Fiserv Inc. (NASDAQ:FISV)

The analysis of the financial leverage and coverage ratios over the five-year period reveals notable trends in the company's capital structure and its ability to cover debt obligations.

Debt to Equity

The debt to equity ratio shows a peak in 2018 at 2.6, indicating higher reliance on debt financing relative to equity during that year. Subsequently, there is a sharp decline to 0.66 in 2019, stabilizing around 0.64 to 0.69 through 2020 and 2021. This suggests a significant deleveraging effort after 2018 or an increase in equity relative to debt.

Debt to Equity (including Operating Lease Liability)

This ratio follows a similar pattern to the standard debt to equity ratio, with a slightly higher value across all years, reflecting the incorporation of operating lease liabilities. The inclusion of these liabilities slightly increases the leverage measure but does not alter the overall trend.

Debt to Capital

The debt to capital ratio peaked in 2018 at 0.72 but dropped significantly in 2019 to 0.40 and remained relatively stable thereafter, at around 0.39 to 0.41. This mirrors the deleveraging trend observed in the debt to equity ratios, indicating a lower proportion of debt in the capital structure post-2018.

Debt to Capital (including Operating Lease Liability)

When including operating lease liabilities, the debt to capital ratio is marginally higher but shows the same decreasing trend from 2018 onward and stabilization in the latter years.

Debt to Assets

This ratio declined from 0.48 in 2017 to 0.28 by 2019 and remained steady at that level through 2021, indicating that the company's total liabilities in relation to its assets have decreased significantly and maintained a consistent lower level since 2019.

Debt to Assets (including Operating Lease Liability)

The inclusion of operating lease liabilities results in a slightly higher ratio, consistent with observations in other debt measures. However, the downward trend followed by stabilization remains the same.

Financial Leverage

Financial leverage shows a high peak in 2018 at 4.91, echoing the heightened debt reliance identified in prior ratios. It then drops sharply to approximately half that level in 2019 (2.35) and remains relatively steady around 2.3 to 2.5 through the last two years, indicating reduced reliance on debt financing and possibly increased equity base.

Interest Coverage

Interest coverage declined significantly from a strong position of 8.9 in 2017 and 9.11 in 2018 down to 3.19 in 2019 and further to 2.64 in 2020, before slightly recovering to 3.54 in 2021. This decline suggests increasing difficulty in covering interest expenses from earnings during this period, although the modest recovery in 2021 may indicate an improvement in earnings or reduction in interest expenses.

Fixed Charge Coverage

Fixed charge coverage exhibits a similar pattern to interest coverage, declining from 5.6 and 6.03 in 2017 and 2018 respectively, down to 2.56 and 2.28 in 2019 and 2020, with a partial rebound to 3.06 in 2021. This trend reflects challenges in covering all fixed financial obligations, which slightly ameliorated by the end of the period.

Overall, the data signifies a period of elevated financial leverage in 2018 followed by a substantial reduction in debt reliance from 2019 onward, accompanied by a decrease and partial recovery in the coverage ratios. The moderation in leverage metrics and the improvements in coverage ratios toward the end of the period could imply strategic efforts to strengthen the balance sheet and improve financial stability.

The financial data provided reveals several significant trends in the company's capital structure over the analyzed periods from 2017 to 2021.

Total debt

The total debt exhibits a sharp increase in 2019, surging from US$5,959 million in 2018 to US$21,899 million. This elevated level of debt is largely sustained through 2020 and 2021, remaining above US$20,000 million, which is a substantial increase compared to the levels recorded in 2017 and 2018.

Total shareholders’ equity

Shareholders’ equity remains relatively stable from 2017 through 2018 but experiences a remarkable increase in 2019, rising from US$2,293 million to US$32,979 million. This heightened level slightly decreases in the subsequent years 2020 and 2021 but remains significantly above the earlier years' values, indicating substantial equity growth.

Debt to equity ratio

The debt to equity ratio shows an inverse trend relative to total debt and equity figures. Initially, the ratio increases from 1.79 in 2017 to 2.6 in 2018, reflecting higher leverage. However, from 2019 onward, the ratio sharply decreases to around 0.66 in 2019 and remains stable near 0.64 to 0.69 in 2020 and 2021. This indicates a marked reduction in leverage, suggesting the company’s equity growth has outpaced the increase in debt, improving the balance between debt and equity financing.

Overall, the data depicts a significant transformation in the company’s financial structure beginning in 2019, characterized by a large escalation in both debt and equity but accompanied by a notably improved debt to equity ratio, reflecting a stronger equity base and more balanced capital structure going forward.

The financial data exhibits notable variations in the company’s debt and equity structure over the five-year period from 2017 to 2021. There is a significant rise in total debt from 2017 to 2019, followed by a slight reduction and stabilization in the years after. Shareholders’ equity displayed a contrasting trend, with a decrease initially, then a sharp increase peaking in 2019, followed by a mild decline through 2021.

Total Debt (including operating lease liability)

The total debt increased from $4,900 million in 2017 to a peak of $22,642 million in 2019. Subsequently, the debt slightly decreased to $21,280 million in 2020 and marginally increased to $21,974 million in 2021. The initial growth, particularly the sharp rise in 2019, suggests significant borrowing or financing activities occurred during this period.

Total Shareholders’ Equity

Equity started at $2,731 million in 2017, declined to $2,293 million in 2018, then surged dramatically to $32,979 million in 2019. After 2019, equity slightly declined to $32,330 million in 2020 and further to $30,952 million in 2021. The sharp increase from 2018 to 2019 indicates a possible infusion of capital, retained earnings accumulation, or revaluation gains during that year, while the mild decrease afterwards may reflect distributions, losses, or other equity changes.

Debt to Equity Ratio (including operating lease liability)

The ratio rose from 1.79 in 2017 to 2.6 in 2018, indicating increased leverage. However, it dropped significantly to 0.69 in 2019 and remained relatively stable at 0.66 and 0.71 in 2020 and 2021 respectively. This decline corresponds with the substantial growth in equity outpacing debt increases in 2019, resulting in a lower leverage position despite high absolute debt levels.

Overall, the company’s financial leverage experienced a marked shift, with a period of elevated leverage up to 2018 transitioning to a substantially stronger equity position and more conservative leverage ratios from 2019 onwards. This suggests strategic financial restructuring or capital market activities that improved the equity base and lowered relative debt levels.

The analysis of the financial data reveals several notable trends related to the company's debt and capital structure over the five-year period ending in 2021.

Total Debt

Total debt experienced a significant increase from 2017 through 2019, rising from $4,900 million to $21,899 million. This sharp increase was followed by a slight decrease in 2020 and a marginal increase again in 2021, reaching $21,237 million. Overall, total debt more than quadrupled between 2017 and 2019 and then stabilized at a high level in the subsequent two years.

Total Capital

Total capital mirrored the debt trend, moving from $7,631 million in 2017 to a peak of $54,878 million in 2019. After this peak, total capital decreased slightly over the next two years, reaching $52,189 million in 2021. Despite the decline post-2019, total capital remained substantially higher than the levels observed in 2017 and 2018.

Debt to Capital Ratio

The debt to capital ratio showed a different pattern compared to absolute debt and capital values. Initially, the ratio increased from 0.64 in 2017 to 0.72 in 2018, indicating a growing reliance on debt as a component of total capital. However, from 2019 onwards, the ratio declined noticeably, dropping to 0.40 and remaining relatively stable near that level through 2021 (0.39 in 2020 and 0.41 in 2021). This indicates that despite the absolute increase in debt, the proportion of debt within the capital structure decreased significantly after 2018 due to a proportionally larger increase in total capital.

In summary, the period showed rapid growth in both total debt and total capital around 2019, with a stabilization phase in the following years. The declining debt to capital ratio from 2019 suggests a strategic shift towards a more balanced or equity-heavy capital structure despite elevated debt levels in absolute terms.

The financial data indicates significant changes in the company's debt and capital structure over the five-year period from 2017 to 2021.

Total Debt (including operating lease liability)

The total debt increased moderately from 4,900 million US dollars in 2017 to 5,959 million in 2018. There was a dramatic increase in debt in 2019, reaching 22,642 million US dollars. Following this peak, the total debt decreased slightly in 2020 to 21,280 million US dollars and then marginally rose again to 21,974 million US dollars in 2021. Overall, the data reveals a substantial elevation in debt levels beginning in 2019, maintaining a relatively high plateau in subsequent years.

Total Capital (including operating lease liability)

Total capital showed a steady growth from 7,631 million US dollars in 2017 to 8,252 million in 2018. Similar to total debt, there is a pronounced surge in 2019 with total capital soaring to 55,621 million US dollars. Thereafter, total capital experienced a slight decline to 53,610 million in 2020, followed by a further modest decrease to 52,926 million US dollars in 2021. This pattern suggests a significant expansion of the company’s capital base starting in 2019, with a stabilization but a downward adjustment in the two following years.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio increased from 0.64 in 2017 to 0.72 in 2018, indicating a higher proportion of debt relative to capital. This ratio then sharply declined to 0.41 in 2019 and slightly decreased further to 0.40 in 2020, before rising marginally to 0.42 in 2021. The marked decrease in the ratio in 2019 and 2020 implies that while the absolute amount of debt increased considerably, total capital grew at a faster pace, thereby reducing the relative leverage. The small uptick in 2021 signals a slight increase in leverage, though at a more moderate level compared to earlier years.

In summary, the firm undertook a large increase in both debt and capital starting in 2019, reflecting either significant acquisitions, investments, or restructuring activities that substantially expanded the balance sheet. Despite the increased debt, the leverage ratio decreased, suggesting that capital expansion outpaced debt growth. In the most recent years, the company maintained high levels of debt and capital with minor fluctuations, indicating a period of stabilization in its financial structure.

The financial data reveals several noteworthy trends over the five-year period ending in 2021. Total debt demonstrates a substantial increase from 2017 to 2019, rising from $4.9 billion to approximately $21.9 billion, which is more than a fourfold increase within two years. After this sharp rise, total debt slightly declines in 2020 to about $20.7 billion and then experiences a modest increase again in 2021, reaching roughly $21.2 billion. This pattern suggests significant borrowing or debt accumulation activity around 2019, followed by some level of stabilization in subsequent years.

In contrast, total assets exhibit a different trajectory. From 2017 through 2018, total assets increased moderately from about $10.3 billion to $11.3 billion. However, in 2019, total assets jump dramatically to approximately $77.5 billion. This elevated level is somewhat sustained in the following years, with a slight decrease to about $74.6 billion in 2020 and a small rebound to $76.2 billion in 2021. The substantial growth in assets coinciding with the rise in debt around 2019 indicates a likely major acquisition or investment activity, reflecting expanded balance sheet scale during this period.

The debt-to-assets ratio offers insight into the relative leverage of the company over time. Initially, this ratio increases from 0.48 in 2017 to 0.53 in 2018, indicating a higher proportion of debt relative to assets. However, with the large increase in assets beginning in 2019, the ratio drops sharply to 0.28 and remains stable at this lower level through 2020 and 2021. This decline suggests a significant improvement in the company’s asset base relative to its liabilities, implying reduced financial risk or improved capital structure despite the high nominal debt.

Overall, the data reflects a period of expansion beginning in 2019 characterized by increased debt and a markedly larger asset base, leading to a more favorable debt-to-assets ratio. This suggests strategic actions, likely acquisitions or capital investments, which leveraged financial resources to generate growth in asset holdings while maintaining a controlled leverage profile.

Total Debt (Including Operating Lease Liability)

The total debt exhibited a significant increase between 2018 and 2019, rising sharply from approximately 5.96 billion US dollars to 22.64 billion US dollars. This elevated debt level remained relatively stable during the subsequent years 2020 and 2021, with values around 21.3 billion and 21.97 billion US dollars, respectively. This indicates a major debt acquisition or restructuring event occurring in 2019, followed by a period of consolidation or minor fluctuations in debt levels.

Total Assets

Total assets followed a similar pattern to the total debt. From 2017 to 2018, there was a moderate increase from around 10.3 billion US dollars to 11.26 billion US dollars. However, between 2018 and 2019, total assets increased dramatically to approximately 77.5 billion US dollars, mirroring the timing of the debt increase. In the subsequent years, 2020 and 2021, total assets slightly decreased to near 74.6 billion US dollars and then modestly increased to 76.2 billion US dollars. This fluctuation suggests a major asset acquisition or revaluation in 2019, followed by stabilization.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt-to-assets ratio decreased notably between 2018 and 2019, dropping from 0.53 to 0.29. This significant reduction, despite the sharp increases in both debt and assets, indicates that the increase in assets proportionally exceeded or balanced the increase in debt. The ratio stabilized at 0.29 through 2020 and 2021, suggesting that the relative leverage of the company remained constant during this period.

Summary

Over the analyzed period, there was an evident transformative event around 2019, characterized by a pronounced rise in both total debt and total assets. Despite the sharp increase in absolute debt levels, the company's leverage, as expressed by the debt-to-assets ratio, improved significantly and then remained stable. This pattern typically reflects a substantial acquisition or investment financed through increased borrowing, accompanied by a proportional growth in asset base, ultimately maintaining a consistent leverage position.

The financial data reveals notable shifts in the company's asset base, equity, and leverage ratios over the five-year period ending in 2021.

Total Assets

The total assets exhibit a significant jump between 2018 and 2019, increasing from approximately $11.3 billion to $77.5 billion. This large increase is followed by moderate declines and slight growth, stabilizing around $74.6 billion in 2020 and $76.2 billion in 2021. This pattern suggests a major acquisition or asset acquisition event took place in 2019, substantially expanding the asset base, which then remained relatively stable in subsequent years.

Total Shareholders’ Equity

Shareholders’ equity decreases slightly from 2017 ($2.7 billion) to 2018 ($2.3 billion), but then surges dramatically in 2019 to approximately $33.0 billion, closely following the trend in total assets. Equity slightly declines in the following years, ending at about $31.0 billion in 2021. The surge corresponds to an infusion of equity value likely related to the increase in total assets, possibly from acquisition-related equity transactions or revaluation effects.

Financial Leverage

Financial leverage, defined as the ratio of total assets to shareholders’ equity, indicates the company’s use of debt relative to equity financing. The ratio increases from 3.77 in 2017 to 4.91 in 2018, implying higher leverage or greater reliance on debt. However, from 2018 to 2019, leverage decreases sharply to around 2.35 and remains relatively stable at low levels through 2020 and 2021 (2.31 and 2.46, respectively). This decline in leverage following 2018 suggests a deleveraging event or a significant rise in equity that outpaced asset growth, enhancing the company's capital structure strength.

In summary, the data points to a transformational financial event around 2019, characterized by a large increase in assets and equity and a simultaneous decrease in leverage. This improved capital structure stability persisted through 2021, underlining a strategic shift towards a stronger equity base and more balanced financing.

Earnings before interest and tax (EBIT)

The EBIT demonstrated an overall upward trend across the five-year period. Beginning at 1,566 million USD in 2017, EBIT increased to 1,758 million USD in 2018. There was a slight decline in 2019, with EBIT dropping to 1,619 million USD, followed by a recovery in 2020 to 1,887 million USD. The most significant growth occurred in 2021, with EBIT reaching 2,462 million USD, marking a substantial increase compared to previous years.

Interest expense

The interest expense exhibited a notable rising trend from 2017 to 2020. Starting at 176 million USD in 2017, it grew moderately to 193 million USD in 2018 but then surged considerably to 507 million USD in 2019. The increase continued to 716 million USD in 2020, before slightly declining to 696 million USD in 2021. This pattern suggests increasing debt servicing costs over this timeframe, with some easing in the final year.

Interest coverage ratio

The interest coverage ratio, which measures the ability to cover interest expenses with EBIT, declined sharply over the period. It began at a relatively strong level of 8.9 in 2017 and improved slightly to 9.11 in 2018. However, the ratio dropped significantly to 3.19 in 2019 and decreased further to 2.64 in 2020, indicating deteriorating capacity to meet interest obligations. An improvement to 3.54 in 2021 suggests a partial recovery, but coverage remains substantially lower than the initial years.

Summary

Overall, EBIT increased significantly over the analyzed period, particularly in the final year, indicating growth in operating profitability. Concurrently, interest expenses increased sharply from 2018 to 2020, which heavily impacted the interest coverage ratio, causing it to decline markedly and signal increased financial risk. The slight reduction in interest expense and improvement in coverage ratio in 2021 indicate some mitigation of this risk, although coverage remains well below the earlier period's levels. These trends suggest rising leverage and increased borrowing costs that have affected financial stability, despite the improvement in operating earnings.

Earnings before fixed charges and tax (EBIT fixed charges)

The earnings before fixed charges and tax demonstrate an overall upward trend from 2017 to 2021. Starting at $1,692 million in 2017, the value increases steadily to $1,876 million in 2018 but experiences a slight decline to $1,826 million in 2019. Subsequently, there is a notable increase, reaching $2,085 million in 2020 and further rising to $2,624 million in 2021. This pattern indicates an improvement in the company's operating profitability over the five-year period, particularly pronounced in the last two years.

Fixed charges

Fixed charges exhibit significant growth throughout the analyzed period. Beginning at $302 million in 2017, these charges increase marginally to $311 million in 2018 before experiencing a sharp rise to $714 million in 2019. The increasing trend continues with fixed charges climbing to $914 million in 2020, followed by a marginal decrease to $858 million in 2021. The substantial increase in fixed charges from 2018 onwards suggests rising interest or related fixed financial obligations for the company.

Fixed charge coverage ratio

The fixed charge coverage ratio shows a declining trend from 2017 to 2020, indicating a diminished ability to cover fixed charges from earnings before fixed charges and tax. The ratio decreases from 5.6 in 2017 to 6.03 in 2018, then drops sharply to 2.56 in 2019 and further to 2.28 in 2020. However, in 2021, the coverage ratio improves to 3.06, suggesting a recovery in the company's capacity to meet fixed obligations relative to previous years. Despite this improvement, the ratio remains significantly lower than the 2017 and 2018 levels.

Overall observations

The data reveals a trend of rising earnings before fixed charges and tax alongside increasing fixed charges. While increased earnings strengthen the company's earning power, the parallel escalation of fixed charges has pressured the fixed charge coverage ratio downward until a partial recovery in 2021. This dynamic suggests growing financial leverage or credit obligations, which could impact financial flexibility. Nonetheless, the upward earnings trend and the improvement in coverage ratio in the final year indicate steps toward better managing fixed financial commitments.