Bed Bath & Beyond Inc. (NASDAQ:BBBY)

The analysis of the quarterly financial ratios reveals several significant trends in the company's capital structure and financial health over the observed periods.

Debt to Equity

The debt to equity ratio was relatively stable and low, fluctuating slightly around 0.55 to 0.6 through early 2019, indicating moderate leverage. Beginning mid-2019, a clear upward trend is noticeable, rising from about 0.72 to a peak of 6.77 by mid-2022, which suggests a substantial increase in reliance on debt financing compared to equity.

Debt to Equity (Including Operating Lease Liability)

This variant follows a similar pattern to the plain debt to equity ratio but at higher levels, emphasizing the impact of including lease liabilities. The ratio steadily increased from approximately 0.59 initially to an extreme 17.42 by mid-2022, indicating that operating lease obligations considerably augmented the company's leverage exposure in recent years.

Debt to Capital

Debt to capital remained fairly stable near 0.35 during the early periods but began a gradual increase around 2019, ultimately reaching 1.5 by August 2022. This rise signals a growing proportion of debt within the total capital framework, which could impact financial flexibility.

Debt to Capital (Including Operating Lease Liability)

When including operating lease liabilities, this ratio followed a similar increasing trend but started from around 0.37 and increased steadily to 1.2 by the latest data point, reinforcing the understanding that lease commitments significantly contribute to the company's overall debt structure.

Debt to Assets

Debt to assets ratio remained relatively low and stable between 0.19 and 0.23 for most of the timeline but showed a gradual increase from 0.23 in early 2022 to 0.37 by mid-2022, showing a modest uptick in debt relative to total assets.

Debt to Assets (Including Operating Lease Liability)

This metric evidenced a more marked increase from approximately 0.23 early on to 0.76 in mid-2022, highlighting again that operating leases constitute a significant part of the company's obligations, moderately increasing asset leverage.

Financial Leverage

Financial leverage was mostly stable through 2016 to early 2019, oscillating near 2.5 to 2.6, before rising sharply to over 29 by mid-2022. This pronounced rise suggests a dramatic increase in the use of debt relative to equity, which may raise concerns regarding solvency risk and the ability to cover financial commitments without equity dilution.

Interest Coverage

The interest coverage ratio shows a severe decline over the observed periods. Though data starts only from early 2017, initial values were in a healthy range (above 10), indicating comfortable ability to cover interest expenses. However, from late 2018 onward, the ratio deteriorated steadily, turning negative repeatedly from late 2018 through 2022. Such negative and declining interest coverage implies the company struggled to generate sufficient earnings before interest and taxes to meet its interest obligations, signifying increased financial distress.

In summary, the financial ratios indicate an increasing reliance on debt financing, both in traditional terms and when accounting for operating lease liabilities. The sharp rise in leverage ratios and the worsening interest coverage ratio suggest deteriorating financial stability and an elevated risk profile in recent years. Management might need to address these leverage issues to mitigate associated risks and improve financial resilience.

The analysis of the financial data reveals notable trends in the company’s debt, shareholders' equity, and debt to equity ratio over the reported periods.

Total Debt

The total debt remained relatively stable from May 2016 through February 2020, fluctuating marginally around 1,491,000 to 1,488,000 thousand US dollars. However, starting in May 2020, there is an evident fluctuation with peaks and troughs, including a significant reduction in August 2020 followed by a rise in May 2022 and August 2022 reaching levels of approximately 1,379,870 and 1,729,964 thousand US dollars respectively. This indicates some variability in the company’s borrowing or debt repayment activities during the later periods.

Shareholders’ Equity (Deficit)

The shareholders’ equity showed a general increasing trend from May 2016, starting at approximately 2,529,087 thousand US dollars and reaching a peak near 2,903,275 thousand US dollars in December 2018. Following this peak, there was a sharp decline in equity starting in March 2019, trending downward through to August 2022 where equity became negative, reaching a deficit of approximately -577,654 thousand US dollars. This transition from positive equity to a substantial deficit indicates challenges in maintaining net asset value over the later periods.

Debt to Equity Ratio

The debt to equity ratio began at a conservative level of 0.59 in May 2016 and decreased gradually to a low of approximately 0.51 by December 2018, reflecting strong equity relative to debt. From March 2019 onwards, a rising trend in this ratio occurred, reaching 0.84 by February 2020, followed by volatility with sharp increases, notably hitting 2.13 by February 2022 and an extremely high ratio of 6.77 afterward. These values suggest increasing financial leverage and risk, likely due to declining equity combined with varying debt levels.

In summary, the data indicates a period of stable leverage and strong equity until late 2018, after which the company experienced deteriorating equity and heightened leverage, culminating in a negative equity position and substantially increased debt to equity ratios by mid-2022. This shift points to potentially increased financial stress and risk exposure over the recent periods.

The financial data reveals distinct trends in the company’s debt levels, shareholders’ equity, and debt-to-equity ratio over the analyzed periods.

Total Debt (Including Operating Lease Liability)

The total debt remained relatively stable around 1.49 billion US dollars from May 2016 through March 2019. Beginning in June 2019, there is a notable surge in debt to over 3.6 billion US dollars, with values fluctuating between approximately 3.1 billion and 4.1 billion through mid-2020. From August 2020 onwards, the debt level shows a generally declining trend, reducing to about 3.5 billion by August 2022.

Shareholders’ Equity (Deficit)

Shareholders’ equity gradually increased from approximately 2.5 billion US dollars in May 2016 to a peak of around 2.9 billion by late 2018. Starting March 2019, equity sharply declined to just over 2 billion and continued to decrease throughout the subsequent periods. The decline accelerated such that by mid-2022 the company shifted into a negative equity position, with values falling below zero to nearly -0.6 billion US dollars. This indicates a deterioration in net asset value over time.

Debt to Equity Ratio (Including Operating Lease Liability)

The ratio initially improved, decreasing from 0.59 in May 2016 to a low of approximately 0.51 by late 2018, implying a healthier balance between debt and equity. However, significant shifts occur starting March 2019, where the ratio rises sharply above 1.7, indicating increased leverage. The upward trend continues dramatically, reaching values as high as 17.42 by mid-2022. This steep increase corresponds with the decline in equity and increase in debt, signaling heightened financial risk and potential solvency concerns.

In summary, the analysis illustrates a stable debt position initially coupled with growing equity and low leverage. Subsequently, the company experienced a significant increase in debt and a sharp deterioration of shareholders’ equity, culminating in negative equity and dramatically higher debt-to-equity ratios. These patterns suggest increasing financial stress and weakened capital structure in the most recent periods.

Total Debt

The total debt remained relatively stable from May 2016 through February 2020, hovering just above 1.49 billion US dollars. A notable increase occurred in May 2020, when total debt rose sharply to approximately 1.72 billion US dollars. Subsequently, significant fluctuations were observed with a steep decline by August 2020 to about 1.19 billion, followed by a period of minor variations. From May 2022, debt again increased substantially, reaching roughly 1.73 billion US dollars by the end of the observed period.

Total Capital

Total capital exhibited a general declining trend over the analyzed timeframe. Initially, between May 2016 and March 2019, total capital fluctuated around 4 billion US dollars, peaking near 4.39 billion. Starting from mid-2019, a consistent decrease was evident, dropping steadily to about 1.15 billion US dollars by August 2022. This persistent decline in total capital indicates a reduction in the overall financing base of the company during this period.

Debt to Capital Ratio

The debt to capital ratio demonstrated relative stability around 0.34 to 0.37 from May 2016 to December 2018. However, beginning in early 2019, this ratio began increasing, reflecting a rising proportion of debt in the capital structure. Particularly after February 2020, the ratio surged markedly, surpassing 1.0 by May 2022 and reaching 1.5 by August 2022. This increase indicates that debt levels exceeded total capital, suggesting a highly leveraged position towards the end of the period.

Overall Analysis

The data illustrates a period of financial stability from 2016 to early 2019, followed by a gradual deterioration in the capital structure characterized by decreasing total capital and increasing reliance on debt. The sharp rise in total debt in 2020, coinciding with the increasing debt to capital ratio, suggests potential financial stress or strategic leveraging possibly influenced by external factors. The sustained decline in total capital combined with elevated debt levels towards 2022 raises concerns about the company's solvency and financial flexibility during this timeframe.

The analysis of the financial data over the observed periods reveals several key trends related to debt, capital, and leverage ratios.

Total Debt (including operating lease liability)

The total debt was relatively stable from May 2016 through March 2019, fluctuating mildly around 1.49 billion US dollars. A significant increase occurred starting in June 2019, with debt rising sharply from approximately 1.49 billion to over 4 billion by May 2020. After peaking, debt levels showed a general decline with some fluctuations but remained elevated compared to pre-2019 figures, ending at approximately 3.53 billion US dollars in August 2022.

Total Capital (including operating lease liability)

Total capital followed a somewhat similar pattern. It increased gradually between May 2016 and March 2019, moving from around 4.02 billion to roughly 4.4 billion US dollars. A sharp increase occurred in June 2019, with capital jumping to about 5.7 billion and maintaining relatively high values through early 2020. However, after this peak, a downward trend emerged, with capital declining steadily to approximately 2.95 billion US dollars by August 2022.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio demonstrates a marked change in the company’s financial leverage position. From May 2016 to March 2019, this ratio was relatively stable, ranging between 0.34 and 0.37, indicating moderate leverage. Starting in June 2019, the ratio increased dramatically, surpassing 0.60 and reaching above 1.0 by August 2022. This rise implies that debt grew faster than total capital, resulting in a leverage level where debt exceeds capital by the most recent periods observed.

Overall, the data reflect a pronounced shift in the company's capital structure beginning mid-2019, characterized by increased borrowing and a significant rise in financial leverage. The sustained elevated debt levels combined with declining total capital post-peak raise considerations regarding the company's risk exposure and financial stability. The debt to capital ratio exceeding 1.0 by the latest period distinctly indicates that debt outweighs capital, a factor that typically necessitates close monitoring.

The financial data reveals several important trends regarding the company's debt and asset structure over the analyzed period.

Total Debt

The total debt level remained relatively stable from May 2016 through February 2020, fluctuating only marginally around approximately 1,490,000 to 1,488,000 thousand US dollars. However, a significant increase in total debt is observed starting May 2020, reaching a peak of approximately 1,724,916 thousand US dollars by August 2022. Notably, a sharp drop occurs in August 2020, bringing debt down to about 1,190,168 thousand US dollars, before gradually increasing again toward the end of the timeframe.

Total Assets

Total assets exhibit higher volatility throughout the period. Initially, assets increased from about 6,578,977 thousand US dollars in May 2016 to a peak near 8,018,988 thousand US dollars in November 2019. Starting from early 2020, however, a marked decline is evident, with assets shrinking steadily to 4,666,639 thousand US dollars by August 2022 — a reduction exceeding 40% from the peak. This decline parallels periods of increased total debt described earlier.

Debt to Assets Ratio

The debt to assets ratio remains mostly stable and moderate in the earlier periods, oscillating between 0.19 and 0.23 up to early 2020. Post-February 2020, the ratio increases notably, climbing from around 0.19 up to 0.37 by August 2022. This rising ratio is indicative of increasing financial leverage, driven by both rising debt levels and shrinking asset base. The most pronounced increase occurs in the later periods, signaling a material shift in the company's capital structure, likely reflecting heightened reliance on debt financing relative to asset value.

Overall, the data reflects a company experiencing relatively stable leverage and asset growth up to late 2019, followed by substantial asset contraction and increased debt reliance starting in early 2020. The recent trend suggests elevated financial risk due to the growing debt burden combined with declining asset values.

The analysis of the quarterly financial data reveals notable trends in the company's leverage and asset base over the period under review.

Total debt (including operating lease liability)

The total debt was relatively stable, slightly increasing from approximately 1.49 billion USD in mid-2016 to just over 1.49 billion USD by early 2019. Subsequently, there was a sharp increase to around 3.68 billion USD in mid-2019, which remained elevated with some fluctuations. The debt level peaked near 4.06 billion USD in mid-2020 but then generally declined towards 3.53 billion USD by late 2022. This pattern suggests a significant debt acquisition phase beginning in 2019 followed by partial deleveraging or debt restructuring.

Total assets

Total assets showed moderate fluctuations through the initial period, ranging from about 6.58 billion USD to 7.54 billion USD between 2016 and early 2019. Post early 2019, assets peaked at nearly 8.02 billion USD but then exhibited a marked downward trend, declining to approximately 4.67 billion USD by late 2022. This steady reduction in asset base over recent periods indicates either asset disposals, devaluations, or other forms of downsizing.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio initially hovered between 0.20 and 0.23 up to early 2019, reflecting a moderate leverage position. From mid-2019 onwards, this ratio rose sharply, nearly doubling to 0.46 and continuing to increase, reaching 0.76 by late 2022. This escalation indicates a substantially higher leverage level, driven by increasing debt and shrinking asset values. Such a trend often signals heightened financial risk and potential pressures on solvency.

Overall, the data depicts a significant shift in the financial structure starting in mid-2019, characterized by a rapid increase in liabilities and a simultaneous contraction of assets. The resulting elevated leverage ratio suggests increased financial risks, which may warrant further investigation into the underlying operational or strategic factors driving these changes.

The analysis of the quarterly financial data reveals several notable trends and developments over the examined periods.

Total Assets

Total assets exhibited fluctuations throughout the periods, initially increasing from approximately 6.58 billion to about 7.99 billion between May 2016 and June 2019. Following this peak, a downward trend is observed, with total assets declining steadily to approximately 4.67 billion by August 2022. This indicates a contraction in asset base over the more recent periods.

Shareholders’ Equity (Deficit)

Shareholders’ equity remained positive and relatively stable in the early periods, ranging around 2.5 to 2.9 billion up until late 2018. However, starting in early 2019, equity showed a marked and continuous decline, turning significantly negative by mid-2022, with a deficit reaching approximately -577 million. This change suggests increasing accumulated losses or impairments impacting the equity position.

Financial Leverage Ratio

The financial leverage ratio maintained a moderate level around 2.4 to 2.8 in the initial periods. Starting late 2018, the ratio escalated sharply, increasing from approximately 3.87 at March 2019 to an exceptionally high level of 29.46 by May 2022. The increase in financial leverage implies a growing reliance on debt financing relative to equity, exacerbated by the declining shareholders’ equity base.

Overall, the data indicates that while the company experienced growth in total assets and maintained stable equity initially, significant financial stress emerged from 2019 onwards. This is characterized by diminishing equity, increased financial leverage, and an eventual decline in total assets, which may reflect operational challenges, debt accumulation, or other adverse financial events during the latter periods.

The earnings before interest and tax (EBIT) display significant volatility over the reported periods. Initially, EBIT maintains a positive trend with values peaking at 429,928 thousand US$ in the quarter ending February 25, 2017. Following this peak, there is a marked decline, with EBIT turning negative starting from the quarter ending March 2, 2019. This negative trend deepens substantially in the subsequent periods, reaching a low of -460,929 thousand US$ in the quarter ending August 29, 2020. A temporary recovery is observed in November 28, 2020, with a positive EBIT of 347,581 thousand US$, but this is short-lived, and EBIT again falls into negative territory in the following quarters, remaining deeply negative through the last reported period.

Interest expense, net, remains relatively stable throughout the periods, fluctuating within a narrow range between approximately 13,621 thousand US$ and 23,691 thousand US$. There is no evident upward or downward trend in interest expenses, indicating consistent borrowing costs or financial expenses during the periods under review.

The interest coverage ratio exhibits a decline consistent with the patterns observed in EBIT. Early periods show a healthy coverage ratio, reaching as high as 16.32, reflecting strong operational earnings relative to interest expenses. However, starting from the quarter ending June 1, 2019, the ratio turns negative and continues to worsen, indicating an inability to cover interest expenses with operating earnings. The lowest interest coverage ratio occurs at -14.12, evidencing severe operational challenges impacting the company's ability to service debt. A brief improvement to a positive ratio of 1.7 in May 29, 2021 does not reflect a sustained recovery, as the ratio turns negative again subsequently.

Overall, the financial data suggest significant operational difficulties beginning in early 2019, with EBIT shifting into persistent losses and interest coverage deteriorating sharply. The stable interest expenses highlight that increased financial costs did not primarily drive these negative outcomes. Instead, the declining earnings point to operational or market challenges affecting profitability. The brief positive rebound in late 2020 is insufficient to offset the broader negative trend observed across the analyzed quarters.

EBIT Trend

Positive with a peak in early 2017, followed by a steep decline to negative values from early 2019, with intermittent recovery attempts.

Interest Expense

Relatively stable over time, showing no significant upward or downward trend.

Interest Coverage Ratio

Strong in initial periods, turning negative from mid-2019 onwards, indicating operational earnings insufficient to cover interest expenses.

Overall Financial Health

Indicates increasing operational challenges and loss-making periods starting in 2019, despite stable financial expenses, leading to compromised ability to service debt obligations.