Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Income Statement
- Statement of Comprehensive Income
- Cash Flow Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
- Aggregate Accruals
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Solvency Ratios (Summary)
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of the financial leverage and debt-related ratios over the five-year period reveals notable fluctuations and trends impacting the company’s capital structure and solvency.
- Debt to Equity Ratios
- The debt to equity ratio declined from 2.46 in 2020 to 1.77 in 2021, indicating a reduction in reliance on debt relative to equity. However, it sharply increased to 4.51 in 2022, suggesting a significant increase in debt or reduction in equity. The trend including operating lease liabilities mirrors this pattern, increasing even more steeply to 4.75 in 2022. Data for 2023 and 2024 are missing for these ratios.
- Debt to Capital Ratios
- Both debt to capital ratios, with and without operating lease liabilities, show an initial decrease from 0.71 (2020) to around 0.64–0.65 (2021), followed by a notable increase to 0.82–0.83 (2022). The ratios further increase steadily through 2023 and 2024, reaching 1.24–1.3 in 2024. This upward trend indicates growing leverage and a rising proportion of debt in the company’s capital structure during the last three years.
- Debt to Assets Ratios
- Debt to assets ratios including operating lease liabilities dropped from 0.57 in 2020 to 0.48 in 2021, then gradually increased thereafter, reaching approximately 0.62 in both 2023 and 2024. This suggests a moderate increase in debt relative to total assets over the recent two years, after an initial improvement.
- Financial Leverage
- The financial leverage ratio fell from 4.47 in 2020 to 3.83 in 2021, indicating a temporary reduction in the use of debt financing. However, the ratio substantially surged to 9.12 in 2022, underscoring a marked rise in leverage that aligns with the increased debt ratios previously noted.
- Interest and Fixed Charge Coverage Ratios
- Interest coverage experienced a strong improvement from 2.59 in 2020 to 5.39 in 2021, further rising dramatically to 11.03 in 2022. This indicates a greater capacity to meet interest obligations despite increasing debt levels. However, it then declined moderately in 2023 and 2024 to 7.11 and 6.63 respectively, suggesting some easing in coverage though it remains significantly better than in early years. Fixed charge coverage followed a similar trajectory with increases to 8.12 in 2022, followed by a slight decrease to just under 6 in the last two years.
Overall, the data depict a period of reduced leverage and improved coverage ratios from 2020 to 2021, followed by a significant increase in leverage from 2022 onward. Despite this rising debt, the company has maintained relatively strong interest and fixed charge coverage ratios, though these metrics slightly tapered in the most recent periods. The escalation in debt relative to equity, capital, and assets indicates a more aggressive financing strategy or increased borrowing, which warrants ongoing monitoring given the implications for financial risk and solvency.
Debt Ratios
Coverage Ratios
Debt to Equity
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current finance lease liabilities | ||||||
Short-term debt | ||||||
Non-current finance lease liabilities | ||||||
Long-term debt | ||||||
Total debt | ||||||
Stockholders’ equity (deficit) | ||||||
Solvency Ratio | ||||||
Debt to equity1 | ||||||
Benchmarks | ||||||
Debt to Equity, Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Debt to Equity, Sector | ||||||
Consumer Services | ||||||
Debt to Equity, Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity (deficit)
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several significant trends over the five-year period ending December 31, 2024. The total debt of the company has demonstrated a consistent upward trajectory. Beginning at $12,014 million in 2020, it decreased slightly to $10,936 million in 2021 but then increased steadily each year to reach $16,631 million by the end of 2024. This represents a substantial increase in leverage, especially evident after 2021.
Stockholders' equity shows a declining trend, becoming negative from 2023 onwards. Initially, equity was positive and growing, starting at $4,893 million in 2020 and increasing to $6,178 million by 2021. However, it sharply declined to $2,782 million in 2022 and turned negative at -$2,744 million in 2023, further deteriorating to -$4,020 million in 2024. This negative equity indicates potential financial distress or significant accumulated losses during the later years.
The debt to equity ratio, available for the first three periods only, exhibits volatility and an overall increase. It decreased from 2.46 in 2020 to 1.77 in 2021, suggesting a relatively lower debt burden compared to equity at that point. However, by 2022, the ratio surged dramatically to 4.51, reflecting the sharp decline in equity and increase in debt. The absence of data for 2023 and 2024 aligns with the negative equity figures, as the ratio becomes undefined or less meaningful when equity is negative.
- Total debt
- Shows a general increasing trend, rising from $12 billion in 2020 to over $16.6 billion in 2024, indicating growing reliance on debt financing.
- Stockholders’ equity
- Initially positive and growing until 2021, followed by a steep decline resulting in negative equity in 2023 and 2024, signaling potential financial challenges.
- Debt to equity ratio
- Declined initially but then rose sharply by 2022 due to equity reduction and debt increase, with missing values for 2023 and 2024 likely because of negative equity.
Overall, the data suggests rising financial leverage combined with deteriorating equity position, warranting close attention to the company’s solvency and risk profile going forward.
Debt to Equity (including Operating Lease Liability)
Booking Holdings Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current finance lease liabilities | ||||||
Short-term debt | ||||||
Non-current finance lease liabilities | ||||||
Long-term debt | ||||||
Total debt | ||||||
Current operating lease liabilities (classified in Accrued expenses and other current liabilities) | ||||||
Non-current operating lease liabilities | ||||||
Total debt (including operating lease liability) | ||||||
Stockholders’ equity (deficit) | ||||||
Solvency Ratio | ||||||
Debt to equity (including operating lease liability)1 | ||||||
Benchmarks | ||||||
Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Debt to Equity (including Operating Lease Liability), Sector | ||||||
Consumer Services | ||||||
Debt to Equity (including Operating Lease Liability), Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity (deficit)
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant trends in the company's capital structure over the five-year period from 2020 to 2024. Total debt, including operating lease liability, exhibits a generally upward trajectory, rising from $12,539 million in 2020 to $17,236 million in 2024. This increase represents a substantial growth in leverage, with a particularly marked rise between 2022 and 2024.
Conversely, stockholders’ equity shows a contrasting and concerning pattern. Initially, equity increased from $4,893 million in 2020 to $6,178 million in 2021, suggesting a strengthening of the company's net asset position during that period. However, from 2022 onwards, equity declined sharply, turning negative at ($2,744) million in 2023 and further decreasing to ($4,020) million in 2024. This shift to negative equity indicates accumulated losses or significant write-downs, adversely impacting the company’s net worth.
The available debt to equity ratio data illustrates these changes in relative terms. The ratio fell from 2.56 in 2020 to 1.85 in 2021, reflecting lower leverage relative to equity during that year. Nevertheless, the ratio then increased dramatically to 4.75 in 2022, aligning with the observed decline in equity and rise in total debt. The absence of ratio data for 2023 and 2024 is likely due to the negative equity figures, which make ratio calculation non-meaningful or impractical.
Overall, the trends indicate escalating financial leverage combined with a deteriorating equity position. The growing debt burden alongside negative shareholders’ equity suggests increased financial risk and potential solvency concerns if the patterns persist. This situation warrants close monitoring and potential strategic actions to stabilize the capital structure and improve equity levels.
Debt to Capital
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current finance lease liabilities | ||||||
Short-term debt | ||||||
Non-current finance lease liabilities | ||||||
Long-term debt | ||||||
Total debt | ||||||
Stockholders’ equity (deficit) | ||||||
Total capital | ||||||
Solvency Ratio | ||||||
Debt to capital1 | ||||||
Benchmarks | ||||||
Debt to Capital, Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Debt to Capital, Sector | ||||||
Consumer Services | ||||||
Debt to Capital, Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total debt
- The total debt has demonstrated an overall upward trend from 2020 to 2024. Starting at $12,014 million in 2020, it decreased slightly in 2021 to $10,936 million, but then increased consistently in subsequent years, reaching $16,631 million in 2024. This represents a significant increase of approximately 38.5% from the initial value in 2020.
- Total capital
- Total capital fluctuated over the analyzed period, peaking at $17,114 million in 2021 before experiencing a decline in 2022 to $15,320 million. Subsequently, it fell more sharply in 2023 to $11,508 million, with a slight recovery in 2024 to $12,611 million. Despite this partial recovery, the total capital in 2024 remains notably lower than the values observed at the beginning of the period.
- Debt to capital ratio
- The debt to capital ratio conveys an increasing reliance on debt financing relative to total capital between 2020 and 2024. Initially, the ratio stood at 0.71 in 2020, indicating that debt composed 71% of total capital. It declined to 0.64 in 2021, signaling reduced leverage, but then increased sharply in 2022 to 0.82. The trend intensified in 2023 and 2024, reaching 1.24 and 1.32 respectively, which implies that debt exceeded the total capital, raising potential concerns about financial risk and leverage management.
Debt to Capital (including Operating Lease Liability)
Booking Holdings Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current finance lease liabilities | ||||||
Short-term debt | ||||||
Non-current finance lease liabilities | ||||||
Long-term debt | ||||||
Total debt | ||||||
Current operating lease liabilities (classified in Accrued expenses and other current liabilities) | ||||||
Non-current operating lease liabilities | ||||||
Total debt (including operating lease liability) | ||||||
Stockholders’ equity (deficit) | ||||||
Total capital (including operating lease liability) | ||||||
Solvency Ratio | ||||||
Debt to capital (including operating lease liability)1 | ||||||
Benchmarks | ||||||
Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Debt to Capital (including Operating Lease Liability), Sector | ||||||
Consumer Services | ||||||
Debt to Capital (including Operating Lease Liability), Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= ÷ =
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt has exhibited an upward trend over the analyzed period. Beginning at 12,539 million USD in 2020, the debt decreased to 11,430 million USD in 2021. Subsequently, it increased consistently, reaching 13,215 million USD in 2022, 15,003 million USD in 2023, and further to 17,236 million USD in 2024. This indicates a general increase in debt levels after a temporary decline in 2021.
- Total Capital (including operating lease liability)
- Total capital showed a fluctuating pattern. It started at 17,432 million USD in 2020, marginally increased to 17,608 million USD in 2021, and then decreased significantly to 15,997 million USD in 2022. Capital declined sharply thereafter, falling to 12,259 million USD in 2023, with a slight recovery to 13,216 million USD in 2024. Overall, the capital base declined over the period, particularly from 2021 onwards.
- Debt to Capital Ratio (including operating lease liability)
- The debt to capital ratio reveals a notable increase over the time frame. Starting at 0.72 in 2020, it decreased to 0.65 in 2021, reflecting a lower leverage position at that point. However, from 2022 onward, the ratio rose significantly: to 0.83 in 2022, then sharply to 1.22 in 2023, and slightly further to 1.30 in 2024. A ratio exceeding 1 indicates that total debt now exceeds total capital, pointing to increased financial leverage and potentially higher financial risk.
- Overall Analysis
- The data demonstrates a clear shift towards higher leverage in the later years, primarily driven by rising debt levels and a declining capital base. The initial reduction in debt and stable capital in 2021 improves the leverage position temporarily. However, the persistent increase in debt coupled with falling capital in subsequent years leads to a significant increase in leverage as reflected in the debt to capital ratio surpassing 1. This suggests the company has been increasingly relying on debt financing, which could imply elevated financial risk depending on its ability to service the debt. The slight rebound in capital in 2024 partially offsets this risk but does not reverse the overall trend.
Debt to Assets
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current finance lease liabilities | ||||||
Short-term debt | ||||||
Non-current finance lease liabilities | ||||||
Long-term debt | ||||||
Total debt | ||||||
Total assets | ||||||
Solvency Ratio | ||||||
Debt to assets1 | ||||||
Benchmarks | ||||||
Debt to Assets, Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Debt to Assets, Sector | ||||||
Consumer Services | ||||||
Debt to Assets, Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt increased from $12,014 million at the end of 2020 to $16,631 million by the end of 2024, showing a consistent upward trend. There was a slight decrease from 2020 to 2021, followed by a steady rise through 2022, 2023, and 2024. The increase from 2023 to 2024 is notably significant, indicating an acceleration in debt accumulation during the most recent period.
- Total Assets
- Total assets also exhibited growth over the five-year span, rising from $21,874 million in 2020 to $27,708 million in 2024. The increase was somewhat steady until 2022, after which there was a slight decline in 2023 before assets reached their highest value in 2024. This fluctuation in 2023 suggests a temporary contraction or asset revaluation before the recovery in 2024.
- Debt to Assets Ratio
- The debt to assets ratio decreased from 0.55 in 2020 to 0.46 in 2021, reflecting an improvement in the company’s leverage position relative to assets. However, this ratio then increased to 0.49 in 2022 and further rose to 0.59 in 2023, reaching 0.60 in 2024. This upward movement in the ratio signals a growing reliance on debt financing as a proportion of assets, which may indicate increased financial risk.
- Overall Analysis
- The data reveals an overall increase in both total debt and total assets over the observed period, with assets growing at a slower pace relative to debt in the later years. The declining debt to assets ratio in 2021 suggests a period of improved financial leverage; however, from 2022 onwards, the increasing ratio highlights a trend towards higher leverage and potentially elevated financial risk. The slight asset value dip in 2023 coupled with the marked increase in debt emphasizes a need for attention to the company’s balance sheet structure and capital management strategies going forward.
Debt to Assets (including Operating Lease Liability)
Booking Holdings Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current finance lease liabilities | ||||||
Short-term debt | ||||||
Non-current finance lease liabilities | ||||||
Long-term debt | ||||||
Total debt | ||||||
Current operating lease liabilities (classified in Accrued expenses and other current liabilities) | ||||||
Non-current operating lease liabilities | ||||||
Total debt (including operating lease liability) | ||||||
Total assets | ||||||
Solvency Ratio | ||||||
Debt to assets (including operating lease liability)1 | ||||||
Benchmarks | ||||||
Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Debt to Assets (including Operating Lease Liability), Sector | ||||||
Consumer Services | ||||||
Debt to Assets (including Operating Lease Liability), Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt (Including Operating Lease Liability)
- The total debt displayed an initial decrease from US$12.539 billion in 2020 to US$11.430 billion in 2021. However, this value subsequently increased over the following years, reaching US$13.215 billion in 2022, US$15.003 billion in 2023, and further to US$17.236 billion in 2024. This upward trend in debt from 2021 onwards suggests enhanced leverage or additional borrowing during that period.
- Total Assets
- Total assets increased steadily from US$21.874 billion in 2020 to a peak of US$25.361 billion in 2022. A slight decline to US$24.342 billion was observed in 2023, followed by a significant rise to US$27.708 billion in 2024. Overall, the asset base demonstrated a positive growth trajectory with a minor dip in 2023.
- Debt to Assets Ratio (Including Operating Lease Liability)
- The debt to assets ratio began at 0.57 in 2020, decreased to 0.48 in 2021, indicating a reduction in leverage relative to assets during that year. Subsequently, the ratio increased to 0.52 in 2022 and further to 0.62 in both 2023 and 2024. The increasing ratio in the latter years reflects a growing reliance on debt financing compared to asset size, signaling a potential shift toward higher financial risk or a strategic decision to leverage assets more aggressively.
Financial Leverage
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Total assets | ||||||
Stockholders’ equity (deficit) | ||||||
Solvency Ratio | ||||||
Financial leverage1 | ||||||
Benchmarks | ||||||
Financial Leverage, Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Financial Leverage, Sector | ||||||
Consumer Services | ||||||
Financial Leverage, Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity (deficit)
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the observed periods. Total assets exhibit a generally increasing trend, rising from 21,874 million US dollars at the end of 2020 to 27,708 million US dollars by the end of 2024. This suggests an expansion in the company's asset base over the five-year timeframe, despite a slight decrease observed at the end of 2023.
Stockholders’ equity presents a contrasting pattern. Initially, equity increased from 4,893 million US dollars in 2020 to 6,178 million US dollars in 2021, indicating an improvement in net asset value. However, a significant decline follows, with equity dropping sharply to 2,782 million US dollars in 2022, turning negative at -2,744 million US dollars in 2023, and further deteriorating to -4,020 million US dollars in 2024. The transition from positive to negative equity suggests increasing liabilities or losses that exceed assets, signaling potential financial distress or aggressive leverage.
Financial leverage, expressed as a ratio, was 4.47 at the end of 2020 and decreased to 3.83 in 2021, indicating a reduction in the ratio of total assets to equity. However, in 2022, the financial leverage ratio surged dramatically to 9.12, more than double the previous value, reflecting an intensified use of debt financing relative to equity. Data for 2023 and 2024 are missing, limiting further trend analysis in this metric.
Overall, despite growth in total assets, the company exhibits increasing financial risk, evidenced by the sharply declining equity and significantly elevated financial leverage ratio in 2022. Negative equity in the last two years of the observed period is a critical point, suggesting the company's liabilities substantially outweigh its assets. These developments may warrant a closer examination of the underlying causes, such as operational losses, debt accumulation, or other financial obligations impacting equity.
Interest Coverage
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net income | ||||||
Add: Income tax expense | ||||||
Add: Interest expense | ||||||
Earnings before interest and tax (EBIT) | ||||||
Solvency Ratio | ||||||
Interest coverage1 | ||||||
Benchmarks | ||||||
Interest Coverage, Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Interest Coverage, Sector | ||||||
Consumer Services | ||||||
Interest Coverage, Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends over the five-year period ending December 31, 2024. The earnings before interest and tax (EBIT) demonstrate a consistent and significant upward trajectory, increasing from US$923 million in 2020 to US$8,587 million in 2024. This growth indicates enhanced operational profitability and suggests successful business expansion or improved efficiency over time.
Interest expense shows some variability, starting at US$356 million in 2020, slightly decreasing to US$334 million in 2021, then rising steadily to US$1,295 million by 2024. The increase in interest expense, particularly from 2022 onwards, could be attributed to increased borrowings or changes in debt structure. This trend requires monitoring as it impacts net profitability and financial leverage.
The interest coverage ratio, which measures the company's ability to meet interest obligations from EBIT, exhibits improvement from 2.59 times in 2020 to a peak of 11.03 times in 2022. However, it declines to 7.11 times in 2023 and further to 6.63 times in 2024. Despite the decline, the ratio remains above 6, indicating a comfortable margin of earnings relative to interest expense. The decrease after 2022 may relate to the rise in interest expense outpacing the growth rate of EBIT during those years.
- Summary of Key Points:
- - EBIT has grown substantially, reflecting robust operating performance.
- - Interest expense has increased significantly since 2022, suggesting higher debt costs or increased borrowing.
- - Interest coverage ratio improved markedly through 2022 but declined thereafter, remaining at a solid level nonetheless.
- - The interplay between increasing EBIT and rising interest expense has shaped the interest coverage trends, highlighting the importance of managing debt effectively.
Fixed Charge Coverage
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net income | ||||||
Add: Income tax expense | ||||||
Add: Interest expense | ||||||
Earnings before interest and tax (EBIT) | ||||||
Add: Operating lease cost | ||||||
Earnings before fixed charges and tax | ||||||
Interest expense | ||||||
Operating lease cost | ||||||
Fixed charges | ||||||
Solvency Ratio | ||||||
Fixed charge coverage1 | ||||||
Benchmarks | ||||||
Fixed Charge Coverage, Competitors2 | ||||||
Airbnb Inc. | ||||||
Chipotle Mexican Grill Inc. | ||||||
McDonald’s Corp. | ||||||
Starbucks Corp. | ||||||
Fixed Charge Coverage, Sector | ||||||
Consumer Services | ||||||
Fixed Charge Coverage, Industry | ||||||
Consumer Discretionary |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant developments in earnings before fixed charges and tax, fixed charges, and fixed charge coverage over a five-year period ending in 2024.
- Earnings Before Fixed Charges and Tax
- The earnings before fixed charges and tax have demonstrated a robust upward trajectory from 1117 million US$ in 2020 to 8761 million US$ in 2024. This constitutes an almost eightfold increase across the period, indicating strong operational growth and improved profitability before accounting for fixed financial obligations.
- Fixed Charges
- Fixed charges exhibited a relatively stable trend between 2020 and 2022, fluctuating slightly from 550 million US$ to 551 million US$. However, a marked increase is observed in subsequent years, rising to 1077 million US$ in 2023 and further to 1469 million US$ in 2024. This indicates a growing fixed financial burden, potentially due to higher interest expenses, lease obligations, or other fixed financial commitments.
- Fixed Charge Coverage
- The fixed charge coverage ratio shows improvement from 2.03 in 2020 to a peak of 8.12 in 2022, reflecting a significant increase in the ability to cover fixed charges from earnings before fixed charges and tax. However, this ratio declines in 2023 and 2024 to 6.09 and 5.96 respectively, which, while still strong, indicates a reduced margin of safety as fixed charges increase at a faster pace relative to earnings.
In summary, the company has experienced substantial growth in earnings before fixed charges and tax, which enhances its capacity to meet fixed financial obligations. Nevertheless, the rising fixed charges and the consequent reduction in fixed charge coverage ratio in the later years suggest a need to monitor financial commitments closely to maintain healthy coverage levels.