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
Paramount Global, solvency ratios
Based on: 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), 10-K (reporting date: 2018-12-31).
A consistent downward trend in solvency ratios from 2018 to 2022 indicates a strategic reduction in the company's reliance on debt relative to its equity and assets. This deleveraging process is evident across all primary solvency metrics, suggesting a strengthened balance sheet over the five-year period.
- Capital Structure and Asset Backing
- Debt to equity ratios decreased substantially, falling from 3.62 in 2018 to 0.69 in 2022. A similar trajectory is observed when including operating lease liabilities, which declined from 3.62 to 0.76. Debt to capital and debt to assets ratios followed a corresponding pattern, with debt to assets dropping from 0.46 to 0.27, signifying that a smaller proportion of total assets is financed through debt.
- Financial Leverage
- The financial leverage ratio experienced a sharp contraction, decreasing from 7.80 in 2018 to 2.53 by the end of 2022. This represents a significant reduction in the use of debt to amplify returns, moving the company toward a more conservative financial posture.
- Debt Service Capability
- In contrast to the improving leverage ratios, the ability to service obligations showed significant volatility. Interest coverage and fixed charge coverage ratios both improved in 2021 but declined sharply in 2022. Specifically, interest coverage fell to 2.14 and fixed charge coverage reached 1.72, marking the lowest levels in the observed period. This suggests that despite having less total debt, the capacity to cover interest and fixed charges weakened considerably in the final year of the analysis.
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Debt to Equity
Paramount Global, debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 239) | 11) | 16) | 717) | 687) | |
| Long-term debt, net of current portion | 15,607) | 17,698) | 19,717) | 18,002) | 9,465) | |
| Total debt | 15,846) | 17,709) | 19,733) | 18,719) | 10,152) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.69 | 0.79 | 1.28 | 1.42 | 3.62 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | 0.06 | — | — | — | |
| Comcast Corp. | 1.17 | 0.99 | — | — | — | |
| Meta Platforms Inc. | 0.08 | 0.00 | — | — | — | |
| Netflix Inc. | 0.69 | 0.97 | — | — | — | |
| Walt Disney Co. | 0.51 | 0.62 | 0.71 | — | — | |
| Debt to Equity, Sector | ||||||
| Media & Entertainment | 0.32 | 0.31 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Communication Services | 0.65 | 0.65 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Total Paramount stockholders’ equity
= 15,846 ÷ 23,036 = 0.69
2 Click competitor name to see calculations.
A significant improvement in the solvency position is observed from 2018 through 2022, characterized by a consistent reduction in the debt-to-equity ratio. This trajectory indicates a strategic shift toward a more equity-heavy capital structure and a marked reduction in financial leverage.
- Total Debt Dynamics
- Total debt experienced a sharp increase between 2018 and 2019, rising from 10,152 million to 18,719 million. After reaching a peak of 19,733 million in 2020, a steady downward trend ensued, with total debt declining to 15,846 million by the end of 2022.
- Stockholders' Equity Growth
- Equity exhibited substantial and continuous growth throughout the analyzed period. A notable surge occurred between 2018 and 2019, where equity increased from 2,804 million to 13,207 million. This upward momentum continued through 2022, concluding at 23,036 million, signifying a strengthened capital base.
- Debt-to-Equity Ratio Evolution
- The debt-to-equity ratio declined sharply from 3.62 in 2018 to 0.69 in 2022. The most dramatic reduction occurred between 2018 and 2019, where the ratio fell to 1.42. The subsequent years show a gradual and steady decline, reflecting an increasingly favorable balance between total liabilities and shareholder funds, thereby reducing the reliance on borrowed capital to fund operations and assets.
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Debt to Equity (including Operating Lease Liability)
Paramount Global, debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 239) | 11) | 16) | 717) | 687) | |
| Long-term debt, net of current portion | 15,607) | 17,698) | 19,717) | 18,002) | 9,465) | |
| Total debt | 15,846) | 17,709) | 19,733) | 18,719) | 10,152) | |
| Operating lease liabilities (included in Other current liabilities) | 292) | 325) | 306) | 292) | —) | |
| Noncurrent operating lease liabilities | 1,428) | 1,598) | 1,583) | 1,909) | —) | |
| Total debt (including operating lease liability) | 17,566) | 19,632) | 21,622) | 20,920) | 10,152) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.76 | 0.88 | 1.41 | 1.58 | 3.62 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.12 | 0.11 | — | — | — | |
| Comcast Corp. | 1.26 | 1.06 | — | — | — | |
| Meta Platforms Inc. | 0.22 | 0.12 | — | — | — | |
| Netflix Inc. | 0.81 | 1.14 | — | — | — | |
| Walt Disney Co. | 0.55 | 0.66 | 0.75 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.39 | 0.38 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.80 | 0.79 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Paramount stockholders’ equity
= 17,566 ÷ 23,036 = 0.76
2 Click competitor name to see calculations.
A significant improvement in the solvency position is evident between 2018 and 2022, characterized by a substantial reduction in financial leverage and a strengthened equity base.
- Total Debt Dynamics
- A sharp increase in total debt, including operating lease liabilities, occurred between 2018 and 2019, with the balance rising from US$ 10,152 million to US$ 20,920 million. Following a peak of US$ 21,622 million in 2020, a consistent deleveraging trend emerged, reducing total debt to US$ 17,566 million by the end of 2022.
- Stockholders' Equity Growth
- Total stockholders' equity experienced aggressive and consistent growth throughout the analyzed period. A primary surge was noted between 2018 and 2019, where equity rose from US$ 2,804 million to US$ 13,207 million. This upward trajectory continued steadily over the subsequent years, reaching US$ 23,036 million by December 31, 2022, reflecting a substantial increase in the internal funding base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio demonstrates a steep and continuous decline, moving from 3.62 in 2018 to 0.76 in 2022. The ratio fell below the critical 1.0 threshold between 2020 and 2021, signaling a fundamental transition from a debt-dominant capital structure to one where equity exceeds total debt. This pattern indicates a marked reduction in long-term financial risk and an enhanced solvency profile.
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Debt to Capital
Paramount Global, debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 239) | 11) | 16) | 717) | 687) | |
| Long-term debt, net of current portion | 15,607) | 17,698) | 19,717) | 18,002) | 9,465) | |
| Total debt | 15,846) | 17,709) | 19,733) | 18,719) | 10,152) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Total capital | 38,882) | 40,111) | 35,104) | 31,926) | 12,956) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.41 | 0.44 | 0.56 | 0.59 | 0.78 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | 0.06 | — | — | — | |
| Comcast Corp. | 0.54 | 0.50 | — | — | — | |
| Meta Platforms Inc. | 0.08 | 0.00 | — | — | — | |
| Netflix Inc. | 0.41 | 0.49 | — | — | — | |
| Walt Disney Co. | 0.34 | 0.38 | 0.41 | — | — | |
| Debt to Capital, Sector | ||||||
| Media & Entertainment | 0.24 | 0.24 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Communication Services | 0.39 | 0.40 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 15,846 ÷ 38,882 = 0.41
2 Click competitor name to see calculations.
Between 2018 and 2022, a consistent improvement in solvency is observed, characterized by a steady decline in the debt-to-capital ratio. Although total debt experienced a significant spike in the early part of the period, the expansion of the total capital base and subsequent debt reduction have strengthened the overall financial position.
- Debt to Capital Ratio Trend
- The ratio exhibits a continuous downward trajectory, falling from 0.78 in 2018 to 0.41 in 2022. This decline indicates a reduction in the proportion of debt used to finance the organization's assets relative to its total capital, suggesting a shift toward a more conservative leverage profile.
- Total Debt Dynamics
- Total debt rose sharply from 10,152 million US$ in 2018 to a peak of 19,733 million US$ in 2020. Following this peak, a period of deleveraging is evident, with total debt decreasing to 17,709 million US$ in 2021 and further to 15,846 million US$ by the end of 2022.
- Total Capital Expansion
- Total capital grew substantially from 12,956 million US$ in 2018 to a peak of 40,111 million US$ in 2021. This rapid increase in the total capital base effectively offset the initial surge in debt, contributing significantly to the overall reduction of the debt-to-capital ratio before a slight contraction to 38,882 million US$ occurred in 2022.
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Debt to Capital (including Operating Lease Liability)
Paramount Global, debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 239) | 11) | 16) | 717) | 687) | |
| Long-term debt, net of current portion | 15,607) | 17,698) | 19,717) | 18,002) | 9,465) | |
| Total debt | 15,846) | 17,709) | 19,733) | 18,719) | 10,152) | |
| Operating lease liabilities (included in Other current liabilities) | 292) | 325) | 306) | 292) | —) | |
| Noncurrent operating lease liabilities | 1,428) | 1,598) | 1,583) | 1,909) | —) | |
| Total debt (including operating lease liability) | 17,566) | 19,632) | 21,622) | 20,920) | 10,152) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Total capital (including operating lease liability) | 40,602) | 42,034) | 36,993) | 34,127) | 12,956) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.43 | 0.47 | 0.58 | 0.61 | 0.78 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.10 | 0.10 | — | — | — | |
| Comcast Corp. | 0.56 | 0.52 | — | — | — | |
| Meta Platforms Inc. | 0.18 | 0.10 | — | — | — | |
| Netflix Inc. | 0.45 | 0.53 | — | — | — | |
| Walt Disney Co. | 0.35 | 0.40 | 0.43 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.28 | 0.28 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.44 | 0.44 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 17,566 ÷ 40,602 = 0.43
2 Click competitor name to see calculations.
An analysis of solvency metrics from 2018 to 2022 reveals a consistent improvement in the capital structure, characterized by a steady reduction in leverage relative to total capital.
- Total Debt Dynamics
- A substantial increase in total debt, including operating lease liabilities, occurred between 2018 and 2019, rising from US$ 10,152 million to US$ 20,920 million. After peaking in 2020 at US$ 21,622 million, debt levels entered a period of sustained reduction, falling to US$ 17,566 million by the end of 2022.
- Total Capital Evolution
- Total capital experienced a sharp expansion in 2019, increasing from US$ 12,956 million to US$ 34,127 million. This growth trend continued through 2021, reaching a peak of US$ 42,034 million, followed by a slight contraction to US$ 40,602 million in 2022.
- Debt to Capital Ratio Trend
- The debt to capital ratio exhibited a continuous downward trajectory over the five-year period. Starting at 0.78 in 2018, the ratio declined sequentially to 0.61 in 2019, 0.58 in 2020, 0.47 in 2021, and 0.43 in 2022. This persistent decline indicates a strategic shift toward a less leveraged capital structure, effectively reducing the proportion of debt used to finance assets and improving overall solvency.
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Debt to Assets
Paramount Global, debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 239) | 11) | 16) | 717) | 687) | |
| Long-term debt, net of current portion | 15,607) | 17,698) | 19,717) | 18,002) | 9,465) | |
| Total debt | 15,846) | 17,709) | 19,733) | 18,719) | 10,152) | |
| Total assets | 58,393) | 58,620) | 52,663) | 49,519) | 21,859) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.27 | 0.30 | 0.37 | 0.38 | 0.46 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Alphabet Inc. | 0.04 | 0.04 | — | — | — | |
| Comcast Corp. | 0.37 | 0.34 | — | — | — | |
| Meta Platforms Inc. | 0.06 | 0.00 | — | — | — | |
| Netflix Inc. | 0.30 | 0.35 | — | — | — | |
| Walt Disney Co. | 0.24 | 0.27 | 0.29 | — | — | |
| Debt to Assets, Sector | ||||||
| Media & Entertainment | 0.17 | 0.17 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Communication Services | 0.27 | 0.27 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 15,846 ÷ 58,393 = 0.27
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a consistent strengthening of its financial position between 2018 and 2022. A systemic reduction in the proportion of assets financed by debt is evident, characterized by a steady decline in the debt-to-assets ratio over the five-year period.
- Total Debt Trends
- Total debt experienced a sharp increase between December 31, 2018, and December 31, 2019, rising from US$ 10,152 million to US$ 18,719 million. Debt levels peaked in 2020 at US$ 19,733 million before initiating a downward trend, decreasing to US$ 17,709 million in 2021 and further to US$ 15,846 million by the end of 2022.
- Total Asset Expansion
- A substantial expansion of the asset base occurred in 2019, with total assets growing from US$ 21,859 million to US$ 49,519 million. This upward trajectory continued through 2021, reaching a maximum of US$ 58,620 million, and remained relatively stable at US$ 58,393 million by December 31, 2022.
- Debt to Assets Ratio Performance
- The debt-to-assets ratio exhibits a continuous decline from 0.46 in 2018 to 0.27 in 2022. This improvement is primarily attributed to the rapid growth of the asset base in 2019, which outweighed the simultaneous increase in debt, followed by a period of deleveraging between 2020 and 2022 while assets remained high. The result is a significant reduction in financial leverage and an enhanced solvency position.
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Debt to Assets (including Operating Lease Liability)
Paramount Global, debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt | 239) | 11) | 16) | 717) | 687) | |
| Long-term debt, net of current portion | 15,607) | 17,698) | 19,717) | 18,002) | 9,465) | |
| Total debt | 15,846) | 17,709) | 19,733) | 18,719) | 10,152) | |
| Operating lease liabilities (included in Other current liabilities) | 292) | 325) | 306) | 292) | —) | |
| Noncurrent operating lease liabilities | 1,428) | 1,598) | 1,583) | 1,909) | —) | |
| Total debt (including operating lease liability) | 17,566) | 19,632) | 21,622) | 20,920) | 10,152) | |
| Total assets | 58,393) | 58,620) | 52,663) | 49,519) | 21,859) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.30 | 0.33 | 0.41 | 0.42 | 0.46 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.08 | 0.08 | — | — | — | |
| Comcast Corp. | 0.39 | 0.37 | — | — | — | |
| Meta Platforms Inc. | 0.15 | 0.09 | — | — | — | |
| Netflix Inc. | 0.35 | 0.41 | — | — | — | |
| Walt Disney Co. | 0.26 | 0.29 | 0.31 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.22 | 0.21 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.33 | 0.33 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 17,566 ÷ 58,393 = 0.30
2 Click competitor name to see calculations.
The solvency position exhibits a consistent improvement over the five-year period ending December 31, 2022. The debt to assets ratio, which incorporates operating lease liabilities, demonstrates a steady downward trajectory, reflecting a reduction in the proportion of the asset base financed through debt and an overall strengthening of the financial structure.
- Debt to Assets Ratio Trend
- The ratio decreased from 0.46 in 2018 to 0.30 in 2022. This continuous decline indicates a reduction in financial leverage and an improved capacity to cover total liabilities with existing assets.
- Debt Level Dynamics
- Total debt experienced a sharp increase between 2018 and 2019, rising from US$ 10,152 million to US$ 20,920 million. After reaching a peak of US$ 21,622 million in 2020, a period of deleveraging followed, with total debt decreasing to US$ 17,566 million by the end of 2022.
- Asset Base Expansion
- Total assets grew significantly from US$ 21,859 million in 2018 to US$ 58,393 million in 2022. The most substantial growth occurred between 2018 and 2019, where assets more than doubled. This expansion provided the necessary buffer to lower the solvency ratio despite the concurrent spike in debt during the 2019 period.
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Financial Leverage
Paramount Global, financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 58,393) | 58,620) | 52,663) | 49,519) | 21,859) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.53 | 2.62 | 3.43 | 3.75 | 7.80 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Alphabet Inc. | 1.43 | 1.43 | — | — | — | |
| Comcast Corp. | 3.18 | 2.87 | — | — | — | |
| Meta Platforms Inc. | 1.48 | 1.33 | — | — | — | |
| Netflix Inc. | 2.34 | 2.81 | — | — | — | |
| Walt Disney Co. | 2.14 | 2.30 | 2.41 | — | — | |
| Financial Leverage, Sector | ||||||
| Media & Entertainment | 1.83 | 1.82 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Communication Services | 2.45 | 2.43 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Total Paramount stockholders’ equity
= 58,393 ÷ 23,036 = 2.53
2 Click competitor name to see calculations.
An analysis of the solvency position between 2018 and 2022 reveals a consistent strengthening of the balance sheet, characterized by significant asset expansion and a substantial reduction in financial leverage.
- Asset and Equity Expansion
- Total assets exhibited a sharp increase between 2018 and 2019, rising from 21,859 million USD to 49,519 million USD, followed by a steady ascent to 58,393 million USD by the end of 2022. This growth was accompanied by a substantial rise in stockholders' equity, which climbed from 2,804 million USD in 2018 to 23,036 million USD in 2022. The expansion of equity occurred at a faster relative pace than asset growth, contributing to a more stable financial base.
- Financial Leverage Trend
- The financial leverage ratio demonstrates a strong and consistent downward trend, declining from 7.80 in 2018 to 2.53 in 2022. The most pronounced correction occurred between 2018 and 2019, where the ratio fell to 3.75. This trajectory continued through 2022, indicating a systematic reduction in the proportion of debt used to finance the company's assets.
- Solvency and Risk Implications
- The marked decrease in the leverage ratio suggests a significant reduction in financial risk and an improvement in long-term solvency. By shifting from a high-leverage position of 7.80 to a more conservative 2.53, the company has decreased its dependence on external borrowing and increased its equity cushion, thereby enhancing its overall financial resilience.
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Interest Coverage
Paramount Global, interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Paramount | 1,104) | 4,543) | 2,422) | 3,308) | 1,960) | |
| Add: Net income attributable to noncontrolling interest | 110) | 88) | 279) | 31) | —) | |
| Less: Net earnings from discontinued operations, net of tax | 379) | 162) | 117) | 38) | —) | |
| Add: Income tax expense | 227) | 646) | 535) | (9) | 273) | |
| Add: Interest expense | 931) | 986) | 1,031) | 962) | 467) | |
| Earnings before interest and tax (EBIT) | 1,993) | 6,101) | 4,150) | 4,254) | 2,700) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 2.14 | 6.19 | 4.03 | 4.42 | 5.78 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Alphabet Inc. | 200.80 | 263.24 | — | — | — | |
| Comcast Corp. | 3.38 | 5.46 | — | — | — | |
| Meta Platforms Inc. | 164.74 | 3,153.27 | — | — | — | |
| Netflix Inc. | 8.45 | 8.63 | — | — | — | |
| Walt Disney Co. | 4.41 | 2.66 | -0.06 | — | — | |
| Interest Coverage, Sector | ||||||
| Media & Entertainment | 18.95 | 24.80 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Communication Services | 8.50 | 11.90 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 1,993 ÷ 931 = 2.14
2 Click competitor name to see calculations.
The analysis of solvency ratios indicates a significant deterioration in interest coverage capacity by the end of the observation period. While the company maintained a robust ability to service its debt through 2021, the 2022 fiscal year shows a marked decline in financial flexibility.
- Earnings Before Interest and Tax (EBIT)
- Operating performance exhibited a general upward trajectory from 2018 to 2021, peaking at 6,101 million USD. However, a substantial contraction occurred in 2022, with EBIT falling to 1,993 million USD, representing a sharp decline in the earnings available to cover financial obligations.
- Interest Expense
- Interest costs increased sharply between 2018 and 2019, rising from 467 million USD to 962 million USD. Following this initial surge, the expense remained relatively stable, fluctuating between 931 million USD and 1,031 million USD over the subsequent four years.
- Interest Coverage Ratio
- The coverage ratio fluctuated throughout the period, reaching a peak of 6.19 in 2021 before dropping to 2.14 in 2022. This decline is primarily attributable to the precipitous drop in EBIT rather than an increase in interest costs, indicating that the margin of safety for debt servicing has narrowed considerably.
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Fixed Charge Coverage
Paramount Global, fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| U.S. federal statutory income tax rate | 21.00% | 21.00% | 21.00% | 21.00% | 21.00% | |
| Selected Financial Data (US$ in millions) | ||||||
| Net earnings attributable to Paramount | 1,104) | 4,543) | 2,422) | 3,308) | 1,960) | |
| Add: Net income attributable to noncontrolling interest | 110) | 88) | 279) | 31) | —) | |
| Less: Net earnings from discontinued operations, net of tax | 379) | 162) | 117) | 38) | —) | |
| Add: Income tax expense | 227) | 646) | 535) | (9) | 273) | |
| Add: Interest expense | 931) | 986) | 1,031) | 962) | 467) | |
| Earnings before interest and tax (EBIT) | 1,993) | 6,101) | 4,150) | 4,254) | 2,700) | |
| Add: Operating lease cost | 373) | 374) | 379) | 406) | 212) | |
| Earnings before fixed charges and tax | 2,366) | 6,475) | 4,529) | 4,660) | 2,912) | |
| Interest expense | 931) | 986) | 1,031) | 962) | 467) | |
| Operating lease cost | 373) | 374) | 379) | 406) | 212) | |
| Preferred stock dividends | 58) | 44) | —) | —) | —) | |
| Preferred stock dividends, tax adjustment1 | 15) | 12) | —) | —) | —) | |
| Preferred stock dividends, after tax adjustment | 73) | 56) | —) | —) | —) | |
| Fixed charges | 1,377) | 1,416) | 1,410) | 1,368) | 679) | |
| Solvency Ratio | ||||||
| Fixed charge coverage2 | 1.72 | 4.57 | 3.21 | 3.41 | 4.29 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors3 | ||||||
| Alphabet Inc. | 22.90 | 30.80 | — | — | — | |
| Comcast Corp. | 2.82 | 4.48 | — | — | — | |
| Meta Platforms Inc. | 15.18 | 31.41 | — | — | — | |
| Netflix Inc. | 5.00 | 5.46 | — | — | — | |
| Walt Disney Co. | 3.25 | 2.07 | 0.32 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Media & Entertainment | 9.54 | 13.00 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Communication Services | 4.31 | 6.03 | — | — | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Preferred stock dividends, tax adjustment = (Preferred stock dividends × U.S. federal statutory income tax rate) ÷ (1 − U.S. federal statutory income tax rate)
= (58 × 21.00%) ÷ (1 − 21.00%) = 15
2 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,366 ÷ 1,377 = 1.72
3 Click competitor name to see calculations.
The analysis of solvency metrics from 2018 to 2022 reveals a significant deterioration in the capacity to meet fixed obligations by the end of the period, characterized by high volatility in earnings and a substantial increase in fixed costs.
- Earnings Before Fixed Charges and Tax
- Earnings exhibited an upward trend between 2018 and 2021, rising from US$ 2,912 million to a peak of US$ 6,475 million. However, a sharp reversal occurred in 2022, with earnings falling to US$ 2,366 million, representing the lowest level recorded throughout the five-year period.
- Fixed Charges
- A substantial increase in fixed charges was observed between 2018 and 2019, where costs rose from US$ 679 million to US$ 1,368 million. From 2019 through 2022, these charges remained relatively stable, fluctuating within a narrow range between US$ 1,368 million and US$ 1,416 million.
- Fixed Charge Coverage Ratio
- The coverage ratio demonstrated instability, starting at 4.29 in 2018 and declining to 3.21 by 2020. Although a recovery to a peak of 4.57 was achieved in 2021, the ratio plummeted to 1.72 in 2022. This final decline indicates a marked reduction in the financial margin available to cover fixed obligations, signaling an increase in solvency risk.
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