Charter Communications Inc. (NASDAQ:CHTR)

The analysis of the financial ratios over the given periods reveals notable trends in the leverage and creditworthiness metrics.

Debt to Equity

This ratio exhibits a consistent upward trend from March 31, 2019, starting at 2.07 and rising steadily to a peak of 10.92 by September 30, 2022. After this peak, a gradual decline occurs, leading to a level of 8.82 by December 31, 2023. This indicates an overall increase in debt relative to equity over the period, with a slight reduction in the most recent quarters.

Debt to Capital

The debt to capital ratio also shows a rising trend, increasing from 0.67 at the beginning to a peak near 0.92 in late 2022. Following this peak, the ratio remains relatively stable around 0.90 through the end of 2023. This suggests that debt has become a larger component of the company's capital structure over time but stabilized recently.

Debt to Assets

There is a gradual increase in debt to assets from 0.50 in March 2019 to about 0.68 by late 2022 and early 2023, followed by a slight decrease to 0.66 in the final quarter. This reflects a similar trend to other leverage ratios, indicating increased debt usage in asset financing, with a hint of stabilization or slight deleveraging towards the end of the period.

Financial Leverage

Financial leverage follows a marked upward trajectory, moving from 4.12 in early 2019 to a high of 16.16 in September 2022, before decreasing somewhat to around 13.28 by December 2023. This substantial increase indicates that the company has been relying more heavily on debt financing relative to equity, though there is evidence of moderate deleveraging in the latest quarters.

Interest Coverage

The interest coverage ratio data commences from December 31, 2019, showing improvement over time from 1.64 to a peak of 2.84 by September 30, 2022. Subsequently, it declines gradually to 2.32 by the end of 2023. Although the ratio indicates the company’s ability to meet interest obligations strengthened through 2022, the recent downward trend may suggest some pressure on earnings relative to interest expenses.

In summary, the company has significantly increased its leverage across multiple dimensions over the analyzed period, reaching peak levels in 2022. The modest partial reversal or stabilization seen during 2023 may indicate efforts to manage or reduce risk associated with high indebtedness. The improvement in interest coverage until late 2022 suggests enhanced capacity to service debt, though the slight decline in 2023 may warrant monitoring for future financial health implications.

Total Debt

The total debt exhibits a gradual upward trend from March 31, 2019 to December 31, 2023. Starting at approximately $74.1 billion, debt levels remain relatively steady through 2019 and 2020, fluctuating slightly between $73.3 billion and $82.8 billion. From 2021 onwards, the debt increases more consistently, reaching nearly $97.8 billion by the end of 2023. This indicates a continuing reliance on debt financing over the observed period with moderate growth in absolute debt levels.

Total Charter Shareholders’ Equity

Shareholders’ equity shows a clear declining trend over the period, decreasing from approximately $35.7 billion at the end of Q1 2019 to about $11.1 billion by Q4 2023. The decline is steady with notable acceleration between 2021 and 2022, where equity drops from around $20.9 billion to under $9 billion. A slight stabilization or minor recovery is observed in 2023, where equity marginally increases from roughly $9.4 billion to $11.1 billion. Overall, the data suggests that equity has been eroding significantly over time, reflecting either losses, shareholder payouts, or other equity-reducing events.

Debt to Equity Ratio

The debt to equity ratio shows a pronounced increasing trend throughout the entire period, rising from 2.07 in March 2019 to a peak above 10.9 in September 2022. The ratio climbs steadily, accelerating notably from 2020 onward, reflecting that debt levels have increased disproportionately compared to equity. After peaking in late 2022, the ratio slightly declines to around 8.8 by the end of 2023, indicating a moderate improvement in the company’s capital structure but still pointing to a high leverage position with debt approximately 8 to 9 times equity. This elevated leverage level may suggest greater financial risk or aggressive financing strategies.

Summary of Trends

The data reveals a company that is increasing its total debt moderately while simultaneously experiencing a significant reduction in shareholders’ equity over a five-year span. This combination results in a sharp escalation of financial leverage, as measured by the debt to equity ratio, which more than quadruples during the period analyzed. Despite some mild equity recovery and a slight debt to equity ratio decrease in 2023, the overall capital structure is characterized by high leverage, posing potential concerns regarding financial flexibility and solvency risk. The trends suggest that the company's financial strategy or operational outcomes have led to progressively increased reliance on debt relative to equity financing.

The analysis of the financial data reveals several consistent trends over the examined periods.

Total Debt

The total debt exhibits a gradually increasing trend from March 31, 2019, through December 31, 2023. Initially at approximately 74.1 billion US dollars, the total debt rises with some fluctuations, reaching close to 97.8 billion US dollars by the end of the period. Notably, the increase is steady across consecutive quarters, with some acceleration in growth observable around late 2020 and early 2021. The debt level stabilizes slightly towards the last few quarters, maintaining a plateau around the high 97 billion US dollars mark.

Total Capital

Total capital demonstrates a generally stable to slightly declining pattern throughout the timeframe. Starting near 110 billion US dollars, it experiences minor fluctuations but tends to hover in the range of roughly 105 billion to 109 billion US dollars. The capital shows slight downward pressure notably from 2019 into 2021, followed by a modest recovery and stabilization around 107 billion by the end of 2023. This stability alongside increasing debt suggests a shift in capital structure composition rather than growth in base capital.

Debt to Capital Ratio

The debt to capital ratio increases consistently over the reported periods, moving from 0.67 in the first quarter of 2019 to approximately 0.90 by the last quarter of 2023. This indicates a rising reliance on debt financing relative to total capital over time. The ratio's upward trend is quite marked post-2019, reflecting a gradual but persistent increase in leverage. The pace of increase moderates somewhat in the last year of data but remains at historically high levels compared to earlier periods.

Overall, the data suggests a financial strategy increasingly weighted towards debt, with the company progressively leveraging its capital base. While total capital remains relatively stable, the marked rise in both total debt and the debt to capital ratio highlights a significant shift toward debt financing. This could imply increased risk exposure due to higher leverage, which may warrant careful monitoring depending on the broader financial and market context.

The analysis of the quarterly financial data reveals several notable trends related to the company's debt and asset management over the period from March 2019 through December 2023.

Total Debt

The total debt exhibits an overall upward trajectory across the examined quarters. Beginning at $74,099 million in March 2019, total debt experienced fluctuations but generally increased to a peak near $97,799 million by December 2023. The increments show relatively steady growth with occasional periods of stabilization, especially in the later quarters where the total debt remains close to the $97,000 million mark.

Total Assets

Total assets display a more stable but slightly fluctuating pattern over the same timeframe. Starting at $147,257 million in March 2019, assets declined gradually, reaching a low around $142,495 million in the fourth quarter of 2021. From that point onward, there was a gradual recovery, culminating in an increase to approximately $147,193 million by December 2023. This recovery suggests some asset base strengthening in the most recent periods.

Debt to Assets Ratio

The debt to assets ratio steadily increased through the period, implying a growing reliance on debt relative to total assets. The ratio was 0.50 in March 2019 and rose consistently to reach 0.68 by the end of 2022, indicating that debt levels increased at a faster rate than assets during this interval. However, in 2023, the ratio stabilized and slightly declined, ending at approximately 0.66 in December 2023. This slight decline suggests some moderation in borrowing or a balancing effect with asset growth in the latest quarters.

Overall, the data reflect a company that has incrementally increased its leverage over the five-year period, with total debt rising more prominently than its asset base until recent quarters where asset levels have begun to recover. The stabilization and modest reduction of the debt-to-assets ratio toward the end of the dataset may indicate a strategic effort to manage financial risk or improve capital structure balance. Continuous monitoring of these trends is advisable to assess future financial stability and debt servicing capacity.

Total assets

The total assets have remained relatively stable over the observed period, fluctuating mildly around the range of approximately US$142 billion to US$148 billion. An initial slight decline was noted from March 2019 to September 2020, followed by a generally steady or marginally increasing trend toward the end of 2023, with total assets increasing again to about US$147 billion.

Total Charter shareholders’ equity

The total shareholders’ equity has demonstrated a consistent downward trend throughout the period. Starting near US$35.7 billion in early 2019, the equity continually decreased, reaching a low point near US$8.9 billion by the end of 2022. A moderate recovery is visible in 2023, with equity inching up to around US$11.1 billion by December 2023. The overall pattern indicates significant erosion of equity value over these years, with a slight rebound only occurring quite late in the timeframe.

Financial leverage

Financial leverage has shown a pronounced upward trend across the observed quarters. The ratio increased from approximately 4.1 in early 2019 to a peak exceeding 16 in late 2022. Following this peak, a modest reduction is observable in 2023, bringing the ratio down to roughly 13.3 by the end of 2023. This trend suggests a growing reliance on debt relative to equity, particularly peaking near the end of 2022, although there are signs of slight deleveraging afterward.

Overall insights

The combination of relatively stable asset levels with continuously declining shareholders’ equity and increasing financial leverage reflects an increasing debt burden on the company over the analyzed period. This could imply increased financial risk and potential stress on the equity base. The modest recovery in equity and reduction in leverage in 2023 may indicate early stages of balance sheet stabilization or strategic financial adjustments. However, the overall pattern underscores a period marked by significant capital structure shifts, favoring higher leverage and diminished equity values.

The earnings before interest and tax (EBIT) figures reveal a generally upward trajectory across the observed quarters, with some fluctuations. Starting at 1,361 million USD in March 2019, EBIT increased steadily, peaking at 3,306 million USD in June 2022. This peak was followed by a moderate decline toward the end of the period, with the December 2023 figure recorded at 2,954 million USD. The growth indicates an overall strengthening in operational profitability over the span of the data, despite short-term variability.

Interest expense, net, shows a gradual but consistent rising trend throughout the time frame. Beginning at 925 million USD in March 2019, it consistently increased each quarter, reaching 1,319 million USD by December 2023. This pattern suggests increasing costs related to debt servicing or other financing expenses, which could potentially exert pressure on net income if interest expense growth outpaces EBIT growth.

The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, was not reported for early quarters but shows a rising trend once data appears from December 2019 onward. Starting at 1.64, the ratio increased steadily, peaking at 2.84 in June 2022. Following this peak, the ratio experienced a declining trend, falling to 2.32 by December 2023. Although the ratio remains above 2 throughout this period, indicating the company’s EBIT comfortably covers interest expenses, the decline after mid-2022 suggests a slight reduction in coverage strength, potentially due to the combination of falling EBIT and increasing interest expenses.

EBIT Trends

Overall growth from 1,361 million USD in early 2019 to a peak of 3,306 million USD in mid-2022, followed by a moderate decline by end of 2023.

Interest Expense Trends

Continuous increase each quarter from 925 million USD in early 2019 to 1,319 million USD by the end of 2023, reflecting rising financing costs.

Interest Coverage Ratio Trends

Improvement from December 2019 to mid-2022, reaching a high of 2.84, then a gradual decline to 2.32 by December 2023, indicating maintained, but slightly weakened, ability to cover interest expenses from operating earnings.