Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Keurig Dr Pepper Inc., solvency ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
A comprehensive review of solvency metrics from 2018 to 2021 indicates a consistent strengthening of the financial position, characterized by a systematic reduction in leverage and a significant improvement in the capacity to service debt obligations.
- Leverage Ratios
- A steady downward trend is observed across all leverage metrics. The debt to equity ratio decreased from 0.71 in 2018 to 0.50 in 2021, reflecting a reduced reliance on borrowed funds relative to shareholder equity. This trend remains consistent when incorporating operating lease liabilities, which fell from 0.71 to 0.53 over the same period. Similarly, the debt to assets ratio declined from 0.33 to 0.25, and the debt to capital ratio moved from 0.42 to 0.34, signaling a more conservative capital structure and a higher proportion of assets financed through equity.
- Financial Leverage
- Financial leverage exhibited a gradual and consistent decline from 2.17 in 2018 to 2.03 in 2021, further corroborating the overall trend of deleveraging and reduced financial risk.
- Coverage Ratios
- Coverage metrics demonstrate substantial improvement, with the most significant gains occurring in 2021. The interest coverage ratio rose from 2.75 in 2018 to 6.60 in 2021, indicating a significantly enhanced ability to meet interest payments from operating profits. The fixed charge coverage ratio followed a similar trajectory, increasing from 2.58 to 5.51, which underscores a strengthened safety margin for meeting all fixed financial commitments.
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Debt to Equity
Keurig Dr Pepper Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Short-term borrowings and current portion of long-term obligations | 304) | 2,345) | 1,593) | 1,458) | |
| Current finance lease liability | 79) | 44) | 41) | 26) | |
| Long-term obligations, excluding current portion | 11,578) | 11,143) | 12,827) | 14,201) | |
| Non-current finance lease liability | 621) | 298) | 269) | 305) | |
| Total debt | 12,582) | 13,830) | 14,730) | 15,990) | |
| Stockholders’ equity | 24,972) | 23,829) | 23,257) | 22,533) | |
| Solvency Ratio | |||||
| Debt to equity1 | 0.50 | 0.58 | 0.63 | 0.71 | |
| Benchmarks | |||||
| Debt to Equity, Competitors2 | |||||
| Coca-Cola Co. | 1.86 | — | — | — | |
| Mondelēz International Inc. | 0.69 | — | — | — | |
| PepsiCo Inc. | 2.51 | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | |
| Debt to Equity, Sector | |||||
| Food, Beverage & Tobacco | 2.28 | — | — | — | |
| Debt to Equity, Industry | |||||
| Consumer Staples | 1.07 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 12,582 ÷ 24,972 = 0.50
2 Click competitor name to see calculations.
A consistent improvement in solvency is observed between 2018 and 2021. The capital structure has shifted toward a lower reliance on borrowed funds, characterized by a simultaneous reduction in total liabilities and a steady increase in equity.
- Total Debt
- A sustained downward trend is evident, with total debt decreasing from US$ 15,990 million in 2018 to US$ 12,582 million by the end of 2021. This represents a systematic reduction in the company's total debt obligations over the four-year period.
- Stockholders’ Equity
- Equity has demonstrated consistent growth, rising from US$ 22,533 million in 2018 to US$ 24,972 million in 2021. This growth indicates an increase in the net assets attributable to shareholders.
- Debt to Equity Ratio
- The debt to equity ratio declined steadily from 0.71 in 2018 to 0.50 in 2021. This contraction reflects a strengthening of the balance sheet, as the company has reduced its financial leverage and improved its long-term solvency position.
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Debt to Equity (including Operating Lease Liability)
Keurig Dr Pepper Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Short-term borrowings and current portion of long-term obligations | 304) | 2,345) | 1,593) | 1,458) | |
| Current finance lease liability | 79) | 44) | 41) | 26) | |
| Long-term obligations, excluding current portion | 11,578) | 11,143) | 12,827) | 14,201) | |
| Non-current finance lease liability | 621) | 298) | 269) | 305) | |
| Total debt | 12,582) | 13,830) | 14,730) | 15,990) | |
| Current operating lease liability | 76) | 72) | 69) | —) | |
| Non-current operating lease liability | 608) | 580) | 427) | —) | |
| Total debt (including operating lease liability) | 13,266) | 14,482) | 15,226) | 15,990) | |
| Stockholders’ equity | 24,972) | 23,829) | 23,257) | 22,533) | |
| Solvency Ratio | |||||
| Debt to equity (including operating lease liability)1 | 0.53 | 0.61 | 0.65 | 0.71 | |
| Benchmarks | |||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||
| Coca-Cola Co. | 1.92 | — | — | — | |
| Mondelēz International Inc. | 0.71 | — | — | — | |
| PepsiCo Inc. | 2.64 | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||
| Food, Beverage & Tobacco | 2.36 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||
| Consumer Staples | 1.19 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 13,266 ÷ 24,972 = 0.53
2 Click competitor name to see calculations.
A consistent improvement in the solvency profile is observed between 2018 and 2021, characterized by a steady reduction in financial leverage and a simultaneous expansion of the equity base.
- Total Debt Trends
- Total debt, including operating lease liabilities, declined monotonically over the analyzed period. The balance decreased from US$ 15,990 million in 2018 to US$ 13,266 million by December 31, 2021, indicating a sustained reduction in total liabilities.
- Stockholders' Equity Growth
- Stockholders' equity demonstrated a continuous upward trend, increasing from US$ 22,533 million in 2018 to US$ 24,972 million in 2021. This growth reflects an increase in the company's net worth and internal capital strength.
- Debt to Equity Ratio Analysis
- The debt to equity ratio experienced a significant decline, moving from 0.71 in 2018 to 0.53 in 2021. This downward trajectory is the result of both decreasing debt levels and increasing equity, signifying a lower reliance on external borrowing and a strengthened solvency position.
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Debt to Capital
Keurig Dr Pepper Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Short-term borrowings and current portion of long-term obligations | 304) | 2,345) | 1,593) | 1,458) | |
| Current finance lease liability | 79) | 44) | 41) | 26) | |
| Long-term obligations, excluding current portion | 11,578) | 11,143) | 12,827) | 14,201) | |
| Non-current finance lease liability | 621) | 298) | 269) | 305) | |
| Total debt | 12,582) | 13,830) | 14,730) | 15,990) | |
| Stockholders’ equity | 24,972) | 23,829) | 23,257) | 22,533) | |
| Total capital | 37,554) | 37,659) | 37,987) | 38,523) | |
| Solvency Ratio | |||||
| Debt to capital1 | 0.34 | 0.37 | 0.39 | 0.42 | |
| Benchmarks | |||||
| Debt to Capital, Competitors2 | |||||
| Coca-Cola Co. | 0.65 | — | — | — | |
| Mondelēz International Inc. | 0.41 | — | — | — | |
| PepsiCo Inc. | 0.72 | — | — | — | |
| Philip Morris International Inc. | 1.57 | — | — | — | |
| Debt to Capital, Sector | |||||
| Food, Beverage & Tobacco | 0.70 | — | — | — | |
| Debt to Capital, Industry | |||||
| Consumer Staples | 0.52 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 12,582 ÷ 37,554 = 0.34
2 Click competitor name to see calculations.
A consistent improvement in the solvency profile is evident between December 31, 2018, and December 31, 2021, characterized by a systematic reduction in financial leverage and a decreasing reliance on borrowed funds relative to total capital.
- Total Debt Reduction
- Total debt exhibited a continuous downward trajectory over the analyzed period, declining from US$ 15,990 million in 2018 to US$ 12,582 million by 2021. This represents a steady decrease in absolute liabilities, indicating a consistent effort to pay down principal obligations.
- Total Capital Stability
- Total capital remained relatively stable, experiencing a slight decrease from US$ 38,523 million in 2018 to US$ 37,554 million in 2021. The stability of the capital base, coupled with the significant drop in debt, suggests that the reduction in leverage is driven primarily by debt repayment rather than a contraction of the overall capital structure.
- Debt to Capital Ratio Trend
- The debt to capital ratio shows a steady decline from 0.42 in 2018 to 0.34 in 2021. This downward trend signifies an improvement in the company's solvency position, as debt constitutes a smaller proportion of the total capital funding. The transition from 42% to 34% leverage indicates a strengthened balance sheet and a reduced risk profile regarding long-term debt obligations.
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Debt to Capital (including Operating Lease Liability)
Keurig Dr Pepper Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Short-term borrowings and current portion of long-term obligations | 304) | 2,345) | 1,593) | 1,458) | |
| Current finance lease liability | 79) | 44) | 41) | 26) | |
| Long-term obligations, excluding current portion | 11,578) | 11,143) | 12,827) | 14,201) | |
| Non-current finance lease liability | 621) | 298) | 269) | 305) | |
| Total debt | 12,582) | 13,830) | 14,730) | 15,990) | |
| Current operating lease liability | 76) | 72) | 69) | —) | |
| Non-current operating lease liability | 608) | 580) | 427) | —) | |
| Total debt (including operating lease liability) | 13,266) | 14,482) | 15,226) | 15,990) | |
| Stockholders’ equity | 24,972) | 23,829) | 23,257) | 22,533) | |
| Total capital (including operating lease liability) | 38,238) | 38,311) | 38,483) | 38,523) | |
| Solvency Ratio | |||||
| Debt to capital (including operating lease liability)1 | 0.35 | 0.38 | 0.40 | 0.42 | |
| Benchmarks | |||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||
| Coca-Cola Co. | 0.66 | — | — | — | |
| Mondelēz International Inc. | 0.42 | — | — | — | |
| PepsiCo Inc. | 0.73 | — | — | — | |
| Philip Morris International Inc. | 1.55 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||
| Food, Beverage & Tobacco | 0.70 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||
| Consumer Staples | 0.54 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 13,266 ÷ 38,238 = 0.35
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2018 through 2021 reveals a consistent improvement in the company's capital structure and a steady reduction in financial leverage.
- Total Debt Trends
- Total debt, inclusive of operating lease liabilities, exhibited a persistent downward trajectory over the observed period. The balance decreased from US$ 15,990 million in 2018 to US$ 13,266 million by the end of 2021. This cumulative reduction of approximately US$ 2,724 million indicates a sustained effort to lower the company's total obligations.
- Total Capital Stability
- Total capital remained remarkably stable, experiencing only a marginal decline from US$ 38,523 million in 2018 to US$ 38,238 million in 2021. The relative constancy of the capital base underscores that the reduction in total debt was the primary driver of the changes in the solvency profile.
- Debt to Capital Ratio Analysis
- The debt to capital ratio declined linearly each year, falling from 0.42 in 2018 to 0.35 in 2021. This trend reflects a diminishing reliance on borrowed funds relative to the total capital employed, resulting in a strengthened solvency position and a reduced risk profile regarding long-term financial obligations.
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Debt to Assets
Keurig Dr Pepper Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Short-term borrowings and current portion of long-term obligations | 304) | 2,345) | 1,593) | 1,458) | |
| Current finance lease liability | 79) | 44) | 41) | 26) | |
| Long-term obligations, excluding current portion | 11,578) | 11,143) | 12,827) | 14,201) | |
| Non-current finance lease liability | 621) | 298) | 269) | 305) | |
| Total debt | 12,582) | 13,830) | 14,730) | 15,990) | |
| Total assets | 50,598) | 49,779) | 49,518) | 48,918) | |
| Solvency Ratio | |||||
| Debt to assets1 | 0.25 | 0.28 | 0.30 | 0.33 | |
| Benchmarks | |||||
| Debt to Assets, Competitors2 | |||||
| Coca-Cola Co. | 0.45 | — | — | — | |
| Mondelēz International Inc. | 0.29 | — | — | — | |
| PepsiCo Inc. | 0.44 | — | — | — | |
| Philip Morris International Inc. | 0.67 | — | — | — | |
| Debt to Assets, Sector | |||||
| Food, Beverage & Tobacco | 0.44 | — | — | — | |
| Debt to Assets, Industry | |||||
| Consumer Staples | 0.30 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 12,582 ÷ 50,598 = 0.25
2 Click competitor name to see calculations.
The financial period between 2018 and 2021 is characterized by a consistent improvement in the organization's solvency profile. This trend is driven by a systematic reduction in total liabilities paired with a steady growth in the total asset base, resulting in a decreased reliance on debt financing.
- Total Debt Reduction
- A consistent downward trend is observed in total debt, which decreased from 15,990 million US dollars in 2018 to 12,582 million US dollars by December 31, 2021. This represents a total reduction of approximately 3,408 million US dollars over the four-year period, indicating a disciplined approach to deleveraging.
- Total Asset Expansion
- Total assets demonstrated a steady increase, rising from 48,918 million US dollars in 2018 to 50,598 million US dollars in 2021. The gradual growth of the asset base indicates a stable expansion of the company's financial resources while simultaneously reducing its debt obligations.
- Debt to Assets Ratio Analysis
- The debt to assets ratio exhibited a continuous decline, moving from 0.33 in 2018 to 0.25 in 2021. This reduction confirms that a smaller percentage of assets is funded by debt, signifying a strengthened balance sheet and a reduced risk of insolvency.
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Debt to Assets (including Operating Lease Liability)
Keurig Dr Pepper Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Short-term borrowings and current portion of long-term obligations | 304) | 2,345) | 1,593) | 1,458) | |
| Current finance lease liability | 79) | 44) | 41) | 26) | |
| Long-term obligations, excluding current portion | 11,578) | 11,143) | 12,827) | 14,201) | |
| Non-current finance lease liability | 621) | 298) | 269) | 305) | |
| Total debt | 12,582) | 13,830) | 14,730) | 15,990) | |
| Current operating lease liability | 76) | 72) | 69) | —) | |
| Non-current operating lease liability | 608) | 580) | 427) | —) | |
| Total debt (including operating lease liability) | 13,266) | 14,482) | 15,226) | 15,990) | |
| Total assets | 50,598) | 49,779) | 49,518) | 48,918) | |
| Solvency Ratio | |||||
| Debt to assets (including operating lease liability)1 | 0.26 | 0.29 | 0.31 | 0.33 | |
| Benchmarks | |||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||
| Coca-Cola Co. | 0.47 | — | — | — | |
| Mondelēz International Inc. | 0.30 | — | — | — | |
| PepsiCo Inc. | 0.46 | — | — | — | |
| Philip Morris International Inc. | 0.69 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||
| Food, Beverage & Tobacco | 0.46 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||
| Consumer Staples | 0.33 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 13,266 ÷ 50,598 = 0.26
2 Click competitor name to see calculations.
A consistent improvement in the solvency position is observed over the four-year period ending December 31, 2021. The financial trajectory is characterized by a simultaneous reduction in total liabilities and a steady expansion of the asset base, resulting in a strengthened balance sheet and reduced financial leverage.
- Total Debt Trend
- A steady downward trend in total debt, including operating lease liabilities, is evident. Obligations decreased from US$ 15,990 million in 2018 to US$ 13,266 million in 2021. This continuous reduction suggests a focused effort toward deleveraging.
- Total Asset Expansion
- Total assets grew incrementally each year, rising from US$ 48,918 million in 2018 to US$ 50,598 million in 2021. The growth in assets, paired with declining debt, enhances the overall solvency profile.
- Debt to Assets Ratio Interpretation
- The debt to assets ratio declined linearly from 0.33 in 2018 to 0.26 in 2021. This indicates that a decreasing proportion of the company's assets is financed through debt. The contraction of this ratio reflects a lower risk profile and an increase in financial stability over the analyzed period.
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Financial Leverage
Keurig Dr Pepper Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Total assets | 50,598) | 49,779) | 49,518) | 48,918) | |
| Stockholders’ equity | 24,972) | 23,829) | 23,257) | 22,533) | |
| Solvency Ratio | |||||
| Financial leverage1 | 2.03 | 2.09 | 2.13 | 2.17 | |
| Benchmarks | |||||
| Financial Leverage, Competitors2 | |||||
| Coca-Cola Co. | 4.10 | — | — | — | |
| Mondelēz International Inc. | 2.37 | — | — | — | |
| PepsiCo Inc. | 5.76 | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | |
| Financial Leverage, Sector | |||||
| Food, Beverage & Tobacco | 5.16 | — | — | — | |
| Financial Leverage, Industry | |||||
| Consumer Staples | 3.59 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 50,598 ÷ 24,972 = 2.03
2 Click competitor name to see calculations.
Between 2018 and 2021, a consistent strengthening of the company's solvency position is observed. This period is characterized by a steady increase in both total assets and stockholders' equity, coupled with a progressive decline in the financial leverage ratio, indicating a shift toward a more conservative capital structure.
- Asset and Equity Growth
- Total assets grew steadily from US$ 48,918 million in 2018 to US$ 50,598 million in 2021. During the same timeframe, stockholders' equity experienced a more pronounced increase, rising from US$ 22,533 million to US$ 24,972 million. The fact that equity grew at a faster rate than total assets suggests a reduction in the proportion of debt used to fund the balance sheet.
- Financial Leverage Reduction
- The financial leverage ratio exhibited a continuous downward trend, decreasing annually from 2.17 in 2018 to 2.03 in 2021. This decline signifies a reduction in the company's financial risk, as a smaller multiple of assets is being supported by equity. The trend reflects an improved ability to cover long-term obligations and a decreased reliance on external borrowing relative to shareholder investment.
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Interest Coverage
Keurig Dr Pepper Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net income attributable to KDP | 2,146) | 1,325) | 1,254) | 586) | |
| Add: Net income attributable to noncontrolling interest | (1) | —) | —) | 3) | |
| Add: Income tax expense | 653) | 428) | 440) | 202) | |
| Add: Interest expense | 500) | 604) | 654) | 452) | |
| Earnings before interest and tax (EBIT) | 3,298) | 2,357) | 2,348) | 1,243) | |
| Solvency Ratio | |||||
| Interest coverage1 | 6.60 | 3.90 | 3.59 | 2.75 | |
| Benchmarks | |||||
| Interest Coverage, Competitors2 | |||||
| Coca-Cola Co. | 8.78 | — | — | — | |
| Mondelēz International Inc. | 16.08 | — | — | — | |
| PepsiCo Inc. | 5.94 | — | — | — | |
| Philip Morris International Inc. | 17.80 | — | — | — | |
| Interest Coverage, Sector | |||||
| Food, Beverage & Tobacco | 9.56 | — | — | — | |
| Interest Coverage, Industry | |||||
| Consumer Staples | 11.46 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,298 ÷ 500 = 6.60
2 Click competitor name to see calculations.
An analysis of the financial results from 2018 to 2021 reveals a substantial improvement in the capacity to service debt obligations. The overall solvency profile has strengthened significantly, driven by a combination of expanding operational profitability and a reduction in financing costs toward the end of the period.
- Earnings Before Interest and Tax (EBIT)
- A consistent and aggressive growth pattern is evident in operational earnings. EBIT increased from US$ 1,243 million in 2018 to US$ 3,298 million in 2021. The most significant expansion occurred between 2018 and 2019, where earnings nearly doubled, followed by steady growth through 2021, indicating a strong increase in core earning power.
- Interest Expense
- Financing costs exhibited an initial increase, rising from US$ 452 million in 2018 to a peak of US$ 654 million in 2019. Subsequently, a downward trend is observed, with interest expenses declining to US$ 500 million by December 31, 2021. This reduction in costs occurred while operational earnings continued to rise.
- Interest Coverage Ratio
- The interest coverage ratio demonstrates a strong and continuous upward trajectory, improving from 2.75 in 2018 to 6.60 in 2021. This progression indicates a markedly reduced financial risk and a wider margin of safety for meeting interest payments. The sharp increase in the final year suggests a highly favorable alignment between operational performance and debt servicing requirements.
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Fixed Charge Coverage
Keurig Dr Pepper Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net income attributable to KDP | 2,146) | 1,325) | 1,254) | 586) | |
| Add: Net income attributable to noncontrolling interest | (1) | —) | —) | 3) | |
| Add: Income tax expense | 653) | 428) | 440) | 202) | |
| Add: Interest expense | 500) | 604) | 654) | 452) | |
| Earnings before interest and tax (EBIT) | 3,298) | 2,357) | 2,348) | 1,243) | |
| Add: Operating lease cost | 121) | 113) | 82) | 48) | |
| Earnings before fixed charges and tax | 3,419) | 2,470) | 2,430) | 1,291) | |
| Interest expense | 500) | 604) | 654) | 452) | |
| Operating lease cost | 121) | 113) | 82) | 48) | |
| Fixed charges | 621) | 717) | 736) | 500) | |
| Solvency Ratio | |||||
| Fixed charge coverage1 | 5.51 | 3.44 | 3.30 | 2.58 | |
| Benchmarks | |||||
| Fixed Charge Coverage, Competitors2 | |||||
| Coca-Cola Co. | 7.41 | — | — | — | |
| Mondelēz International Inc. | 10.28 | — | — | — | |
| PepsiCo Inc. | 4.85 | — | — | — | |
| Philip Morris International Inc. | 13.43 | — | — | — | |
| Fixed Charge Coverage, Sector | |||||
| Food, Beverage & Tobacco | 7.60 | — | — | — | |
| Fixed Charge Coverage, Industry | |||||
| Consumer Staples | 7.50 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,419 ÷ 621 = 5.51
2 Click competitor name to see calculations.
The fixed charge coverage for Keurig Dr Pepper Inc. demonstrates a consistent upward trajectory from 2018 through 2021, signifying a strengthening solvency position and an enhanced capacity to service fixed financial obligations.
- Earnings before fixed charges and tax
- A significant growth trend is observed in earnings, which rose from US$ 1,291 million in 2018 to US$ 3,419 million in 2021. This represents a substantial increase in the operational income available to cover fixed costs over the four-year period.
- Fixed charges
- Fixed obligations experienced an initial increase, peaking at US$ 736 million in 2019, before trending downward to US$ 621 million by the end of 2021. The reduction in these charges after 2019 supports a more favorable solvency profile.
- Fixed charge coverage ratio
- The coverage ratio improved steadily from 2.58 in 2018 to 5.51 in 2021. The acceleration of this ratio, particularly the sharp increase between 2020 and 2021, indicates a significantly expanded margin of safety and a reduced risk regarding the fulfillment of fixed commitments.
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