Intuit Inc. (NASDAQ:INTU)

The analysis of the financial leverage and debt-related ratios over the examined period reveals notable trends in the company’s capital structure and its ability to cover financial obligations.

Debt to Equity Ratios

Both the standard debt to equity ratio and the ratio including operating lease liability exhibit a decline from 2020 to 2021, indicating a reduction in debt relative to shareholder equity. This is followed by an increase in 2022, before declining gradually in the subsequent years through 2025. Overall, the trend shows a moderation of the company's leverage, with a slight upward adjustment in the middle years.

Debt to Capital Ratios

The debt to capital ratios, with and without the inclusion of operating lease liability, mirror a similar pattern to the debt to equity ratios. Initially, the ratios drop significantly from 2020 to 2021, then rise in 2022 before gently decreasing again. This pattern reinforces the indication of an initial deleveraging followed by a moderate increase and subsequent stabilization in reliance on debt financing.

Debt to Assets Ratios

These ratios show a consistent downward trend from 2020 through 2025, both including and excluding operating lease liabilities. The steady reduction suggests an ongoing decrease in the proportion of assets financed by debt, which may indicate either asset growth outpacing debt increases or active debt reduction policies.

Financial Leverage

Financial leverage ratios decrease sharply from 2020 to 2021, reflecting a decline in total assets relative to equity or an increase in equity relative to assets. However, after 2021, financial leverage shows a moderate upward trend, increasing slightly each year through 2025, suggesting a gradual increase in the use of debt relative to equity over this period.

Interest Coverage Ratio

This ratio, measuring the ability to meet interest expenses, declines substantially from a very high level in 2020 to much lower levels by 2023, reflecting reduced earnings relative to interest obligations or increased interest expenses. However, from 2023 onwards, the ratio improves steadily, indicating enhanced capacity to cover interest payments, which may be due to improved earnings or reduced interest expenses.

Fixed Charge Coverage Ratio

A similar trend is observed in the fixed charge coverage ratio, showing a decline from 2020 through 2023, followed by recovery through 2025. This suggests a parallel pattern in the company's ability to cover not only interest but other fixed charges, pointing to improved financial stability in the later years.

In summary, the company has demonstrated an initial reduction in leverage and debt reliance around 2021, followed by moderate fluctuations and a gradual return to increased leverage metrics. Simultaneously, the capacity to service debt and fixed charges experienced a decline but showed signs of recovery starting in 2023, indicating improving financial health in terms of coverage ratios. The consistently decreasing debt to asset ratios suggest a strengthening asset base or prudent debt management over the evaluated timeframe.

Total Debt

The total debt experienced significant fluctuations over the analyzed period. Initially, there was a decrease from 3,369 million USD in 2020 to 2,034 million USD in 2021, followed by a sharp increase peaking at 6,914 million USD in 2022. After this peak, total debt gradually declined over the subsequent years, reaching 5,973 million USD in 2025. Overall, after a volatile period, the debt level appears to be stabilizing at a higher level compared to the starting point.

Stockholders’ Equity

Stockholders’ equity showed a consistent upward trend throughout the entire period. Starting at 5,106 million USD in 2020, equity increased steadily each year, reaching 19,710 million USD by 2025. This represents substantial growth, more than tripling over the examined timeframe, indicating strong capital accumulation or retained earnings growth.

Debt to Equity Ratio

The debt to equity ratio decreased notably overall, starting at 0.66 in 2020 and declining to 0.30 by 2025. Despite the spike in total debt in 2022, the ratio remained below the initial level, supported by the substantial increases in equity. This suggests improved financial leverage and a stronger equity base relative to debt over time.

Total debt (including operating lease liability)

The total debt exhibited significant volatility over the years. From 2020 to 2021, there was a notable decrease from 3,636 million USD to 2,480 million USD. However, this was followed by a sharp increase in 2022, reaching 7,540 million USD. Since then, total debt slightly declined and stabilized around 6,600 million USD from 2023 through 2025, indicating a period of relatively stable leverage after an initial sharp rise.

Stockholders’ equity

Stockholders’ equity demonstrated a consistent upward trend throughout the period. Starting at 5,106 million USD in 2020, it nearly doubled in 2021 and then continued to grow steadily each subsequent year, reaching 19,710 million USD by 2025. This increase suggests strong retained earnings or capital injections, enhancing the company’s net asset base over time.

Debt to equity ratio (including operating lease liability)

The debt to equity ratio decreased overall from 0.71 in 2020 to 0.34 in 2025, reflecting a reduction in financial leverage relative to equity. The ratio fell sharply in 2021 to 0.25, rose again in 2022 to 0.46, and then progressively declined in the following years. This pattern corresponds with the fluctuations in total debt and the consistent increase in equity, highlighting a stronger equity base and relatively lower reliance on debt financing over time.

The financial data reveals several noteworthy trends regarding the company's capital structure over the analyzed periods.

Total Debt

The total debt exhibits significant fluctuations. Initially, it decreased sharply from 3,369 million USD in 2020 to 2,034 million USD in 2021. However, it increased substantially to 6,914 million USD in 2022 before gradually declining in the subsequent years to 5,973 million USD by 2025. This pattern suggests a period of strategic borrowing followed by efforts to reduce debt levels progressively.

Total Capital

Total capital shows a consistent upward trend throughout the period. It rose from 8,475 million USD in 2020 to 11,903 million USD in 2021 and more than doubled to 23,355 million USD in 2022. It remained relatively stable from 2022 to 2023, then continued to increase steadily, reaching 25,683 million USD in 2025. This growth indicates expansion and possibly increased equity financing or retained earnings accumulation.

Debt to Capital Ratio

The debt to capital ratio fluctuated in line with the changes in debt and total capital. Starting at 0.40 in 2020, it dropped sharply to 0.17 in 2021, reflecting the debt reduction and capital increase during this period. In 2022, the ratio rose again to 0.30, correlating with the surge in total debt. Subsequently, the ratio steadily decreased to 0.23 by 2025, consistent with the gradual reduction of debt and continued growth in total capital. This trend suggests a movement towards a lower reliance on debt financing relative to overall capital.

Overall, the data indicates a dynamic management of debt within an expanding capital base, reflecting strategic adjustments to optimize the capital structure over time.

The analysis of the financial data reveals distinct trends in debt and capital structure over the examined periods.

Total Debt (Including Operating Lease Liability)

The total debt displayed a significant decrease from 3636 million US dollars in 2020 to 2480 million in 2021. However, a notable increase occurred in 2022, where debt rose sharply to 7540 million. Following this peak, the total debt progressively decreased in the subsequent years, reaching 6639 million by 2025. This pattern indicates a period of increased borrowing or liability recognition in 2022, followed by efforts to reduce total debt levels.

Total Capital (Including Operating Lease Liability)

Total capital showed a consistent upward trajectory throughout the periods analyzed. Starting at 8742 million US dollars in 2020, the capital base expanded substantially to 12349 million in 2021 and then nearly doubled to 23981 million in 2022. After a slight decline to 23958 million in 2023, the capital continued to grow, reaching 26349 million in 2025. This steady increase illustrates a general strengthening of the company’s capital structure over time.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio declined markedly from 0.42 in 2020 to 0.20 in 2021, reflecting a significant improvement in capital structure and reduced leverage. In 2022, the ratio increased to 0.31, indicating a relatively higher debt proportion possibly linked to the spike in total debt during the same period. After this increase, the leverage ratio steadily decreased again to 0.25 by 2025, suggesting a continued focus on managing debt relative to capital and maintaining a more conservative balance sheet.

Overall, the data points to an initial phase of deleveraging, a temporary increase in debt with accompanying capital growth, and a subsequent trend towards reduced leverage, supported by steady capital expansion. These movements indicate strategic financial management aimed at balancing growth with prudent debt levels.

Total Debt

The total debt shows significant volatility over the examined periods. Initially, it decreased from 3,369 million USD in 2020 to 2,034 million USD in 2021. However, it sharply increased in 2022, reaching 6,914 million USD, followed by a gradual decline in subsequent years, settling at 5,973 million USD in 2025. This pattern indicates fluctuating borrowing or debt management strategies, with a notable peak in 2022 and a moderate reduction thereafter.

Total Assets

Total assets have displayed consistent growth throughout the period. From 10,931 million USD in 2020, the asset base expanded significantly to 36,958 million USD by 2025. This upward trend suggests ongoing investment and asset accumulation, reflecting business expansion or increased asset valuation over time.

Debt to Assets Ratio

The debt to assets ratio exhibits a declining trend overall, decreasing from 0.31 in 2020 to 0.16 in 2025. Despite the spike in total debt during 2022, the ratio remained lower than the initial level due to the substantial growth in total assets. The continuous decrease after 2022 indicates improved capital structure, with assets growing at a faster pace than debt, thereby reducing financial leverage.

Total debt (including operating lease liability)

The total debt experienced a notable decline from 3,636 million USD in 2020 to 2,480 million USD in 2021. Subsequently, there was a sharp increase in 2022, reaching 7,540 million USD. In the following years, total debt gradually decreased, stabilizing around 6,567 to 6,639 million USD by 2024 and 2025.

Total assets

Total assets demonstrated consistent growth throughout the period. This metric rose significantly from 10,931 million USD in 2020 to 15,516 million USD in 2021, then nearly doubled by 2022 to 27,734 million USD. Growth continued at a steady pace, reaching 36,958 million USD in 2025.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio decreased sharply from 0.33 in 2020 to 0.16 in 2021, indicating a reduction in financial leverage relative to assets. After increasing to 0.27 in 2022, the ratio progressively declined again, falling to 0.18 by 2025. This pattern points to improved balance sheet strength and a lower proportion of debt compared to assets in recent years.

Total assets

The total assets show a consistent upward trend from 10,931 million US dollars in 2020 to a projected 36,958 million US dollars in 2025. This represents significant growth, with the most notable increase occurring between 2021 and 2022. The asset base more than doubles over the six-year period, indicating potentially aggressive expansion or acquisition strategies.

Stockholders’ equity

Stockholders’ equity has also increased substantially, rising from 5,106 million US dollars in 2020 to a projected 19,710 million US dollars in 2025. The growth in equity is strong and consistent, suggesting retained earnings and possibly capital injections that support the asset growth. The rate of increase in equity is somewhat steadier compared to assets, maintaining a positive trend throughout the period.

Financial leverage

The financial leverage ratio, defined as total assets divided by stockholders’ equity, decreased from 2.14 in 2020 to a low of 1.57 in 2021, indicating reduced reliance on debt relative to equity. However, from 2021 onwards, the ratio shows a gradual increase, reaching a projected 1.88 by 2025. This suggests a trend toward a slightly higher use of leverage over recent years, though it remains below the initial 2020 level. The fluctuations imply a balance is being maintained between debt and equity financing, with a moderate increase in leverage after the initial reduction.

Earnings before interest and tax (EBIT)

The EBIT demonstrates a consistent upward trend over the observed periods, increasing from 2,212 million US dollars in 2020 to an estimated 5,081 million US dollars in 2025. Notably, the growth accelerates in the later years, particularly between 2023 and 2025, suggesting enhanced operational profitability or expansion.

Interest expense

Interest expense exhibits a significant increase from 14 million US dollars in 2020 to 248 million US dollars in 2023, stabilizing around 240 million US dollars through 2025. The sharp rise between 2021 and 2023 could reflect increased borrowing or changes in interest rates, which then plateau in the subsequent years.

Interest coverage ratio

The interest coverage ratio shows a declining trend, starting from a very high 158 in 2020 down to a low of approximately 13.05 in 2023, before improving modestly to 20.57 by 2025. This decrease indicates that although EBIT is rising, the faster growth in interest expense during the early years impacts the company's ability to comfortably cover interest payments. The slight recovery toward the end reflects improving relative earnings against interest obligations.

The financial data reveals several notable trends and developments over the observed periods. Earnings before fixed charges and tax demonstrate a consistent upward trajectory, increasing from 2,281 million US dollars in 2020 to 5,192 million US dollars by 2025. This reflects steady growth and an overall improvement in earnings capacity before accounting for fixed financial obligations.

Fixed charges, representing obligations such as interest expenses, have generally increased over the same timeline, starting at 83 million US dollars in 2020 and rising to 358 million US dollars in 2025. There is a marked spike noted in 2023 where fixed charges rise sharply to 372 million US dollars before slightly declining in subsequent years. This rise suggests an increase in financial commitments, possibly due to higher debt levels or increased interest rates.

The fixed charge coverage ratio, which measures the ability to cover fixed charges from earnings before fixed charges and tax, shows a decreasing pattern from 27.48 in 2020 to a low of 9.03 in 2023, followed by a recovery to 14.50 by 2025. Despite the significant earnings growth observed, the ratio’s decline highlights that fixed charges have increased at a relatively faster pace in the middle years, thus reducing the margin of safety. However, the improving ratio after 2023 indicates strengthening capacity to meet fixed financial obligations later in the period.

Earnings before fixed charges and tax

Exhibited continuous growth across all years, nearly more than doubling from 2020 to 2025, signifying enhanced operational performance or profitability before interest and fixed financial costs.

Fixed charges

Increased substantially, especially between 2021 and 2023, suggesting rising financial costs. The slight reduction after 2023 indicates some stabilization in fixed financial commitments.

Fixed charge coverage ratio

Declined considerably from 27.48 to 9.03 by 2023, reflecting increased pressure on earnings to meet fixed charges. The subsequent increase to 14.50 shows an improvement in coverage capability but remains below early period levels.

In summary, while earnings before fixed charges and tax have grown robustly, rising fixed charges have temporarily eroded coverage margins before some recovery occurs in later periods. This pattern suggests that financial leverage or fixed financial expenses have increased but have become more manageable toward the end of the assessed timeline.