Walgreens Boots Alliance Inc. (NASDAQ:WBA)

Debt to equity

The debt to equity ratio showed an overall increasing trend from 0.22 in 2014 to 0.72 in 2019, indicating a gradual rise in financial leverage and dependency on debt financing relative to shareholders' equity. The ratio experienced fluctuations, rising sharply to 0.64 in 2016, dropping to 0.47 in 2017, then increasing again through 2018 and 2019.

Debt to capital

This ratio followed a similar upward pattern, increasing from 0.18 in 2014 to 0.42 in 2019. It peaked at 0.39 in 2016, declined to 0.32 in 2017, and steadily increased thereafter. This indicates a rising proportion of debt within the company's total capital structure over the given period.

Debt to assets

The debt to assets ratio rose from 0.12 in 2014 to 0.25 in 2019, demonstrating an increasing share of debt in total asset financing. The ratio increased until 2016, then decreased in 2017 before stabilizing around 0.21-0.26.

Financial leverage

Financial leverage consistently increased from 1.82 in 2014 to 2.88 in 2019. This indicates that the company used progressively more debt to finance its assets relative to equity, reflecting a higher risk profile and potential return amplification.

Interest coverage

Interest coverage showed a declining trend over the period, falling from a high of 23.8 in 2014 to 7.46 in 2019. Despite a slight recovery in 2018, the steady decrease suggests diminishing ability to cover interest expenses from operating earnings.

Fixed charge coverage

Fixed charge coverage remained relatively stable, fluctuating between 2.05 and 2.48. The ratio peaked at 2.48 in 2018 but decreased to 2.05 in 2019. This points to a consistent, though slightly weakening, capacity to meet fixed financial obligations.

Total Debt

The total debt exhibited a marked increase from 2014 to 2016, rising from US$4,510 million to US$19,028 million, indicating a strong upward borrowing trend during this period. However, this was followed by a significant reduction in 2017 to US$12,935 million. Subsequently, total debt gradually increased again, reaching US$16,836 million by 2019.

Total Shareholders’ Equity

Total shareholders’ equity showed an overall declining trend starting from a peak of US$30,861 million in 2015. It decreased consistently each year through 2019, ending at US$23,512 million. This continuous decline may reflect diminishing retained earnings or other factors reducing the equity base over the years.

Debt to Equity Ratio

The debt to equity ratio rose sharply from 0.22 in 2014 to 0.64 in 2016, reflecting the rapid increase in debt relative to equity. Following this peak, the ratio declined to 0.47 in 2017, consistent with the reduction in debt and the still relatively high equity. It increased again in 2018 to 0.55 and further to 0.72 in 2019, indicating a return to a higher leverage position as debt increased and equity continued to fall.

Overall Analysis

The data reveals a pattern of increased leverage over the examined period, with total debt expanding significantly in the initial years and fluctuating thereafter, while shareholders’ equity consistently contracted. This resulted in a higher debt to equity ratio, suggesting a shift towards greater financial risk and reliance on debt financing. The reduction in equity may warrant further investigation into the company’s retained earnings, dividend policies, or other equity-affecting factors.

Total Debt

The total debt exhibited a significant increase from 2014 to 2016, rising from $4,510 million to $19,028 million. In the following years, the debt level showed some fluctuations, decreasing notably in 2017 to $12,935 million, then increasing again in 2018 and 2019 to $14,397 million and $16,836 million, respectively. This indicates a pattern of initial rapid debt accumulation followed by some reduction and then a renewed upward trend in liabilities.

Total Capital

Total capital followed a generally increasing trend from 2014 until 2016, growing from $24,967 million to $48,908 million. However, from 2017 onwards, total capital contracted and stabilized around the $40,000 million range, with values of $40,401 million in 2017, $40,404 million in 2018, and $40,348 million in 2019. This suggests a shift from capital expansion to a period of relative stability or slight decline.

Debt to Capital Ratio

The debt to capital ratio increased substantially from 0.18 in 2014 to 0.39 in 2016, reflecting the rapid rise in debt relative to total capital. In 2017, the ratio decreased to 0.32, indicating a reduction in leverage, but resumed an increasing trajectory thereafter, reaching 0.42 by 2019. This trend implies growing financial leverage over time, with a brief period of deleveraging followed by an increase in the proportion of debt financing.

The financial data indicates several notable trends over the six-year period from 2014 to 2019. Total debt exhibits significant fluctuations, starting at a relatively moderate level in 2014, sharply increasing in 2015, and peaking in 2016. This is followed by a decrease in 2017 before rising again in 2018 and 2019. Despite this volatility, the total debt remains substantially higher in the latter years compared to the initial period.

Total assets demonstrate a strong growth trend from 2014 through 2016, nearly doubling between 2014 and 2015, and continuing to increase albeit at a slower pace into 2016. However, from 2017 onwards, total assets appear to stabilize and slightly decline, maintaining a more consistent level with minor variations through 2018 and 2019.

The debt to assets ratio reflects the interplay between total debt and total assets. It starts at a low level in 2014, rises markedly in 2015 and 2016, corresponding with the increase in total debt relative to assets. The ratio then decreases in 2017, aligning with the reduction in total debt and stable assets, before showing a modest upward trend again in 2018 and 2019. Overall, the ratio remains below 0.3, indicating that debt constitutes less than a third of total assets throughout this period.

Total Debt

Shows significant increases in 2015 and 2016, temporary decline in 2017, followed by resurgence in 2018 and 2019.

Total Assets

Exhibits substantial growth up to 2016, then plateaus and slightly decreases from 2017 onwards.

Debt to Assets Ratio

Increases sharply in early years coinciding with rising debt, dips in 2017 with debt decline, and modestly rises again subsequently, remaining below 0.3 throughout.

The financial data over the six-year period reveals several notable trends in the company's asset base, shareholders’ equity, and financial leverage.

Total Assets

Total assets increased substantially from 37,182 million USD in 2014 to a peak of 72,688 million USD in 2016, indicating significant growth or acquisitions during this timeframe. However, after 2016, total assets declined to 66,009 million USD in 2017 and then fluctuated slightly, ending at 67,598 million USD in 2019, suggesting a reduction in asset base following earlier expansion.

Total Shareholders’ Equity

Shareholders’ equity showed an initial sharp rise from 20,457 million USD in 2014 to 30,861 million USD in 2015. Subsequently, equity steadily declined each year to 23,512 million USD by 2019. This downward trend may reflect accumulated losses, dividend distributions exceeding net income, share repurchases, or other equity-reducing factors over the later years.

Financial Leverage (ratio)

Financial leverage increased consistently from 1.82 in 2014 to 2.88 in 2019. This rising ratio indicates growing reliance on debt financing relative to equity, which corresponds with the declining equity base and the fluctuations in total assets. The upward trend suggests an increased financial risk profile with leverage becoming more pronounced over time.

In summary, the period from 2014 to 2016 was characterized by rapid asset growth and an increase in equity. In contrast, the years following 2016 saw a contraction in assets and a steady decline in equity, accompanied by a rising reliance on debt as seen in the increasing financial leverage ratio. These dynamics suggest a strategic shift or external pressures influencing the capital structure and balance sheet composition.

The financial data of the company over the period from 2014 to 2019 reveal several notable trends and shifts in its operating performance and financial costs.

Earnings Before Interest and Tax (EBIT)

The EBIT shows a generally volatile trend. Starting from $3,713 million in 2014, it increased substantially to a peak of $5,940 million in 2015. Following this peak, EBIT slightly declined to $5,784 million in 2016 and continued a downward trend to $5,554 million in 2017. There was a rebound to $6,645 million in 2018, marking the highest point in the six-year span. However, the figure fell again in 2019 to $5,254 million, indicating variability in operating profitability.

Interest Expense, Net

Net interest expense increased markedly throughout the period. Starting from a relatively low $156 million in 2014, the expense rose sharply to $605 million by 2015. It remained elevated with minor fluctuations, with values around $596 million in 2016 and climbing to $693 million in 2017. There was a slight decrease to $616 million in 2018, but it climbed again to the highest value of $704 million in 2019, indicating a rising cost of debt or increased borrowing.

Interest Coverage Ratio

The interest coverage ratio, which measures the company’s ability to meet its interest obligations from operating earnings, exhibited a declining trend over the analyzed years. A very strong coverage of 23.8 times in 2014 dropped sharply to below 10 times in 2015 (9.82) and remained around that level in 2016 (9.7). The ratio further decreased consistently to 8.01 in 2017, briefly improved to 10.79 in 2018, possibly due to increased EBIT, but then declined again to 7.46 in 2019. This decline suggests a reduction in the company’s buffer against interest expenses, pointing to increased financial risk.

Overall, the data shows that while earnings before interest and tax fluctuated with peaks and troughs, the interest expense consistently increased over the years. Consequently, interest coverage weakened, reflecting rising financial leverage or worsening profitability relative to interest commitments. These trends underscore an increasing burden of financial obligations and a potential area of concern regarding the company's capacity to comfortably cover interest costs in the later years of this period.

Earnings Before Fixed Charges and Tax

Over the six-year period, the earnings before fixed charges and tax exhibited a fluctuating trend. Starting at 6,400 million USD in 2014, earnings increased significantly in 2015 to 9,116 million USD and remained relatively stable through 2016 and 2017, with values around 9,100 and 8,800 million USD respectively. In 2018, there was a notable increase to 10,092 million USD, representing the highest point in the observed timeframe. However, in 2019, earnings declined to 8,876 million USD, marking a substantial drop from the previous year’s peak.

Fixed Charges

Fixed charges showed a consistent upward trend across the years. Beginning at 2,843 million USD in 2014, fixed charges rose steadily each year, reaching 4,326 million USD by 2019. This represents an overall increase of approximately 52% over the six years. This continuous rise suggests increasing financial obligations or expenses categorized under fixed charges.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio, which indicates the company's ability to cover its fixed charges with earnings before fixed charges and tax, varied throughout the period. The ratio started at 2.25 in 2014, improved to a peak of 2.48 in 2018, demonstrating effectively increased coverage capacity. However, the ratio declined notably to 2.05 in 2019, the lowest value in the period evaluated. This decline reflects a reduction in the margin by which earnings cover fixed charges, potentially signaling tighter financial flexibility or increased risk in servicing fixed obligations.

Summary

Overall, while earnings before fixed charges and tax displayed an upward trajectory with some volatility, fixed charges increased steadily. The fixed charge coverage ratio improved initially but weakened notably in the final year, indicating growing pressure on earnings relative to fixed financial costs. This pattern underscores the importance of monitoring fixed obligations as a rising trend in fixed charges combined with declining coverage may affect financial stability. The year 2019, in particular, suggests a shift toward reduced earnings relative to fixed cost commitments, warranting closer examination and potential strategic adjustments.