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
Monster Beverage Corp., solvency ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The solvency profile of the organization is characterized by an exceptionally low reliance on borrowed capital and a robust ability to meet fixed financial obligations. Throughout the period from 2019 to 2023, the company maintained a conservative capital structure with minimal debt levels.
- Debt Utilization Ratios
- Debt to equity, debt to capital, and debt to assets ratios remained at or near 0.00 across the five-year period. Even when accounting for operating lease liabilities, these ratios stayed negligible, peaking at 0.01. This indicates that the company's assets and operations are funded almost entirely through equity rather than debt.
- Financial Leverage
- The financial leverage ratio exhibited a steady, slight decline from 1.23 in 2019 to 1.18 by 2023. This downward trend suggests a gradual reduction in the proportion of total assets financed by equity relative to the overall capital structure, though the overall level remains very low, reflecting minimal financial risk.
- Coverage Ratios
- Interest coverage and fixed charge coverage ratios remained significantly high, although they experienced notable volatility. Interest coverage peaked in 2021 at 94,812.53 before declining to 8,112.69 in 2023. Similarly, the fixed charge coverage ratio rose from 286.76 in 2019 to a peak of 389.82 in 2021, before descending to 168.96 in 2023. Despite the decline in the latter two years, these figures remain far above typical solvency thresholds, indicating an overwhelming capacity to service all fixed financial commitments.
Overall, the analysis reveals a highly solvent financial position with virtually no long-term debt burden and substantial margins of safety regarding interest and fixed charge payments.
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Debt to Equity
Monster Beverage Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current finance lease liabilities | 6,449) | 757) | 960) | 799) | 1,485) | |
| Noncurrent finance lease liabilities | 19) | 41) | 41) | 24) | —) | |
| Total debt | 6,468) | 798) | 1,001) | 823) | 1,485) | |
| Stockholders’ equity | 8,228,744) | 7,025,041) | 6,566,951) | 5,160,860) | 4,171,281) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Coca-Cola Co. | 1.62 | 1.62 | 1.86 | — | — | |
| Mondelēz International Inc. | 0.69 | 0.85 | 0.69 | — | — | |
| PepsiCo Inc. | 2.38 | 2.28 | 2.51 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Food, Beverage & Tobacco | 2.49 | 2.44 | 2.28 | — | — | |
| Debt to Equity, Industry | ||||||
| Consumer Staples | 1.16 | 1.08 | 1.07 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 6,468 ÷ 8,228,744 = 0.00
2 Click competitor name to see calculations.
The financial position from 2019 to 2023 is characterized by an exceptionally low reliance on borrowed capital and a consistent expansion of the equity base. The organization maintains a solvency profile that indicates minimal financial risk and a high degree of internal funding.
- Stockholders' Equity Growth
- A steady and significant upward trend is observed in stockholders' equity, which increased from approximately 4.17 billion US dollars in 2019 to 8.23 billion US dollars by the end of 2023. This represents nearly a doubling of the equity base over the five-year period, suggesting strong retained earnings and a robust capital structure.
- Total Debt Fluctuations
- Total debt remained immaterial and relatively stable between 2019 and 2022, fluctuating between 798 thousand and 1.48 million US dollars. However, a notable increase occurred in 2023, with total debt rising to 6.47 million US dollars. Despite this spike, the absolute value of the debt remains negligible when compared to the overall scale of the company's assets and equity.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained constant at 0.00 throughout the entire period. This indicates that the company operates with virtually no leverage. The massive scale of stockholders' equity effectively absorbs the minimal debt levels, ensuring that the leverage ratio does not move above the zero threshold when rounded, thereby reflecting an extremely conservative approach to financing.
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Debt to Equity (including Operating Lease Liability)
Monster Beverage Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current finance lease liabilities | 6,449) | 757) | 960) | 799) | 1,485) | |
| Noncurrent finance lease liabilities | 19) | 41) | 41) | 24) | —) | |
| Total debt | 6,468) | 798) | 1,001) | 823) | 1,485) | |
| Operating lease liabilities (included in Accrued liabilities) | 11,088) | 7,747) | 3,990) | 3,171) | 2,812) | |
| Operating lease liabilities (included in Other liabilities) | 48,459) | 29,586) | 17,389) | 17,342) | 25,651) | |
| Total debt (including operating lease liability) | 66,015) | 38,131) | 22,380) | 21,336) | 29,948) | |
| Stockholders’ equity | 8,228,744) | 7,025,041) | 6,566,951) | 5,160,860) | 4,171,281) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.01 | 0.01 | 0.00 | 0.00 | 0.01 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 1.67 | 1.68 | 1.92 | — | — | |
| Mondelēz International Inc. | 0.71 | 0.88 | 0.71 | — | — | |
| PepsiCo Inc. | 2.54 | 2.42 | 2.64 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 2.59 | 2.53 | 2.36 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 1.28 | 1.20 | 1.19 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 66,015 ÷ 8,228,744 = 0.01
2 Click competitor name to see calculations.
The solvency profile of the organization is characterized by an exceptionally low reliance on external debt and a consistent expansion of the equity base. Over the five-year period ending December 31, 2023, the company maintained a conservative capital structure with minimal leverage, ensuring high financial stability and a strong solvency position.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited volatility between 2019 and 2021, decreasing from US$ 29.9 million to US$ 21.3 million before stabilizing around US$ 22.4 million. However, a significant upward trend emerged in the latter two years, with liabilities rising to US$ 38.1 million in 2022 and further increasing to US$ 66.0 million by the end of 2023. Despite this recent acceleration in debt levels, the absolute figures remain low relative to the overall scale of the balance sheet.
- Stockholders' Equity Growth
- A strong and consistent upward trajectory is observed in stockholders' equity. Equity grew from US$ 4.17 billion in 2019 to US$ 8.23 billion in 2023. This steady increase indicates robust retained earnings or capital contributions, effectively doubling the equity base over the five-year window and providing a substantial buffer against financial risk.
- Debt to Equity Ratio Analysis
- The debt to equity ratio remained negligible throughout the analyzed period, fluctuating between 0.00 and 0.01. The massive growth in stockholders' equity has effectively neutralized the impact of the increase in total debt. The ratio reflects a nearly debt-free capital structure, suggesting that the company finances its operations and growth almost entirely through equity rather than borrowed funds.
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Debt to Capital
Monster Beverage Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current finance lease liabilities | 6,449) | 757) | 960) | 799) | 1,485) | |
| Noncurrent finance lease liabilities | 19) | 41) | 41) | 24) | —) | |
| Total debt | 6,468) | 798) | 1,001) | 823) | 1,485) | |
| Stockholders’ equity | 8,228,744) | 7,025,041) | 6,566,951) | 5,160,860) | 4,171,281) | |
| Total capital | 8,235,212) | 7,025,839) | 6,567,952) | 5,161,683) | 4,172,766) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Coca-Cola Co. | 0.62 | 0.62 | 0.65 | — | — | |
| Mondelēz International Inc. | 0.41 | 0.46 | 0.41 | — | — | |
| PepsiCo Inc. | 0.70 | 0.69 | 0.72 | — | — | |
| Philip Morris International Inc. | 1.31 | 1.26 | 1.57 | — | — | |
| Debt to Capital, Sector | ||||||
| Food, Beverage & Tobacco | 0.71 | 0.71 | 0.70 | — | — | |
| Debt to Capital, Industry | ||||||
| Consumer Staples | 0.54 | 0.52 | 0.52 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 6,468 ÷ 8,235,212 = 0.00
2 Click competitor name to see calculations.
The solvency profile is characterized by exceptionally low leverage and a consistent expansion of the capital base over the period from 2019 to 2023.
- Total Debt Trends
- Debt levels remained negligible between 2019 and 2022, fluctuating within a narrow range between US$ 798 thousand and US$ 1,485 thousand. A significant relative increase was observed in 2023, where total debt rose to US$ 6,468 thousand. Despite this spike, the absolute magnitude of debt remains immaterial when compared to the scale of total capital.
- Total Capital Growth
- A sustained upward trajectory in total capital is evident, growing from US$ 4,172,766 thousand in 2019 to US$ 8,235,212 thousand by the end of 2023. This represents a substantial increase in the entity's financial base, indicating strong capital accumulation over the five-year duration.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained constant at 0.00 throughout the analyzed period. This consistency is a result of the extreme disparity between the minimal debt obligations and the large capital base. The ratio indicates a nearly complete absence of financial leverage, suggesting that operations and growth are funded almost entirely through equity rather than borrowed capital, resulting in a highly conservative solvency position.
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Debt to Capital (including Operating Lease Liability)
Monster Beverage Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current finance lease liabilities | 6,449) | 757) | 960) | 799) | 1,485) | |
| Noncurrent finance lease liabilities | 19) | 41) | 41) | 24) | —) | |
| Total debt | 6,468) | 798) | 1,001) | 823) | 1,485) | |
| Operating lease liabilities (included in Accrued liabilities) | 11,088) | 7,747) | 3,990) | 3,171) | 2,812) | |
| Operating lease liabilities (included in Other liabilities) | 48,459) | 29,586) | 17,389) | 17,342) | 25,651) | |
| Total debt (including operating lease liability) | 66,015) | 38,131) | 22,380) | 21,336) | 29,948) | |
| Stockholders’ equity | 8,228,744) | 7,025,041) | 6,566,951) | 5,160,860) | 4,171,281) | |
| Total capital (including operating lease liability) | 8,294,759) | 7,063,172) | 6,589,331) | 5,182,196) | 4,201,229) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.01 | 0.01 | 0.00 | 0.00 | 0.01 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 0.63 | 0.63 | 0.66 | — | — | |
| Mondelēz International Inc. | 0.42 | 0.47 | 0.42 | — | — | |
| PepsiCo Inc. | 0.72 | 0.71 | 0.73 | — | — | |
| Philip Morris International Inc. | 1.30 | 1.26 | 1.55 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 0.72 | 0.72 | 0.70 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.56 | 0.54 | 0.54 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 66,015 ÷ 8,294,759 = 0.01
2 Click competitor name to see calculations.
Analysis of the solvency structure reveals an exceptionally low reliance on debt relative to total capital. The capital base expanded significantly over the five-year period, maintaining a highly conservative leverage profile despite an increase in absolute debt levels in recent years.
- Total Debt (including Operating Lease Liability)
- Absolute debt levels showed initial volatility, decreasing from US$ 29.9 million in 2019 to US$ 21.3 million in 2020, and remaining stable through 2021. A sharp upward trend emerged in the final two years, with debt increasing to US$ 38.1 million in 2022 and reaching US$ 66.0 million by December 31, 2023.
- Total Capital (including Operating Lease Liability)
- Total capital exhibited continuous and substantial growth, rising from US$ 4.2 billion in 2019 to US$ 8.3 billion in 2023. This represents nearly a doubling of the total capital base over the analyzed timeframe, indicating strong capital accumulation.
- Debt to Capital Ratio
- The debt to capital ratio remained negligible throughout the period, fluctuating marginally between 0.00 and 0.01. The significant growth in total capital effectively offset the increase in total debt, ensuring that the solvency position remained stable and that debt levels remained immaterial relative to the total capital structure.
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Debt to Assets
Monster Beverage Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current finance lease liabilities | 6,449) | 757) | 960) | 799) | 1,485) | |
| Noncurrent finance lease liabilities | 19) | 41) | 41) | 24) | —) | |
| Total debt | 6,468) | 798) | 1,001) | 823) | 1,485) | |
| Total assets | 9,686,522) | 8,293,105) | 7,804,784) | 6,202,716) | 5,150,352) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Coca-Cola Co. | 0.43 | 0.42 | 0.45 | — | — | |
| Mondelēz International Inc. | 0.27 | 0.32 | 0.29 | — | — | |
| PepsiCo Inc. | 0.44 | 0.42 | 0.44 | — | — | |
| Philip Morris International Inc. | 0.73 | 0.70 | 0.67 | — | — | |
| Debt to Assets, Sector | ||||||
| Food, Beverage & Tobacco | 0.46 | 0.45 | 0.44 | — | — | |
| Debt to Assets, Industry | ||||||
| Consumer Staples | 0.31 | 0.30 | 0.30 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 6,468 ÷ 9,686,522 = 0.00
2 Click competitor name to see calculations.
The financial position of the entity demonstrates an exceptionally strong solvency profile characterized by minimal leverage and consistent asset growth over the five-year period ending December 31, 2023.
- Asset Growth Trends
- Total assets exhibited a consistent upward trajectory, increasing from approximately $5.15 billion in 2019 to $9.69 billion by 2023. This steady expansion indicates a significant and continuous growth in the organization's total resource base.
- Debt Obligation Patterns
- Total debt remained remarkably low and relatively stable between 2019 and 2022, fluctuating within a narrow range between $798 thousand and $1.49 million. A notable increase occurred in 2023, with debt rising to $6.47 million. Despite this spike, the absolute value of the debt remains immaterial when compared to the scale of the company's total assets.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained constant at 0.00 throughout the analyzed period. This result indicates that the entity's assets are almost entirely funded through equity or internal cash flows. The lack of reliance on external borrowing reflects a highly conservative capital structure and a negligible risk of insolvency related to debt obligations.
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Debt to Assets (including Operating Lease Liability)
Monster Beverage Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current finance lease liabilities | 6,449) | 757) | 960) | 799) | 1,485) | |
| Noncurrent finance lease liabilities | 19) | 41) | 41) | 24) | —) | |
| Total debt | 6,468) | 798) | 1,001) | 823) | 1,485) | |
| Operating lease liabilities (included in Accrued liabilities) | 11,088) | 7,747) | 3,990) | 3,171) | 2,812) | |
| Operating lease liabilities (included in Other liabilities) | 48,459) | 29,586) | 17,389) | 17,342) | 25,651) | |
| Total debt (including operating lease liability) | 66,015) | 38,131) | 22,380) | 21,336) | 29,948) | |
| Total assets | 9,686,522) | 8,293,105) | 7,804,784) | 6,202,716) | 5,150,352) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.01 | 0.00 | 0.00 | 0.00 | 0.01 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 0.44 | 0.44 | 0.47 | — | — | |
| Mondelēz International Inc. | 0.28 | 0.33 | 0.30 | — | — | |
| PepsiCo Inc. | 0.47 | 0.45 | 0.46 | — | — | |
| Philip Morris International Inc. | 0.74 | 0.71 | 0.69 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 0.48 | 0.47 | 0.46 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.34 | 0.33 | 0.33 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 66,015 ÷ 9,686,522 = 0.01
2 Click competitor name to see calculations.
An analysis of solvency metrics reveals an exceptionally low reliance on debt financing relative to the total asset base. Over the five-year period ending December 31, 2023, a highly conservative capital structure has been maintained, characterized by substantial asset growth and minimal leverage.
- Total Asset Expansion
- A consistent upward trajectory in total assets is observed, increasing from US$ 5,150,352 thousand in 2019 to US$ 9,686,522 thousand by 2023. This represents a steady and significant expansion of the resource base over the analyzed period.
- Debt Obligations Trend
- Total debt, including operating lease liabilities, remained relatively stable between 2019 and 2021, fluctuating between US$ 21,336 thousand and US$ 29,948 thousand. A notable increase in leverage occurred starting in 2022, with obligations rising to US$ 38,131 thousand and accelerating to US$ 66,015 thousand by the end of 2023.
- Debt to Assets Ratio Interpretation
- Despite the recent increase in absolute debt levels, the debt-to-assets ratio has remained negligible, fluctuating between 0.00 and 0.01. The growth in total assets has scaled at a rate that far outweighs the increase in liabilities, ensuring that the solvency risk remains extremely low and the organization remains predominantly funded through non-debt sources.
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Financial Leverage
Monster Beverage Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 9,686,522) | 8,293,105) | 7,804,784) | 6,202,716) | 5,150,352) | |
| Stockholders’ equity | 8,228,744) | 7,025,041) | 6,566,951) | 5,160,860) | 4,171,281) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.18 | 1.18 | 1.19 | 1.20 | 1.23 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Coca-Cola Co. | 3.77 | 3.85 | 4.10 | — | — | |
| Mondelēz International Inc. | 2.52 | 2.65 | 2.37 | — | — | |
| PepsiCo Inc. | 5.43 | 5.38 | 5.76 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Food, Beverage & Tobacco | 5.44 | 5.37 | 5.16 | — | — | |
| Financial Leverage, Industry | ||||||
| Consumer Staples | 3.71 | 3.59 | 3.59 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 9,686,522 ÷ 8,228,744 = 1.18
2 Click competitor name to see calculations.
A consistent upward trajectory is observed in the company's balance sheet expansion between 2019 and 2023. Both total assets and stockholders' equity have grown steadily, indicating a strong internal accumulation of capital and an expanding resource base.
- Asset and Equity Expansion
- Total assets increased from US$ 5,150,352 thousand in 2019 to US$ 9,686,522 thousand by the end of 2023. In parallel, stockholders' equity rose from US$ 4,171,281 thousand to US$ 8,228,744 thousand over the same five-year period. This simultaneous growth suggests that the increase in total assets was predominantly financed through equity contributions or retained earnings.
- Financial Leverage Trends
- The financial leverage ratio exhibits a marginal but steady downward trend, moving from 1.23 in 2019 to 1.18 in 2023. This decrease indicates a reduction in the reliance on debt to finance assets, reflecting a shift toward a more conservative capital structure.
- Solvency and Risk Assessment
- The stabilization of the leverage ratio at 1.18 suggests a highly solvent financial position with minimal financial gearing. Such a low ratio indicates that the company maintains a significant cushion of equity, which reduces financial risk and lowers the company's sensitivity to debt-related obligations or interest rate volatility.
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Interest Coverage
Monster Beverage Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,630,988) | 1,191,624) | 1,377,475) | 1,409,594) | 1,107,835) | |
| Add: Income tax expense | 437,494) | 380,340) | 423,944) | 216,563) | 308,127) | |
| Add: Interest on finance lease liabilities | 255) | 24) | 19) | 39) | 56) | |
| Earnings before interest and tax (EBIT) | 2,068,737) | 1,571,988) | 1,801,438) | 1,626,196) | 1,416,018) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 8,112.69 | 65,499.50 | 94,812.53 | 41,697.33 | 25,286.04 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 9.48 | 14.25 | 8.78 | — | — | |
| Mondelēz International Inc. | 12.83 | 9.39 | 16.08 | — | — | |
| PepsiCo Inc. | 8.95 | 10.57 | 5.94 | — | — | |
| Philip Morris International Inc. | 7.95 | 16.33 | 17.80 | — | — | |
| Interest Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 9.23 | 12.81 | 9.56 | — | — | |
| Interest Coverage, Industry | ||||||
| Consumer Staples | 11.37 | 15.69 | 11.46 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,068,737 ÷ 255 = 8,112.69
2 Click competitor name to see calculations.
The company demonstrates an exceptionally strong solvency position characterized by an oversized capacity to cover its interest obligations from operating profits. While the interest coverage ratio has remained remarkably high throughout the period, it has exhibited significant volatility, particularly in the final year of the analysis.
- Earnings Before Interest and Tax (EBIT) Trends
- EBIT followed a general upward trajectory over the five-year period, growing from 1,416,018 thousand US dollars in 2019 to a peak of 2,068,737 thousand US dollars in 2023. A temporary contraction was observed in 2022, where earnings decreased to 1,571,988 thousand US dollars before recovering strongly in the following year.
- Interest Expense Volatility
- Interest on finance lease liabilities remained negligible and showed a downward trend between 2019 and 2021, reaching a low of 19 thousand US dollars. However, a substantial increase occurred in 2023, with interest expenses rising to 255 thousand US dollars, representing a more than tenfold increase compared to the 2022 figure of 24 thousand US dollars.
- Interest Coverage Ratio Analysis
- The interest coverage ratio peaked in 2021 at 94,812.53, driven by the combination of rising EBIT and declining interest expenses. A significant downward shift occurred in 2023, where the ratio fell to 8,112.69. This decline is primarily attributable to the sharp increase in finance lease interest expenses, which outweighed the growth in EBIT. Despite this compression, the ratio remains well above typical industry safety thresholds, indicating virtually no risk of default on these specific obligations.
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Fixed Charge Coverage
Monster Beverage Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income | 1,630,988) | 1,191,624) | 1,377,475) | 1,409,594) | 1,107,835) | |
| Add: Income tax expense | 437,494) | 380,340) | 423,944) | 216,563) | 308,127) | |
| Add: Interest on finance lease liabilities | 255) | 24) | 19) | 39) | 56) | |
| Earnings before interest and tax (EBIT) | 2,068,737) | 1,571,988) | 1,801,438) | 1,626,196) | 1,416,018) | |
| Add: Operating lease cost | 12,060) | 8,641) | 4,614) | 4,637) | 4,899) | |
| Earnings before fixed charges and tax | 2,080,797) | 1,580,629) | 1,806,052) | 1,630,833) | 1,420,917) | |
| Interest on finance lease liabilities | 255) | 24) | 19) | 39) | 56) | |
| Operating lease cost | 12,060) | 8,641) | 4,614) | 4,637) | 4,899) | |
| Fixed charges | 12,315) | 8,665) | 4,633) | 4,676) | 4,955) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 168.96 | 182.42 | 389.82 | 348.77 | 286.76 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 7.73 | 10.14 | 7.41 | — | — | |
| Mondelēz International Inc. | 9.42 | 6.60 | 10.28 | — | — | |
| PepsiCo Inc. | 6.43 | 7.28 | 4.85 | — | — | |
| Philip Morris International Inc. | 6.92 | 12.59 | 13.43 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 7.29 | 9.14 | 7.60 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Consumer Staples | 7.41 | 9.12 | 7.50 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,080,797 ÷ 12,315 = 168.96
2 Click competitor name to see calculations.
An analysis of the fixed charge coverage indicates a strong solvency position, although a clear shift in the trend is observed between 2021 and 2023. While the company maintains a substantial margin of safety to meet its fixed obligations, the ratio has experienced a notable contraction in recent years.
- Earnings Before Fixed Charges and Tax
- Earnings exhibited a general upward trajectory over the five-year period, growing from US$ 1.42 billion in 2019 to US$ 2.08 billion in 2023. A temporary contraction occurred in 2022, where earnings fell to US$ 1.58 billion, before rebounding to a period high in 2023.
- Fixed Charges Trends
- Fixed charges remained relatively stable and slightly declined between 2019 and 2021. However, a significant increase began in 2022, with charges rising to US$ 8.67 million, and further accelerating to US$ 12.32 million by 2023. This represents a substantial increase in fixed obligations compared to the baseline established in the early part of the period.
- Fixed Charge Coverage Ratio
- The coverage ratio peaked in 2021 at 389.82, reflecting a period of high earnings relative to minimal fixed costs. A sharp decline followed in 2022, with the ratio dropping to 182.42, and a further moderation to 168.96 in 2023. This downward trend is primarily attributable to the rapid escalation of fixed charges, which outweighed the growth in earnings before fixed charges and tax.
Despite the observed decline in the coverage ratio, the absolute values remain exceptionally high. A ratio of 168.96 suggests that the company generates earnings far exceeding its fixed obligations, indicating minimal risk of default and a robust capacity to service its fixed financial commitments.
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