Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Cash Flow Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Debt to Equity since 2008
- Price to Book Value (P/BV) since 2008
- Analysis of Debt
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Solvency Ratios (Summary)
Keurig Dr Pepper Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
- Debt to equity ratio
- The debt to equity ratio shows a consistent downward trend from 0.64 at the end of Q1 2020 to 0.46 by Q2 2022. This decline indicates a gradual reduction in the company’s reliance on debt relative to shareholders' equity over the observed periods, suggesting improving financial stability and a more conservative capital structure.
- Debt to capital ratio
- Similarly, the debt to capital ratio decreased from 0.39 in Q1 2020 to 0.31 in Q2 2022. The steady decline reflects a deliberate effort to lower debt as a proportion of total capital, reinforcing the trend observed in the debt to equity ratio and indicating enhanced solvency.
- Debt to assets ratio
- The debt to assets ratio also declined from 0.29 in Q1 2020 to 0.22 by Q2 2022. This measure confirms that the overall debt burden relative to total assets has decreased gradually, which may suggest an improving asset base or reduced debt load contributing to lower financial risk.
- Financial leverage ratio
- Financial leverage decreased marginally from 2.16 in Q1 2020 to about 2.03 in Q2 2022, showing a subtle reduction in the use of borrowed funds to finance the company's assets. Although the change is less pronounced than in the debt ratios, it supports the observation of a more conservative financial posture.
- Interest coverage ratio
- The interest coverage ratio exhibited a significant upward trend, improving from 3.48 in Q1 2020 to a peak of 6.78 in Q1 2022, before slightly declining to 5.62 in Q2 2022. This indicates a strengthening ability to meet interest obligations from operating earnings over time, suggesting increased profitability or reduced interest expenses, enhancing the company's creditworthiness and financial flexibility.
Debt Ratios
Coverage Ratios
Debt to Equity
Keurig Dr Pepper Inc., debt to equity calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||
| Short-term borrowings and current portion of long-term obligations | ||||||||||||||
| Long-term obligations, excluding current portion | ||||||||||||||
| Total debt | ||||||||||||||
| Stockholders’ equity | ||||||||||||||
| Solvency Ratio | ||||||||||||||
| Debt to equity1 | ||||||||||||||
| Benchmarks | ||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||
| Coca-Cola Co. | ||||||||||||||
| Mondelēz International Inc. | ||||||||||||||
| PepsiCo Inc. | ||||||||||||||
| Philip Morris International Inc. | ||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q2 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the observed periods.
- Total Debt
- The total debt decreased consistently from US$14,388 million at the end of March 2020 to US$11,555 million by June 2022. This decline highlights a sustained effort to reduce leverage, with the most significant quarterly reductions occurring towards the end of 2021. Overall, total debt declined by approximately 20% over the two-year span.
- Stockholders’ Equity
- Stockholders’ equity demonstrated steady growth throughout the periods, rising from US$22,640 million in March 2020 to a peak of US$25,511 million by March 2022. Although there was a slight decrease to US$25,391 million by June 2022, the trend indicates a generally positive accumulation of equity, potentially driven by retained earnings or capital injections.
- Debt to Equity Ratio
- The debt to equity ratio exhibited a declining trend, moving from 0.64 in March 2020 down to 0.45 in March 2022, before a minor uptick to 0.46 in June 2022. This reduction reflects an improving financial structure, indicating that debt levels are decreasing relative to equity, enhancing the firm’s financial stability and reducing financial risk.
In summary, the company’s financial position appears to strengthen over the analyzed quarters, with a focus on deleveraging and a gradual increase in shareholder equity. The decreasing debt to equity ratio underscores a shift toward a more conservative capital structure.
Debt to Capital
Keurig Dr Pepper Inc., debt to capital calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||
| Short-term borrowings and current portion of long-term obligations | ||||||||||||||
| Long-term obligations, excluding current portion | ||||||||||||||
| Total debt | ||||||||||||||
| Stockholders’ equity | ||||||||||||||
| Total capital | ||||||||||||||
| Solvency Ratio | ||||||||||||||
| Debt to capital1 | ||||||||||||||
| Benchmarks | ||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||
| Coca-Cola Co. | ||||||||||||||
| Mondelēz International Inc. | ||||||||||||||
| PepsiCo Inc. | ||||||||||||||
| Philip Morris International Inc. | ||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q2 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several noteworthy trends related to the company's debt management and capital structure over the observed periods.
- Total Debt
- Total debt shows a consistent downward trend from March 31, 2020, through June 30, 2022. Beginning at approximately $14.39 billion, the debt decreased steadily each quarter, reaching around $11.56 billion by the last reported period. This decline indicates a sustained effort to reduce leverage or repay obligations over time.
- Total Capital
- Total capital remains relatively stable throughout the period, fluctuating only slightly around the $37 billion mark. It starts near $37.03 billion, shows minor variations in subsequent quarters, and ends close to $36.95 billion. The small fluctuations suggest stable capital investment or equity levels with no significant expansions or contractions.
- Debt to Capital Ratio
- The debt to capital ratio exhibits a clear declining pattern consistent with the reduction in total debt. Starting at approximately 0.39, the ratio gradually decreases each quarter, ending at about 0.31 by June 2022. This decline reflects an overall improvement in the company's capital structure, indicating less reliance on debt financing relative to its capital base.
In summary, the data portray a financial strategy focused on deleveraging, with consistent reductions in total debt and an improving debt-to-capital ratio. The stability in total capital alongside these changes implies that the company maintains its capital base while reducing financial risk associated with debt.
Debt to Assets
Keurig Dr Pepper Inc., debt to assets calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||
| Short-term borrowings and current portion of long-term obligations | ||||||||||||||
| Long-term obligations, excluding current portion | ||||||||||||||
| Total debt | ||||||||||||||
| Total assets | ||||||||||||||
| Solvency Ratio | ||||||||||||||
| Debt to assets1 | ||||||||||||||
| Benchmarks | ||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||
| Coca-Cola Co. | ||||||||||||||
| Mondelēz International Inc. | ||||||||||||||
| PepsiCo Inc. | ||||||||||||||
| Philip Morris International Inc. | ||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q2 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt demonstrates a consistent downward trend over the analyzed periods. Starting at $14,388 million at the end of the first quarter of 2020, it gradually decreases each quarter, reaching $11,555 million by the second quarter of 2022. This steady reduction indicates an ongoing effort to deleverage the balance sheet, improving the company’s financial leverage and potentially reducing interest expenses associated with debt.
- Total Assets
- Total assets show a gradual but steady increase throughout the periods analyzed. Beginning at $48,843 million in the first quarter of 2020, assets increase to $51,428 million by the second quarter of 2022. This incremental growth in assets suggests continued investment or accumulation of resources, possibly reflecting business expansion or increased capital expenditures.
- Debt to Assets Ratio
- The debt to assets ratio exhibits a declining trend, moving from 0.29 in early 2020 to 0.22 by mid-2022. This ratio decline aligns with the reduction in total debt and the increase in total assets, signaling an improvement in the company's financial stability and leverage position. The decreasing ratio indicates that a smaller portion of the company’s assets is financed through debt, which may enhance creditworthiness and reduce financial risk.
Financial Leverage
Keurig Dr Pepper Inc., financial leverage calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||
| Total assets | ||||||||||||||
| Stockholders’ equity | ||||||||||||||
| Solvency Ratio | ||||||||||||||
| Financial leverage1 | ||||||||||||||
| Benchmarks | ||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||
| Coca-Cola Co. | ||||||||||||||
| Mondelēz International Inc. | ||||||||||||||
| PepsiCo Inc. | ||||||||||||||
| Philip Morris International Inc. | ||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q2 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
- The total assets exhibited a consistent upward trend over the examined quarters. Starting at approximately $48.8 billion, assets increased steadily to reach about $51.4 billion by mid-2022. The growth was gradual and reflected stability in asset accumulation, with no significant fluctuations or declines noted during this period.
- Stockholders' Equity
- Stockholders' equity also showed a continuous increase throughout the periods analyzed. Beginning around $22.6 billion, it rose progressively to approximately $25.4 billion by mid-2022. This upward trajectory indicates a strengthening equity base, improving shareholders' claims on company assets over time.
- Financial Leverage
- The financial leverage ratio demonstrated a slight but consistent decrease during the periods reviewed. It started at 2.16 and declined to a low near 2.01 before a minor increase to 2.03 in the most recent quarter. This suggests a gradual reduction in leverage, implying a cautious approach toward debt financing relative to equity, enhancing financial stability.
Interest Coverage
Keurig Dr Pepper Inc., interest coverage calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||
| Net income attributable to KDP | ||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||
| Add: Income tax expense | ||||||||||||||
| Add: Interest expense | ||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||
| Solvency Ratio | ||||||||||||||
| Interest coverage1 | ||||||||||||||
| Benchmarks | ||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||
| Coca-Cola Co. | ||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q2 2022 Calculation
Interest coverage
= (EBITQ2 2022
+ EBITQ1 2022
+ EBITQ4 2021
+ EBITQ3 2021)
÷ (Interest expenseQ2 2022
+ Interest expenseQ1 2022
+ Interest expenseQ4 2021
+ Interest expenseQ3 2021)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The earnings before interest and tax (EBIT) exhibited a generally positive trend throughout the periods, with some fluctuations. Beginning at 358 million US dollars in the first quarter of 2020, EBIT increased significantly, reaching a peak of 1,228 million US dollars in the fourth quarter of 2021. However, there was a notable decline in EBIT to 953 million US dollars in the first quarter of 2022, followed by a further decrease to 388 million US dollars in the second quarter of 2022. This sequence suggests a strong growth phase until late 2021, with a subsequent downturn in 2022.
Interest expense showed a relatively stable pattern with minor variations over the quarters. It started at 153 million US dollars in the first quarter of 2020 and experienced a slight reduction over time, touching a low of 116 million US dollars in the third quarter of 2021. Afterwards, interest expense increased again towards the end of 2021 and into 2022, peaking at 188 million US dollars in the first quarter of 2022 before slightly decreasing to 175 million US dollars in the second quarter of 2022.
The interest coverage ratio, which measures the ability to cover interest expenses with EBIT, improved consistently from 3.48 in the first quarter of 2020 to a peak of 6.78 in the first quarter of 2022, indicating enhanced capacity to meet interest obligations during this timeframe. The ratio then declined to 5.62 in the second quarter of 2022, signaling a reduction in coverage but still maintaining a relatively strong position compared to earlier periods.
- Summary of Trends:
- EBIT increased markedly until the end of 2021, followed by a sharp decline in early 2022.
- Interest expense remained relatively stable with a mild increase at the start of 2022 after a trough in late 2021.
- Interest coverage ratio showed a solid improvement through 2021 and early 2022, reflecting better operational profitability relative to interest costs, although it decreased slightly in the second quarter of 2022.
- The data suggests the company experienced a period of strong profitability growth, subsequently impacted by challenges or changes that reduced operating earnings in 2022, yet retained a reasonable ability to cover interest expenses.