability)
Trane Technologies plc, debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings and current maturities of long-term debt | 1,048,000) | 350,400) | 775,600) | 650,500) | 350,600) | |
| Long-term debt,excluding current maturities | 3,788,300) | 4,491,700) | 4,496,500) | 4,922,900) | 3,740,700) | |
| Total debt | 4,836,300) | 4,842,100) | 5,272,100) | 5,573,400) | 4,091,300) | |
| Operating lease current (classified in Other current liabilities) | 155,800) | 147,300) | 138,800) | 172,000) | —) | |
| Operating lease noncurrent (classified in Other noncurrent liabilities) | 313,500) | 296,000) | 276,500) | 394,400) | —) | |
| Total debt (including operating lease liability) | 5,305,600) | 5,285,400) | 5,687,400) | 6,139,800) | 4,091,300) | |
| Total Trane Technologies plc shareholders’ equity | 6,088,600) | 6,255,900) | 6,407,700) | 7,267,600) | 7,022,700) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.87 | 0.84 | 0.89 | 0.84 | 0.58 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.37 | 2.33 | 2.46 | — | — | |
| Eaton Corp. plc | 0.54 | 0.55 | 0.57 | — | — | |
| GE Aerospace | 0.96 | 0.94 | 2.20 | — | — | |
| Honeywell International Inc. | 1.23 | 1.11 | 1.32 | — | — | |
| Lockheed Martin Corp. | 1.81 | 1.19 | 2.21 | — | — | |
| RTX Corp. | 0.47 | 0.46 | 0.47 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 1.39 | 1.32 | 1.81 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Industrials | 1.59 | 1.54 | 2.00 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Trane Technologies plc shareholders’ equity
= 5,305,600 ÷ 6,088,600 = 0.87
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt increased significantly from US$ 4,091,300 thousand in 2018 to US$ 6,139,800 thousand in 2019, indicating a considerable rise in leverage. Subsequently, total debt decreased gradually over the next two years, falling to US$ 5,285,400 thousand in 2021. In 2022, the debt level remained relatively stable with a slight increase to US$ 5,305,600 thousand.
- Total Shareholders' Equity
- Shareholders' equity demonstrated a fluctuating downward trend. Starting at US$ 7,022,700 thousand in 2018, it rose marginally to US$ 7,267,600 thousand in 2019, but then declined steadily over the subsequent years to US$ 6,087,000 thousand by the end of 2022. This decline suggests a reduction in net assets attributable to shareholders.
- Debt to Equity Ratio (including operating lease liability)
- The debt to equity ratio increased from 0.58 in 2018 to a peak of 0.89 in 2020, reflecting an increasing reliance on debt financing relative to equity during this period. Following 2020, the ratio decreased slightly to 0.84 in 2021, but then increased marginally again to 0.87 in 2022. Overall, the ratio indicates a heightened leverage position compared to 2018, with some stabilization observed after 2020.
Debt to Capital
Trane Technologies plc, debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings and current maturities of long-term debt | 1,048,000) | 350,400) | 775,600) | 650,500) | 350,600) | |
| Long-term debt,excluding current maturities | 3,788,300) | 4,491,700) | 4,496,500) | 4,922,900) | 3,740,700) | |
| Total debt | 4,836,300) | 4,842,100) | 5,272,100) | 5,573,400) | 4,091,300) | |
| Total Trane Technologies plc shareholders’ equity | 6,088,600) | 6,255,900) | 6,407,700) | 7,267,600) | 7,022,700) | |
| Total capital | 10,924,900) | 11,098,000) | 11,679,800) | 12,841,000) | 11,114,000) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.44 | 0.44 | 0.45 | 0.43 | 0.37 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Boeing Co. | 1.39 | 1.35 | 1.40 | — | — | |
| Caterpillar Inc. | 0.70 | 0.70 | 0.71 | — | — | |
| Eaton Corp. plc | 0.34 | 0.34 | 0.35 | — | — | |
| GE Aerospace | 0.47 | 0.47 | 0.68 | — | — | |
| Honeywell International Inc. | 0.54 | 0.51 | 0.56 | — | — | |
| Lockheed Martin Corp. | 0.63 | 0.52 | 0.67 | — | — | |
| RTX Corp. | 0.31 | 0.30 | 0.31 | — | — | |
| Debt to Capital, Sector | ||||||
| Capital Goods | 0.57 | 0.56 | 0.64 | — | — | |
| Debt to Capital, Industry | ||||||
| Industrials | 0.59 | 0.58 | 0.65 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 4,836,300 ÷ 10,924,900 = 0.44
2 Click competitor name to see calculations.
- Total Debt
- The total debt showed an increasing trend from 2018, starting at 4,091,300 thousand US dollars and rising to a peak of 5,573,400 thousand US dollars in 2019. Subsequently, it decreased steadily over the following years, reaching 4,836,300 thousand US dollars by the end of 2022. This indicates a reduction in leverage after 2019.
- Total Capital
- Total capital increased from 11,114,000 thousand US dollars in 2018 to 12,841,000 thousand US dollars in 2019, representing a significant rise. However, following this peak, total capital declined each year, reaching 10,924,900 thousand US dollars by 2022. The peak in 2019 was followed by a gradual erosion of capital over the subsequent three years.
- Debt to Capital Ratio
- The debt to capital ratio increased from 0.37 in 2018 to 0.43 in 2019 and further to 0.45 in 2020, indicating a rising proportion of debt relative to capital during this period. After 2020, the ratio slightly decreased and stabilized around 0.44 in 2021 and 2022. This suggests that although the company initially leveraged more debt relative to its capital, it managed to partially reverse this trend and maintain a relatively stable debt-to-capital structure in the recent years.
Debt to Capital (including Operating Lease Liability)
Trane Technologies plc, debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings and current maturities of long-term debt | 1,048,000) | 350,400) | 775,600) | 650,500) | 350,600) | |
| Long-term debt,excluding current maturities | 3,788,300) | 4,491,700) | 4,496,500) | 4,922,900) | 3,740,700) | |
| Total debt | 4,836,300) | 4,842,100) | 5,272,100) | 5,573,400) | 4,091,300) | |
| Operating lease current (classified in Other current liabilities) | 155,800) | 147,300) | 138,800) | 172,000) | —) | |
| Operating lease noncurrent (classified in Other noncurrent liabilities) | 313,500) | 296,000) | 276,500) | 394,400) | —) | |
| Total debt (including operating lease liability) | 5,305,600) | 5,285,400) | 5,687,400) | 6,139,800) | 4,091,300) | |
| Total Trane Technologies plc shareholders’ equity | 6,088,600) | 6,255,900) | 6,407,700) | 7,267,600) | 7,022,700) | |
| Total capital (including operating lease liability) | 11,394,200) | 11,541,300) | 12,095,100) | 13,407,400) | 11,114,000) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.47 | 0.46 | 0.47 | 0.46 | 0.37 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 1.37 | 1.34 | 1.39 | — | — | |
| Caterpillar Inc. | 0.70 | 0.70 | 0.71 | — | — | |
| Eaton Corp. plc | 0.35 | 0.36 | 0.36 | — | — | |
| GE Aerospace | 0.49 | 0.49 | 0.69 | — | — | |
| Honeywell International Inc. | 0.55 | 0.53 | 0.57 | — | — | |
| Lockheed Martin Corp. | 0.64 | 0.54 | 0.69 | — | — | |
| RTX Corp. | 0.32 | 0.31 | 0.32 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.58 | 0.57 | 0.64 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.61 | 0.61 | 0.67 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 5,305,600 ÷ 11,394,200 = 0.47
2 Click competitor name to see calculations.
- Total debt (including operating lease liability)
-
The total debt exhibited a notable increase from 4,091,300 thousand US dollars at the end of 2018 to 6,139,800 thousand US dollars by the end of 2019. Following this peak, the debt level decreased steadily to 5,685,400 thousand US dollars in 2020 and further to 5,285,400 thousand US dollars in 2021. By the end of 2022, the total debt slightly increased again to 5,305,600 thousand US dollars.
- Total capital (including operating lease liability)
-
Total capital rose from 11,114,000 thousand US dollars at the end of 2018 to 13,407,400 thousand US dollars at the close of 2019. This was followed by a decline to 12,095,100 thousand US dollars in 2020 and continued decreases through 2021 and 2022, reaching 11,541,300 and 11,394,200 thousand US dollars, respectively. This trend indicates a peak in capital in 2019 followed by a gradual reduction over the subsequent three years.
- Debt to capital (including operating lease liability)
-
The debt to capital ratio increased from 0.37 in 2018 to 0.46 in 2019, suggesting a higher reliance on debt financing relative to total capital during that period. The ratio then showed slight increases to 0.47 in 2020, followed by a minor dip to 0.46 in 2021. By 2022, the ratio reverted to 0.47. Overall, the ratio remained relatively stable around the mid-40% range after 2019, indicating consistent leverage levels in this timeframe.
Debt to Assets
Trane Technologies plc, debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings and current maturities of long-term debt | 1,048,000) | 350,400) | 775,600) | 650,500) | 350,600) | |
| Long-term debt,excluding current maturities | 3,788,300) | 4,491,700) | 4,496,500) | 4,922,900) | 3,740,700) | |
| Total debt | 4,836,300) | 4,842,100) | 5,272,100) | 5,573,400) | 4,091,300) | |
| Total assets | 18,081,600) | 18,059,800) | 18,156,700) | 20,492,300) | 17,914,900) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.27 | 0.27 | 0.29 | 0.27 | 0.23 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Boeing Co. | 0.42 | 0.42 | 0.42 | — | — | |
| Caterpillar Inc. | 0.45 | 0.46 | 0.47 | — | — | |
| Eaton Corp. plc | 0.25 | 0.25 | 0.25 | — | — | |
| GE Aerospace | 0.17 | 0.18 | 0.30 | — | — | |
| Honeywell International Inc. | 0.31 | 0.30 | 0.35 | — | — | |
| Lockheed Martin Corp. | 0.29 | 0.23 | 0.24 | — | — | |
| RTX Corp. | 0.20 | 0.20 | 0.20 | — | — | |
| Debt to Assets, Sector | ||||||
| Capital Goods | 0.28 | 0.28 | 0.32 | — | — | |
| Debt to Assets, Industry | ||||||
| Industrials | 0.31 | 0.30 | 0.33 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 4,836,300 ÷ 18,081,600 = 0.27
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a clear upward trend from 2018 to 2019, increasing markedly from approximately 4.09 billion US dollars to about 5.57 billion. This was followed by a decline in the subsequent years, with debt levels decreasing to approximately 5.27 billion in 2020, 4.84 billion in 2021, and stabilizing at 4.84 billion in 2022. The overall pattern indicates a peak in debt in 2019, with a gradual reduction thereafter.
- Total Assets
- Total assets showed an increase from 2018 to 2019, rising from roughly 17.91 billion US dollars to about 20.49 billion. However, this was followed by a decline in 2020 to around 18.16 billion. From 2020 onwards, total assets remained relatively stable, with a slight decrease to approximately 18.06 billion in 2021 and a marginal increase to about 18.08 billion in 2022. This suggests a peak in asset accumulation in 2019 with subsequent stabilization.
- Debt to Assets Ratio
- The debt to assets ratio increased from 0.23 in 2018 to 0.27 in 2019 and further to 0.29 in 2020, indicating a growing proportion of debt relative to assets over this period. Following this peak in 2020, the ratio decreased to 0.27 in 2021 and remained steady at 0.27 in 2022. This pattern reflects an initial trend toward higher leverage, followed by a normalization and stabilization of leverage levels.
Debt to Assets (including Operating Lease Liability)
Trane Technologies plc, debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings and current maturities of long-term debt | 1,048,000) | 350,400) | 775,600) | 650,500) | 350,600) | |
| Long-term debt,excluding current maturities | 3,788,300) | 4,491,700) | 4,496,500) | 4,922,900) | 3,740,700) | |
| Total debt | 4,836,300) | 4,842,100) | 5,272,100) | 5,573,400) | 4,091,300) | |
| Operating lease current (classified in Other current liabilities) | 155,800) | 147,300) | 138,800) | 172,000) | —) | |
| Operating lease noncurrent (classified in Other noncurrent liabilities) | 313,500) | 296,000) | 276,500) | 394,400) | —) | |
| Total debt (including operating lease liability) | 5,305,600) | 5,285,400) | 5,687,400) | 6,139,800) | 4,091,300) | |
| Total assets | 18,081,600) | 18,059,800) | 18,156,700) | 20,492,300) | 17,914,900) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.29 | 0.29 | 0.31 | 0.30 | 0.23 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 0.43 | 0.43 | 0.43 | — | — | |
| Caterpillar Inc. | 0.46 | 0.46 | 0.48 | — | — | |
| Eaton Corp. plc | 0.26 | 0.27 | 0.27 | — | — | |
| GE Aerospace | 0.19 | 0.19 | 0.31 | — | — | |
| Honeywell International Inc. | 0.33 | 0.32 | 0.36 | — | — | |
| Lockheed Martin Corp. | 0.32 | 0.26 | 0.26 | — | — | |
| RTX Corp. | 0.21 | 0.21 | 0.21 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.30 | 0.29 | 0.33 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.34 | 0.34 | 0.36 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 5,305,600 ÷ 18,081,600 = 0.29
2 Click competitor name to see calculations.
The financial data analysis reveals notable trends in the company's debt and asset management over the reviewed period from the end of 2018 through the end of 2022.
- Total Debt (including operating lease liability)
- The total debt exhibited a significant increase from approximately 4.09 billion US dollars at the end of 2018 to around 6.14 billion US dollars by the end of 2019, marking a substantial rise. Following this peak, total debt decreased steadily over the next two years, reaching about 5.29 billion US dollars by the end of 2021. In 2022, the debt level stabilized, showing a marginal increase to approximately 5.31 billion US dollars.
- Total Assets
- Total assets grew from about 17.91 billion US dollars at the end of 2018 to a high of approximately 20.49 billion US dollars at the close of 2019. However, a decline followed in 2020, with total assets dropping to roughly 18.16 billion US dollars. Assets then remained relatively stable during 2021 and 2022, closing at around 18.06 billion US dollars and 18.08 billion US dollars, respectively.
- Debt to Assets Ratio (including operating lease liability)
- The debt to assets ratio increased from 0.23 at the end of 2018 to 0.30 in 2019, indicating a higher proportion of debt relative to assets during that year. This ratio peaked slightly higher at 0.31 in 2020, reflecting sustained leverage despite the reduction in total debt, likely influenced by the diminished asset base. Subsequently, the ratio improved marginally to 0.29 in 2021 and remained steady at 0.29 in 2022, suggesting a modest improvement in leverage and a more balanced capital structure in the later years.
Overall, the company experienced a phase of increased leverage and asset growth through 2019, followed by a contraction in asset size and a reduction in debt levels, leading to a more stable and slightly improved debt to assets ratio in the last two years analyzed.
Financial Leverage
Trane Technologies plc, financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 18,081,600) | 18,059,800) | 18,156,700) | 20,492,300) | 17,914,900) | |
| Total Trane Technologies plc shareholders’ equity | 6,088,600) | 6,255,900) | 6,407,700) | 7,267,600) | 7,022,700) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.97 | 2.89 | 2.83 | 2.82 | 2.55 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 5.16 | 5.02 | 5.11 | — | — | |
| Eaton Corp. plc | 2.06 | 2.07 | 2.13 | — | — | |
| GE Aerospace | 5.16 | 4.93 | 7.13 | — | — | |
| Honeywell International Inc. | 3.73 | 3.47 | 3.68 | — | — | |
| Lockheed Martin Corp. | 5.71 | 4.64 | 8.43 | — | — | |
| RTX Corp. | 2.19 | 2.21 | 2.25 | — | — | |
| Financial Leverage, Sector | ||||||
| Capital Goods | 4.71 | 4.55 | 5.54 | — | — | |
| Financial Leverage, Industry | ||||||
| Industrials | 4.65 | 4.52 | 5.49 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Trane Technologies plc shareholders’ equity
= 18,081,600 ÷ 6,088,600 = 2.97
2 Click competitor name to see calculations.
- Total Assets
- The total assets of the company exhibited fluctuations over the observed periods. From December 31, 2018, to December 31, 2019, there was a notable increase from approximately 17.9 billion to 20.5 billion US dollars, indicating asset growth during that period. However, this growth was not sustained, as assets declined in the following years to approximately 18.2 billion in 2020, remaining relatively stable around 18.1 billion by the end of 2021 and 2022.
- Total Shareholders' Equity
- Shareholders' equity showed a declining trend throughout the period. Beginning at about 7.0 billion US dollars in 2018, it slightly increased to approximately 7.3 billion in 2019 but then consistently decreased each year to reach roughly 6.1 billion by the end of 2022. This decrease in equity suggests a potential reduction in retained earnings or other equity components over time.
- Financial Leverage
- The financial leverage ratio increased steadily from 2.55 in 2018 to 2.97 in 2022. This upward trend indicates a growing proportion of debt relative to equity, reflecting higher financial risk. The increase in leverage coincides with the declining shareholders' equity and relatively stable total assets in recent years, implying a shift in the company’s capital structure toward greater indebtedness.
- Overall Insights
- The data reveals a period of asset growth peaking in 2019, followed by stabilization at a lower level. Meanwhile, equity decreased progressively, contributing to an increasing financial leverage ratio. The rising leverage may signify elevated financial risk, highlighting the importance of monitoring debt levels and their impact on the company’s financial stability.
Interest Coverage
Trane Technologies plc, interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Trane Technologies plc | 1,756,500) | 1,423,400) | 854,900) | 1,410,900) | 1,337,600) | |
| Add: Net income attributable to noncontrolling interest | 18,200) | 13,200) | 15,100) | 17,600) | 19,900) | |
| Less: Discontinued operations, net of tax | (21,500) | (20,600) | (121,400) | 40,600) | (21,500) | |
| Add: Income tax expense | 375,900) | 333,500) | 296,800) | 353,700) | 281,300) | |
| Add: Interest expense | 223,500) | 233,700) | 248,700) | 243,000) | 220,700) | |
| Earnings before interest and tax (EBIT) | 2,395,600) | 2,024,400) | 1,536,900) | 1,984,600) | 1,881,000) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 10.72 | 8.66 | 6.18 | 8.17 | 8.52 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Boeing Co. | -0.98 | -0.88 | -5.71 | — | — | |
| Caterpillar Inc. | 20.80 | 17.88 | 8.80 | — | — | |
| Eaton Corp. plc | 21.22 | 21.11 | 12.72 | — | — | |
| GE Aerospace | 1.88 | -0.96 | 2.59 | — | — | |
| Honeywell International Inc. | 16.41 | 22.09 | 17.75 | — | — | |
| Lockheed Martin Corp. | 11.72 | 14.27 | 14.93 | — | — | |
| RTX Corp. | 5.64 | 4.71 | -0.65 | — | — | |
| Interest Coverage, Sector | ||||||
| Capital Goods | 4.84 | 3.98 | 1.99 | — | — | |
| Interest Coverage, Industry | ||||||
| Industrials | 4.98 | 5.14 | 1.25 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,395,600 ÷ 223,500 = 10.72
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT figures exhibit fluctuation over the examined period. From 2018 to 2019, there was a moderate increase from 1,881,000 to 1,984,600 thousand US dollars, indicating growth in operating profitability. However, in 2020, EBIT declined significantly to 1,536,900 thousand US dollars, reflecting potential operational challenges or external factors impacting earnings. The subsequent years show a recovery and upward trend: 2,024,400 thousand in 2021 followed by a further increase to 2,395,600 thousand US dollars in 2022, surpassing previous peaks and suggesting improved operational performance and profitability.
- Interest Expense
- The interest expense remained relatively stable throughout the period, with minor variations. It increased slightly from 220,700 thousand in 2018 to a peak of 248,700 thousand US dollars in 2020, then decreased gradually over the next two years, reaching 223,500 thousand US dollars in 2022. The stability and recent decline in interest expenses may reflect steady debt levels or improved debt management strategies.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the ability to service interest expenses from EBIT, demonstrates a correspondence to EBIT fluctuations. In 2018 and 2019, the ratio was robust at 8.52 and 8.17 respectively, indicating strong coverage. The decline to 6.18 in 2020 coincides with the drop in EBIT, representing weaker coverage but still above moderate risk levels. Recovery in 2021 to 8.66 and further increase to 10.72 in 2022 highlights enhanced capacity to meet interest obligations, consistent with the rising EBIT and stable interest expenses.
Fixed Charge Coverage
Trane Technologies plc, fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Trane Technologies plc | 1,756,500) | 1,423,400) | 854,900) | 1,410,900) | 1,337,600) | |
| Add: Net income attributable to noncontrolling interest | 18,200) | 13,200) | 15,100) | 17,600) | 19,900) | |
| Less: Discontinued operations, net of tax | (21,500) | (20,600) | (121,400) | 40,600) | (21,500) | |
| Add: Income tax expense | 375,900) | 333,500) | 296,800) | 353,700) | 281,300) | |
| Add: Interest expense | 223,500) | 233,700) | 248,700) | 243,000) | 220,700) | |
| Earnings before interest and tax (EBIT) | 2,395,600) | 2,024,400) | 1,536,900) | 1,984,600) | 1,881,000) | |
| Add: Operating lease expense | 179,400) | 168,300) | 173,000) | 206,100) | 261,300) | |
| Earnings before fixed charges and tax | 2,575,000) | 2,192,700) | 1,709,900) | 2,190,700) | 2,142,300) | |
| Interest expense | 223,500) | 233,700) | 248,700) | 243,000) | 220,700) | |
| Operating lease expense | 179,400) | 168,300) | 173,000) | 206,100) | 261,300) | |
| Fixed charges | 402,900) | 402,000) | 421,700) | 449,100) | 482,000) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 6.39 | 5.45 | 4.05 | 4.88 | 4.44 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Boeing Co. | -0.70 | -0.64 | -4.75 | — | — | |
| Caterpillar Inc. | 14.92 | 12.73 | 6.58 | — | — | |
| Eaton Corp. plc | 10.01 | 10.40 | 6.24 | — | — | |
| GE Aerospace | 1.35 | -0.22 | 1.93 | — | — | |
| Honeywell International Inc. | 11.00 | 13.67 | 11.49 | — | — | |
| Lockheed Martin Corp. | 8.44 | 9.95 | 11.12 | — | — | |
| RTX Corp. | 4.40 | 3.66 | -0.22 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Capital Goods | 3.61 | 3.06 | 1.66 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Industrials | 3.30 | 3.44 | 1.12 | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,575,000 ÷ 402,900 = 6.39
2 Click competitor name to see calculations.
The financial data indicates variability in both earnings before fixed charges and tax as well as fixed charges over the analyzed period. The earnings before fixed charges and tax fluctuated, showing a decrease in 2020 relative to 2019, followed by a recovery and growth through 2021 and 2022. Fixed charges demonstrated a consistent downward trend from 2018 to 2021, stabilizing slightly in 2022.
- Earnings before fixed charges and tax
- Initially rose from 2,142,300 thousand US dollars in 2018 to 2,190,700 thousand in 2019, then declined notably to 1,709,900 thousand in 2020. Subsequently, earnings increased significantly to 2,192,700 thousand in 2021 and further to 2,575,000 thousand in 2022, indicating recovery and growth in operational profitability before fixed charges and tax.
- Fixed charges
- Displayed a declining trend from 482,000 thousand US dollars in 2018 down to 402,000 thousand in 2021, with minimal change to 402,900 thousand in 2022. This pattern suggests improved efficiency or cost management regarding fixed financial obligations over the time frame.
- Fixed charge coverage ratio
- The coverage ratio increased overall from 4.44 in 2018 to 6.39 in 2022, despite a dip in 2020 to 4.05. The ratio rose in 2019 to 4.88 and peaked significantly in 2021 at 5.45 before the final increase in 2022. This upward trend reflects a strengthening ability to cover fixed charges with earnings, pointing to improved financial robustness and lower risk related to fixed financial commitments.