Walgreens Boots Alliance Inc. (NASDAQ:WBA)

The financial leverage ratio exhibited a gradual upward trend over the periods, starting around 2.36 and increasing to over 4.0 by the final quarter. This indicates an increasing use of debt in the capital structure relative to equity.

The debt to equity ratio initially declined from 0.7 to a low around 0.44-0.46, before rising again steadily and ending at 0.8. When including operating lease liabilities, this ratio showed a similar pattern but experienced a notable spike in the last three quarters, reaching nearly 2.0, suggesting a significant increase in lease obligations counted as debt in that timeframe.

Debt to capital ratios followed a mild U-shaped pattern, decreasing from approximately 0.41 to 0.30-0.32 and then climbing back to 0.44 by the last period. Including operating lease liabilities, this ratio remained stable before jumping substantially to 0.66 at the end, further supporting the impact of recognizing lease liabilities.

Debt to assets ratios decreased initially from 0.3 to approximately 0.19 and remained relatively stable through most periods. However, when operating lease liabilities were included, there was a marked increase from about 0.25 to nearly 0.47 in the final periods, reflecting the growing impact of lease liabilities on overall assets financing.

Interest coverage ratio showed a pronounced decreasing trend from a very strong level above 22 down to just over 2.4 by the last quarter. This decline points to reduced earnings capacity relative to interest expenses, potentially signaling increased financial risk or lower operating profitability.

Summary of trends:

The company demonstrated increasing leverage over time, with debt usage rising relative to equity and capital.

The recognition of operating lease liabilities significantly altered leverage and debt ratios in the latest periods, causing notable increases across multiple metrics.

Despite initially strong interest coverage ratios, the company's ability to cover interest expenses deteriorated substantially by the end of the observation period.

Overall, the data indicates a movement toward higher financial risk associated with greater debt and lease-related obligations, alongside weakening earnings cushion for interest payments.

Total Debt

The total debt experienced fluctuations over the reported periods. Initially, it increased from approximately 14.5 billion USD to a peak near 19 billion USD by mid-2016, followed by a moderate decline and relative stabilization around 16 to 18 billion USD in subsequent quarters. A slight decreasing trend is noted toward the latest periods, ending near 16.5 billion USD.

Total Shareholders’ Equity

Shareholders' equity showed variability with an initial rise from 20.6 billion USD to over 30 billion USD between late 2014 and early 2015. After this peak, equity levels experienced a gradual downward trend, with fluctuations moving mostly in the range of 23.5 to 27.5 billion USD. The latter periods suggest a slight decline, closing near 20.7 billion USD.

Debt to Equity Ratio

The debt to equity ratio demonstrated notable variability throughout the periods. Initially, the ratio declined from 0.7 to a low around 0.44 by mid-2016, indicating a relatively stronger equity base compared to debt. However, following this, the ratio increased steadily, reaching approximately 0.8 in the latest quarter. This increasing ratio in later periods reflects a relative increase in debt compared to equity, potentially implying higher financial leverage and associated risk.

Summary Observations

Overall, the analysis indicates a pattern where the company initially reduced leverage as evidenced by a decreasing debt to equity ratio. However, post-2016, an observable reversal began, with debt levels stabilizing at a high level while equity declined, contributing to an increasing debt to equity ratio. This suggests a shift toward greater financial leverage over time. The fluctuations in both equity and debt imply active capital structure management, but the recent trend toward higher leverage could warrant scrutiny regarding risk and financial stability.

The financial data demonstrates noteworthy trends in the company's leverage and equity positions over the analyzed quarters. A detailed examination reveals fluctuating debt levels, shareholders' equity movements, and consequent impacts on the debt-to-equity ratio.

Total Debt (including operating lease liability)

The total debt exhibits variability over the periods. Initially, it ranged between approximately $14.3 billion and $19 billion, reflecting moderate fluctuations. However, there is a marked increase beginning in the later quarters of 2019 and into 2020, with debt levels surging to over $40 billion. This sharp rise suggests a significant change in financing strategy or increased borrowing, possibly related to strategic investments, restructuring, or external factors affecting liquidity needs.

Shareholders’ Equity

Shareholders’ equity shows a generally declining trend over the same timeframe. Starting from around $20.6 billion, equity grew substantially to over $30.8 billion by the early 2015 quarters, indicating a period of equity strengthening or retained earnings accumulation. Post-2015, the equity levels gradually diminished, trending downward to approximately $20.7 billion by mid-2020. This decline may be attributable to factors such as dividend payouts, share repurchases, or losses reducing retained earnings.

Debt to Equity Ratio

The debt-to-equity ratio follows the combined effect of debt and equity trends. Early values are below 1.0, generally ranging from 0.44 to 0.73, indicative of conservative leverage levels with more equity than debt. However, from late 2019 onwards, this ratio escalates sharply, reaching values above 1.7 and nearly 2.0 by mid-2020. This reflects the substantial increase in debt relative to equity, pointing to heightened leverage and potentially increased financial risk.

In summary, the company experienced a period of stable and moderate leverage with supportive equity levels until approximately late 2019. Afterwards, total debt grew significantly while equity declined, resulting in elevated debt-to-equity ratios. This shift denotes a strategic or necessary increase in borrowing that substantially alters the capital structure, warranting attention to associated risks and potential impacts on financial flexibility.

The analysis of the quarterly financial data over the observed periods reveals several notable trends related to the company's debt structure and capital composition.

Total Debt

The total debt displayed fluctuations over the reporting quarters. Initially, debt increased from approximately $14.5 billion to around $17 billion between late 2014 and early 2015, followed by a general downward movement reaching as low as $13 billion toward late 2017. Thereafter, a resurgence in debt levels is evident, peaking near $18 billion by early 2019, before declining again to approximately $16.5 billion by mid-2020. This volatility indicates periodic adjustments in debt financing, possibly linked to operational or strategic factors.

Total Capital

Total capital showed considerable variation, with a substantial increase from about $35 billion in late 2014 to nearly $48 billion in early 2015. Following this peak, the capital levels trended slightly downward and stabilized mostly between $39 billion and $43 billion through most of the subsequent periods. Toward the end of the timeline, total capital breached $40 billion but ended on a lower note at roughly $37 billion by mid-2020. This pattern suggests fluctuating capital base possibly affected by equity changes, retained earnings, or other comprehensive income components.

Debt to Capital Ratio

The debt to capital ratio experienced a decline from 0.41 to a low of 0.30 by mid-2016, indicating a decrease in the proportion of debt within the capital structure. Following mid-2016, the ratio rose steadily, reaching and maintaining a level around 0.42 from late 2018 through early 2020, and finally increasing to 0.44 by mid-2020. This trend reflects increased leverage relative to the total capital, suggesting a strategic shift toward greater reliance on debt financing in the latter periods.

Overall, the company’s financial leverage exhibited increased variability with an initial lowering of debt proportion followed by a period of rising leverage. The fluctuations in total debt and capital levels, coupled with the changing debt to capital ratio, imply active management of the capital structure, possibly driven by market conditions or internal financing needs. The rising leverage in the most recent quarters could indicate a strategic initiative to optimize the cost of capital or support growth investments.

The analysis of the financial data reveals distinct trends in the company's debt levels, total capital, and leverage ratios over the observed quarters.

Total Debt (including operating lease liability)

The total debt demonstrates a fluctuating pattern throughout the periods. Initially, there was a general decrease from US$14,530 million in late 2014 to a low point around US$13,525 million by mid-2016. However, beginning from the third quarter of 2016, there is an upward trajectory with debt levels rising to a peak of approximately US$19,210 million by mid-2017. Subsequently, debt decreases again, before a sharp increase occurs at the start of 2020, reaching over US$41,000 million. This significant increase in debt during the last three recorded quarters may suggest substantial new borrowing or reclassification of liabilities.

Total Capital (including operating lease liability)

Total capital follows a somewhat similar trajectory to total debt with notable fluctuations. Starting at US$35,166 million at the end of 2014, the capital base expands considerably to nearly US$47,876 million in early 2015 and subsequently fluctuates but remains relatively stable around US$40,000 to US$49,000 million through late 2019. A major jump is evident at the beginning of 2020, where total capital surges to over US$64,000 million before slightly tapering to about US$61,457 million. This increase coincides with the rise in total debt, indicating an overall expansion of the company’s capital structure, likely influenced by new lease liabilities or financing activities.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio displays variability closely aligned with the movements in debt and capital levels. The ratio initially declines from 0.41 at the end of 2014 to a low of approximately 0.30 in mid-2016, reflecting a period of deleveraging. From late 2016 through 2019, the ratio consistently rises from 0.39 to 0.42, indicating a gradual increase in leverage. A substantial increase appears in early 2020, with the ratio escalating to as high as 0.66 by mid-2020. This sharp rise suggests a significant shift in the company's leverage, potentially driven by increased borrowing relative to its capital base, raising considerations about financial risk exposure during that period.

In summary, the company’s financial data over the analyzed quarters reflects phases of balance sheet optimization followed by increased leverage and capital expansion, culminating in a marked increase in debt and leverage ratios in early 2020. These changes may be associated with strategic financing decisions or responses to external economic conditions during that period.

The analysis of the quarterly financial data reveals several notable trends related to total debt, total assets, and the debt-to-assets ratio over the observed periods.

Total Debt

Total debt figures exhibit fluctuating behavior throughout the observed quarters. Starting at 14,530 million USD, debt initially increased, reaching a peak of 19,028 million USD by August 2016. After this peak, there is an observed decline and further fluctuations, with levels dropping below 13,000 million USD by August 2017 and subsequently rising again. In the latest periods, total debt shows a modest decrease, settling around 16,490 million USD by May 2020. Overall, the debt trend indicates periods of both increase and reduction, suggesting active debt management and possible refinancing or repayment activities.

Total Assets

Total assets remained relatively stable with some variability across the quarters. Initial values of about 48,612 million USD in November 2014 surged to over 71,000 million USD in early 2015, reflecting a significant asset increase. Subsequent quarters showed some volatility with minor declines and rises, but assets generally maintained levels between approximately 66,000 and 74,000 million USD through mid-2018. In the last few periods, there is a noticeable jump, with total assets surpassing 90,000 million USD by early 2020, indicating potential asset growth or acquisition-related activities.

Debt to Assets Ratio

The debt-to-assets ratio displays a downward trend in the initial periods, decreasing from 0.3 to around 0.2 between late 2014 and mid-2016. This decline corresponds to the increase in assets relative to debt during this time. However, from mid-2016 through 2019, the ratio increases again, reaching approximately 0.26, reflecting a rise in debt relative to assets. Notably, in the latest quarters up to May 2020, there is a significant reduction in the ratio, dropping to around 0.18–0.19. This decline implies an improved balance sheet leverage position, likely due to asset growth outpacing debt or effective debt reduction strategies.

In summary, the data indicates that while total debt has experienced fluctuations, total assets have generally increased over time, especially in recent quarters. The debt-to-assets ratio reflects these patterns, showing initial improvement, mid-period increase, and recent strong leverage reduction, highlighting dynamic financial management and potential strategic shifts in capital structure.

The financial data reveals distinct trends in the company’s debt and asset positions over the observed quarterly periods. A close examination of total debt, total assets, and the debt-to-assets ratio provides insights into the evolving financial structure and leverage dynamics.

Total Debt (including operating lease liability)

The total debt exhibits fluctuations over the analyzed timeframe. Beginning at approximately 14.5 billion USD, it generally remains within the 14–19 billion USD range throughout most of the periods. There is a notable spike starting around early 2020, where total debt more than doubles to roughly 41 billion USD, maintaining this elevated level for the last few quarters. This sharp increase suggests significant new debt acquisition or accounting changes, likely associated with operational shifts or responses to external market conditions at that time.

Total Assets

The company’s total assets have shown relative stability with some volatility over the quarters. Starting near 49 billion USD, the assets generally range between 66 billion to 73 billion USD during the mid-periods. Similar to debt trends, there is a noticeable jump in total assets around early 2020, increasing to approximately 90 billion USD, which corresponds with the sharp rise in debt. This growth in assets could be linked to acquisitions, revaluations, or growth in operational scale during this timeframe.

Debt to Assets Ratio (including operating lease liability)

This ratio reflects changes in leverage over time. Initially, the ratio starts at 0.3 and decreases steadily to about 0.2 by mid-2016, indicating a lower proportion of debt relative to assets during that period. From late 2016 through early 2020, the ratio stabilizes around 0.25 to 0.26, implying a balanced leverage position maintained through those quarters. However, from early 2020 onward, there is a significant increase, with the ratio rising sharply to approximately 0.45 to 0.47. This indicates a substantial increase in financial leverage, as debt grows at a faster pace than assets.

Overall, the data suggests that while the company maintained relatively consistent total debts and assets with moderate leverage for several years, there was a marked shift in early 2020 characterized by a sharp increase in liabilities and assets, leading to substantially higher leverage. This shift may reflect strategic financial decisions or external economic factors necessitating increased debt financing.

The analysis of the quarterly financial data reveals notable trends in the company's assets, equity, and financial leverage over the reported periods.

Total Assets

Total assets exhibited a fluctuating pattern with an overall increase from approximately $48.6 billion at the end of November 2014 to amounts ranging between $86.4 billion and $90.8 billion during 2019 and early 2020. After reaching close to $71.4 billion in February 2015, assets generally remained within the $66 billion to $72 billion range from mid-2015 to mid-2019. A significant increase occurred starting from November 2019, peaking at $90.8 billion in that period, and slightly declining to $86.4 billion by May 2020.

Total Shareholders’ Equity

Shareholders' equity increased sharply from about $20.6 billion in November 2014 to over $30 billion by mid-2015 but then demonstrated a downward trend. From late 2015 through 2019, equity gradually declined from approximately $30.7 billion to around $23.5 billion. In the final quarters analyzed, equity remained relatively stable near $23.7 billion before dipping significantly to about $20.7 billion by May 2020, indicating a reduction in net assets attributable to shareholders during this later period.

Financial Leverage

The financial leverage ratio, defined as the ratio of total assets to shareholders’ equity, initially decreased slightly from 2.36 in November 2014 to approximately 2.18 by mid-2016, reflecting moderate leverage levels at that time. From mid-2016 onward, this ratio saw a consistent upward trend, increasing steadily to 2.88 by late 2019. A sharp escalation occurred in the first half of 2020, with leverage rising to above 4.0, culminating at 4.17 in May 2020. This escalation indicates increased reliance on debt or other liabilities relative to equity.

In summary, the company experienced growth in total assets over the reported timeframe, particularly in late 2019 and early 2020. Conversely, shareholders’ equity showed a declining trend after an early peak, leading to a rising financial leverage ratio, especially pronounced in 2020. This shift suggests increased financial risk and greater use of debt financing relative to equity in recent periods.

The analysis of the financial metrics over the quarters reveals several notable trends regarding earnings before interest and tax (EBIT), interest expense, net, and interest coverage ratio.

Earnings Before Interest and Tax (EBIT)

EBIT fluctuates significantly throughout the observed periods. Initial figures show a rise from 1253 million USD to a peak of 2595 million USD in early 2015, followed by a sharp decline to 223 million USD in the third quarter of 2015. Subsequently, the values oscillate, with intermittent recoveries reaching values near or above 1800 million USD, such as in early 2018 and mid-2018. However, the trend deteriorates in the most recent periods, notably posting a negative EBIT of -1611 million USD in the last quarter observed. This indicates substantial operational challenges or one-time charges affecting profitability near the end of the timeline.

Interest Expense, Net

Interest expense shows a relatively stable and gradual increase over the quarters. Beginning at 55 million USD, it rises steadily to a range between 150 and 190 million USD for the majority of the subsequent periods. There are no sharp spikes or decreases, suggesting consistent borrowing costs or debt servicing levels, with a slight decline back to 155 million USD in the latest quarter.

Interest Coverage Ratio

The interest coverage ratio demonstrates a downward trajectory, reflecting the relationship between EBIT and interest expense. Starting from a high of 22.45, the ratio decreases considerably to levels below 10 during most quarters, indicating tighter earnings relative to interest obligations. Towards the end of the period, the ratio dips markedly to 2.42, correlating with the negative EBIT. This low coverage suggests increased risk in meeting interest payments from operational earnings, highlighting potential financial strain or diminished profitability.

Overall, the financial data indicate volatility and a general decline in operating earnings relative to interest costs. Despite relatively steady interest expenses, the decreasing EBIT and resulting lowered interest coverage ratio suggest deteriorating operating performance and increasing leverage risks over time. The negative EBIT in the latest quarter is especially indicative of significant operational or financial issues requiring attention.