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
Warner Bros. Discovery Inc., solvency ratios
Based on: 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), 10-K (reporting date: 2017-12-31).
The analysis of solvency metrics from 2017 to 2021 reveals a consistent and significant trend toward deleveraging and improved financial stability. There is a marked reduction in the reliance on debt across all primary solvency indicators, suggesting a strategic shift toward a more sustainable capital structure.
- Debt Proportion Ratios
- A sustained downward trend is observed in debt-to-equity, debt-to-capital, and debt-to-assets ratios. The debt-to-equity ratio decreased substantially from 3.21 in 2017 to 1.29 by 2021, while the debt-to-assets ratio fell from 0.66 to 0.44 over the same period. The inclusion of operating lease liabilities creates a marginal increase in these ratios, but the overall trajectory remains consistently negative, indicating that the reduction in debt is not offset by lease obligations.
- Financial Leverage
- Financial leverage exhibited a steady decline, moving from 4.89 in 2017 to 2.97 in 2021. This compression in leverage indicates a reduction in the use of borrowed funds to finance assets, which typically correlates with a lower risk profile and reduced financial volatility.
- Debt Serviceability and Coverage
- Coverage ratios show a dramatic recovery and stabilization. Both interest coverage and fixed charge coverage began at critical levels in 2017, with values below 1.0 (0.71 and 0.77 respectively), suggesting that earnings were insufficient to cover interest and fixed obligations. A sharp improvement occurred by 2019, with interest coverage peaking at 4.39. While there was a slight moderation in these ratios through 2021, the figures remained significantly higher than the 2017 baseline, ending at 3.26 for interest coverage and 2.95 for fixed charge coverage.
Overall, the data demonstrates a transition from a high-risk solvency position in 2017 to a more robust financial footing by 2021. The simultaneous reduction in debt ratios and the increase in coverage ratios indicate a strengthened capacity to meet long-term obligations.
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Debt to Equity
Warner Bros. Discovery Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Finance lease liabilities, current | 58) | 57) | 47) | —) | —) | |
| Current portion of debt | 339) | 335) | 609) | 1,860) | 30) | |
| Noncurrent portion of debt | 14,420) | 15,069) | 14,810) | 15,185) | 14,755) | |
| Finance lease liabilities, noncurrent | 197) | 184) | 203) | —) | —) | |
| Total debt | 15,014) | 15,645) | 15,669) | 17,045) | 14,785) | |
| Total Discovery, Inc. stockholders’ equity | 11,599) | 10,464) | 9,891) | 8,386) | 4,610) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.29 | 1.50 | 1.58 | 2.03 | 3.21 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | — | — | — | — | |
| Comcast Corp. | 0.99 | — | — | — | — | |
| Meta Platforms Inc. | 0.00 | — | — | — | — | |
| Netflix Inc. | 0.97 | — | — | — | — | |
| Walt Disney Co. | 0.62 | 0.71 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Media & Entertainment | 0.31 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Communication Services | 0.65 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Total Discovery, Inc. stockholders’ equity
= 15,014 ÷ 11,599 = 1.29
2 Click competitor name to see calculations.
The financial data indicates a consistent improvement in the solvency position between 2017 and 2021. A significant reduction in financial leverage is evident, characterized by a steady decline in the debt-to-equity ratio over the five-year period.
- Total Debt Trends
- Total debt experienced a peak in 2018 at 17,045 million US$, followed by a gradual and sustained decrease to 15,014 million US$ by the end of 2021. This trajectory suggests a period of liability reduction following the 2018 peak.
- Stockholders' Equity Growth
- A substantial and uninterrupted increase in stockholders' equity is observed, rising from 4,610 million US$ in 2017 to 11,599 million US$ in 2021. The most pronounced growth occurred between 2017 and 2018, contributing significantly to the overall strengthening of the capital base.
- Debt to Equity Ratio Analysis
- The debt to equity ratio declined sharply from 3.21 in 2017 to 1.29 in 2021. This downward trend is the result of the simultaneous increase in equity and the reduction of total debt, reflecting a decreased reliance on borrowed funds relative to shareholder capital and an overall improvement in long-term financial stability.
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Debt to Equity (including Operating Lease Liability)
Warner Bros. Discovery Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Finance lease liabilities, current | 58) | 57) | 47) | —) | —) | |
| Current portion of debt | 339) | 335) | 609) | 1,860) | 30) | |
| Noncurrent portion of debt | 14,420) | 15,069) | 14,810) | 15,185) | 14,755) | |
| Finance lease liabilities, noncurrent | 197) | 184) | 203) | —) | —) | |
| Total debt | 15,014) | 15,645) | 15,669) | 17,045) | 14,785) | |
| Operating lease liabilities, current (included in Accrued liabilities) | 62) | 71) | 82) | —) | —) | |
| Operating lease liabilities, noncurrent (included in Other noncurrent liabilities) | 567) | 592) | 621) | —) | —) | |
| Total debt (including operating lease liability) | 15,643) | 16,308) | 16,372) | 17,045) | 14,785) | |
| Total Discovery, Inc. stockholders’ equity | 11,599) | 10,464) | 9,891) | 8,386) | 4,610) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 1.35 | 1.56 | 1.66 | 2.03 | 3.21 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.11 | — | — | — | — | |
| Comcast Corp. | 1.06 | — | — | — | — | |
| Meta Platforms Inc. | 0.12 | — | — | — | — | |
| Netflix Inc. | 1.14 | — | — | — | — | |
| Walt Disney Co. | 0.66 | 0.75 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.38 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.79 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Discovery, Inc. stockholders’ equity
= 15,643 ÷ 11,599 = 1.35
2 Click competitor name to see calculations.
The analysis of solvency metrics between 2017 and 2021 reveals a significant and consistent improvement in the capital structure and overall financial stability. A systematic reduction in financial leverage is evident, driven by a combination of aggressive equity growth and the stabilization and subsequent reduction of total debt obligations.
- Total Debt Profile
- Total debt, including operating lease liabilities, experienced an initial increase from 14,785 million USD in 2017 to a peak of 17,045 million USD in 2018. Following this peak, a consistent downward trend was observed, with liabilities decreasing annually to reach 15,643 million USD by December 31, 2021.
- Equity Expansion
- Stockholders' equity demonstrated substantial and uninterrupted growth throughout the five-year period. The equity base expanded from 4,610 million USD in 2017 to 11,599 million USD in 2021. This steady accumulation of equity provided a stronger financial cushion and reduced the company's reliance on borrowed funds.
- Debt to Equity Ratio Trend
- The debt to equity ratio showed a sharp and continuous decline, falling from 3.21 in 2017 to 1.35 by 2021. The most significant reduction occurred between 2017 and 2018, where the ratio dropped from 3.21 to 2.03. The subsequent gradual decline underscores a strategic shift toward a more conservative solvency position and a strengthened balance sheet.
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Debt to Capital
Warner Bros. Discovery Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Finance lease liabilities, current | 58) | 57) | 47) | —) | —) | |
| Current portion of debt | 339) | 335) | 609) | 1,860) | 30) | |
| Noncurrent portion of debt | 14,420) | 15,069) | 14,810) | 15,185) | 14,755) | |
| Finance lease liabilities, noncurrent | 197) | 184) | 203) | —) | —) | |
| Total debt | 15,014) | 15,645) | 15,669) | 17,045) | 14,785) | |
| Total Discovery, Inc. stockholders’ equity | 11,599) | 10,464) | 9,891) | 8,386) | 4,610) | |
| Total capital | 26,613) | 26,109) | 25,560) | 25,431) | 19,395) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.56 | 0.60 | 0.61 | 0.67 | 0.76 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Alphabet Inc. | 0.06 | — | — | — | — | |
| Comcast Corp. | 0.50 | — | — | — | — | |
| Meta Platforms Inc. | 0.00 | — | — | — | — | |
| Netflix Inc. | 0.49 | — | — | — | — | |
| Walt Disney Co. | 0.38 | 0.41 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Media & Entertainment | 0.24 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Communication Services | 0.40 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 15,014 ÷ 26,613 = 0.56
2 Click competitor name to see calculations.
Between 2017 and 2021, a consistent improvement in the solvency profile is evident, characterized by a steady reduction in the proportion of debt relative to total capital.
- Debt to Capital Ratio Trend
- The debt to capital ratio exhibits a monotonic downward trend, decreasing from 0.76 in 2017 to 0.56 by the end of 2021. This decline indicates a progressive reduction in financial leverage and a lower reliance on borrowed funds to finance the capital structure over the five-year period.
- Total Debt Analysis
- Total debt peaked in 2018 at US$ 17,045 million. Following this peak, debt levels declined steadily for three consecutive years, ending at US$ 15,014 million in 2021. The reduction in total debt from its 2018 high suggests an active effort toward debt repayment or a reduction in new borrowings.
- Total Capital Evolution
- Total capital increased consistently throughout the period, rising from US$ 19,395 million in 2017 to US$ 26,613 million in 2021. The simultaneous increase in total capital and the decrease in total debt after 2018 indicates that the growth in the capital base was driven by non-debt components, such as equity.
The convergence of increasing total capital and decreasing total debt has resulted in a significantly strengthened solvency position. The reduction of the debt to capital ratio by 20 percentage points over the analyzed period reflects a lower risk profile regarding long-term debt obligations.
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Debt to Capital (including Operating Lease Liability)
Warner Bros. Discovery Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Finance lease liabilities, current | 58) | 57) | 47) | —) | —) | |
| Current portion of debt | 339) | 335) | 609) | 1,860) | 30) | |
| Noncurrent portion of debt | 14,420) | 15,069) | 14,810) | 15,185) | 14,755) | |
| Finance lease liabilities, noncurrent | 197) | 184) | 203) | —) | —) | |
| Total debt | 15,014) | 15,645) | 15,669) | 17,045) | 14,785) | |
| Operating lease liabilities, current (included in Accrued liabilities) | 62) | 71) | 82) | —) | —) | |
| Operating lease liabilities, noncurrent (included in Other noncurrent liabilities) | 567) | 592) | 621) | —) | —) | |
| Total debt (including operating lease liability) | 15,643) | 16,308) | 16,372) | 17,045) | 14,785) | |
| Total Discovery, Inc. stockholders’ equity | 11,599) | 10,464) | 9,891) | 8,386) | 4,610) | |
| Total capital (including operating lease liability) | 27,242) | 26,772) | 26,263) | 25,431) | 19,395) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.57 | 0.61 | 0.62 | 0.67 | 0.76 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.10 | — | — | — | — | |
| Comcast Corp. | 0.52 | — | — | — | — | |
| Meta Platforms Inc. | 0.10 | — | — | — | — | |
| Netflix Inc. | 0.53 | — | — | — | — | |
| Walt Disney Co. | 0.40 | 0.43 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.28 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.44 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 15,643 ÷ 27,242 = 0.57
2 Click competitor name to see calculations.
Between 2017 and 2021, a consistent improvement in the solvency profile is observed, characterized by a steady reduction in the proportion of debt relative to total capital.
- Total Debt (including operating lease liability)
- Total debt levels experienced an initial increase from US$ 14,785 million in 2017 to a peak of US$ 17,045 million in 2018. Following this peak, a gradual downward trajectory was maintained over the subsequent three years, with debt declining to US$ 15,643 million by the end of 2021.
- Total Capital (including operating lease liability)
- A continuous upward trend in total capital is evident throughout the analyzed period. Total capital grew from US$ 19,395 million in 2017 to US$ 27,242 million in 2021. The most significant expansion occurred between 2017 and 2018, with an increase of approximately US$ 6,036 million.
- Debt to Capital Ratio
- The debt to capital ratio exhibited a persistent decline from 0.76 in 2017 to 0.57 in 2021. This contraction suggests a strengthened financial position and a reduced reliance on leveraged funding. The reduction in the ratio was driven by the simultaneous expansion of the total capital base and the gradual reduction of total debt obligations after 2018.
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Debt to Assets
Warner Bros. Discovery Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Finance lease liabilities, current | 58) | 57) | 47) | —) | —) | |
| Current portion of debt | 339) | 335) | 609) | 1,860) | 30) | |
| Noncurrent portion of debt | 14,420) | 15,069) | 14,810) | 15,185) | 14,755) | |
| Finance lease liabilities, noncurrent | 197) | 184) | 203) | —) | —) | |
| Total debt | 15,014) | 15,645) | 15,669) | 17,045) | 14,785) | |
| Total assets | 34,427) | 34,087) | 33,735) | 32,550) | 22,555) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.44 | 0.46 | 0.46 | 0.52 | 0.66 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Alphabet Inc. | 0.04 | — | — | — | — | |
| Comcast Corp. | 0.34 | — | — | — | — | |
| Meta Platforms Inc. | 0.00 | — | — | — | — | |
| Netflix Inc. | 0.35 | — | — | — | — | |
| Walt Disney Co. | 0.27 | 0.29 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Media & Entertainment | 0.17 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Communication Services | 0.27 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 15,014 ÷ 34,427 = 0.44
2 Click competitor name to see calculations.
An analysis of the solvency position reveals a consistent improvement in the debt-to-assets ratio from 2017 through 2021. The overall trend indicates a reduction in financial leverage relative to the organization's asset base, resulting in a strengthened solvency profile over the five-year period.
- Total Asset Growth
- A significant expansion in total assets was observed between 2017 and 2018, with values increasing from US$ 22,555 million to US$ 32,550 million. This growth continued at a steadier, incremental pace in subsequent years, culminating in a total asset value of US$ 34,427 million by December 31, 2021.
- Total Debt Trajectory
- Total debt peaked in 2018 at US$ 17,045 million. Following this peak, a gradual downward trend was established, with debt levels decreasing to US$ 15,669 million in 2019 and further declining to US$ 15,014 million by the end of 2021. This represents a steady reduction in total borrowing after the 2018 high.
- Debt to Assets Ratio Interpretation
- The debt-to-assets ratio declined progressively from 0.66 in 2017 to 0.44 in 2021. The most substantial improvement occurred between 2017 and 2019, where the ratio dropped by 0.20 points. The stabilization of the ratio at 0.46 during 2019 and 2020, followed by a final decrease to 0.44, suggests a sustained strategic shift toward a less leveraged capital structure.
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Debt to Assets (including Operating Lease Liability)
Warner Bros. Discovery Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Finance lease liabilities, current | 58) | 57) | 47) | —) | —) | |
| Current portion of debt | 339) | 335) | 609) | 1,860) | 30) | |
| Noncurrent portion of debt | 14,420) | 15,069) | 14,810) | 15,185) | 14,755) | |
| Finance lease liabilities, noncurrent | 197) | 184) | 203) | —) | —) | |
| Total debt | 15,014) | 15,645) | 15,669) | 17,045) | 14,785) | |
| Operating lease liabilities, current (included in Accrued liabilities) | 62) | 71) | 82) | —) | —) | |
| Operating lease liabilities, noncurrent (included in Other noncurrent liabilities) | 567) | 592) | 621) | —) | —) | |
| Total debt (including operating lease liability) | 15,643) | 16,308) | 16,372) | 17,045) | 14,785) | |
| Total assets | 34,427) | 34,087) | 33,735) | 32,550) | 22,555) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.45 | 0.48 | 0.49 | 0.52 | 0.66 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Alphabet Inc. | 0.08 | — | — | — | — | |
| Comcast Corp. | 0.37 | — | — | — | — | |
| Meta Platforms Inc. | 0.09 | — | — | — | — | |
| Netflix Inc. | 0.41 | — | — | — | — | |
| Walt Disney Co. | 0.29 | 0.31 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Media & Entertainment | 0.21 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Communication Services | 0.33 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 15,643 ÷ 34,427 = 0.45
2 Click competitor name to see calculations.
A consistent improvement in the solvency position is observed from 2017 to 2021. The debt-to-assets ratio indicates a sustained reduction in financial leverage, as the growth of total assets significantly outpaced the fluctuations in total debt over the five-year period.
- Debt to Assets Ratio Trend
- The ratio demonstrated a steady decline, moving from 0.66 in 2017 to 0.45 by the end of 2021. The most pronounced decrease occurred between 2017 and 2018, where the ratio fell from 0.66 to 0.52, marking a significant reduction in the proportion of assets financed by debt.
- Asset Growth and Debt Dynamics
- Total assets expanded substantially from 22,555 million USD in 2017 to 34,427 million USD in 2021. During the same period, total debt, including operating lease liabilities, peaked in 2018 at 17,045 million USD before entering a period of gradual decline to 15,643 million USD by 2021. The aggressive expansion of the asset base in 2018 was the primary driver for the initial improvement in the solvency ratio.
- Long-term Solvency Interpretation
- The downward trajectory of the debt-to-assets ratio suggests a strengthening balance sheet and a reduced reliance on external borrowing. By 2021, the financial structure transitioned to a state where debt and lease liabilities accounted for only 45% of total assets, indicating a lower risk profile regarding long-term solvency obligations compared to the 2017 baseline.
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Financial Leverage
Warner Bros. Discovery Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 34,427) | 34,087) | 33,735) | 32,550) | 22,555) | |
| Total Discovery, Inc. stockholders’ equity | 11,599) | 10,464) | 9,891) | 8,386) | 4,610) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.97 | 3.26 | 3.41 | 3.88 | 4.89 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Alphabet Inc. | 1.43 | — | — | — | — | |
| Comcast Corp. | 2.87 | — | — | — | — | |
| Meta Platforms Inc. | 1.33 | — | — | — | — | |
| Netflix Inc. | 2.81 | — | — | — | — | |
| Walt Disney Co. | 2.30 | 2.41 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Media & Entertainment | 1.82 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Communication Services | 2.43 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Total Discovery, Inc. stockholders’ equity
= 34,427 ÷ 11,599 = 2.97
2 Click competitor name to see calculations.
An analysis of the solvency metrics between 2017 and 2021 reveals a consistent strengthening of the capital structure and a systematic reduction in financial risk. The overall trend is characterized by a steady decline in financial leverage, driven by an expansion of the equity base that outpaced the growth of total assets.
- Total Asset Expansion
- Total assets grew from 22,555 million USD in 2017 to 34,427 million USD in 2021. This steady increase indicates a consistent growth in the company's resource base over the five-year period.
- Stockholders' Equity Growth
- Stockholders' equity experienced significant growth, rising from 4,610 million USD in 2017 to 11,599 million USD in 2021. This represents a more than twofold increase in equity, highlighting a substantial strengthening of the company's internal funding and net worth.
- Financial Leverage Reduction
- The financial leverage ratio exhibited a continuous downward trend, decreasing from 4.89 in 2017 to 2.97 in 2021. This persistent decline reflects a reduced dependency on debt to finance assets, resulting in a lower risk profile and improved long-term solvency.
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Interest Coverage
Warner Bros. Discovery Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) available to Discovery, Inc. | 1,006) | 1,219) | 2,069) | 594) | (337) | |
| Add: Net income attributable to noncontrolling interest | 191) | 136) | 144) | 87) | 24) | |
| Add: Income tax expense | 236) | 373) | 81) | 341) | 176) | |
| Add: Interest expense, net | 633) | 648) | 677) | 729) | 475) | |
| Earnings before interest and tax (EBIT) | 2,066) | 2,376) | 2,971) | 1,751) | 338) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 3.26 | 3.67 | 4.39 | 2.40 | 0.71 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Alphabet Inc. | 263.24 | — | — | — | — | |
| Comcast Corp. | 5.46 | — | — | — | — | |
| Meta Platforms Inc. | 3,153.27 | — | — | — | — | |
| Netflix Inc. | 8.63 | — | — | — | — | |
| Walt Disney Co. | 2.66 | -0.06 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Media & Entertainment | 24.80 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Communication Services | 11.90 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,066 ÷ 633 = 3.26
2 Click competitor name to see calculations.
The solvency profile demonstrates a significant recovery in debt-servicing capacity followed by a period of gradual decline. The transition from an inability to cover interest expenses through operating profits in 2017 to a more stable, though currently diminishing, position by 2021 is evident.
- Earnings Before Interest and Tax (EBIT)
- Operating earnings experienced rapid growth between 2017 and 2019, rising from US$ 338 million to a peak of US$ 2,971 million. However, a downward trend emerged thereafter, with EBIT contracting to US$ 2,376 million in 2020 and further decreasing to US$ 2,066 million by the end of 2021.
- Net Interest Expense
- Interest obligations increased sharply from US$ 475 million in 2017 to US$ 729 million in 2018. Following this peak, net interest expenses exhibited a consistent, marginal decline over the subsequent three years, ending at US$ 633 million in 2021.
- Interest Coverage Ratio
- The interest coverage ratio shifted from a critical level of 0.71 in 2017—indicating that EBIT was insufficient to meet interest payments—to a peak of 4.39 in 2019. Since 2019, the ratio has steadily declined to 3.67 in 2020 and 3.26 in 2021. While the company maintains a capacity to service its debt, the contracting ratio reflects a reduction in the financial margin of safety due to the decline in operating earnings.
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Fixed Charge Coverage
Warner Bros. Discovery Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) available to Discovery, Inc. | 1,006) | 1,219) | 2,069) | 594) | (337) | |
| Add: Net income attributable to noncontrolling interest | 191) | 136) | 144) | 87) | 24) | |
| Add: Income tax expense | 236) | 373) | 81) | 341) | 176) | |
| Add: Interest expense, net | 633) | 648) | 677) | 729) | 475) | |
| Earnings before interest and tax (EBIT) | 2,066) | 2,376) | 2,971) | 1,751) | 338) | |
| Add: Operating lease cost | 103) | 116) | 114) | 205) | 127) | |
| Earnings before fixed charges and tax | 2,169) | 2,492) | 3,085) | 1,956) | 465) | |
| Interest expense, net | 633) | 648) | 677) | 729) | 475) | |
| Operating lease cost | 103) | 116) | 114) | 205) | 127) | |
| Fixed charges | 736) | 764) | 791) | 934) | 602) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 2.95 | 3.26 | 3.90 | 2.09 | 0.77 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Alphabet Inc. | 30.80 | — | — | — | — | |
| Comcast Corp. | 4.48 | — | — | — | — | |
| Meta Platforms Inc. | 31.41 | — | — | — | — | |
| Netflix Inc. | 5.46 | — | — | — | — | |
| Walt Disney Co. | 2.07 | 0.32 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Media & Entertainment | 13.00 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Communication Services | 6.03 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,169 ÷ 736 = 2.95
2 Click competitor name to see calculations.
The solvency profile of the organization exhibited significant volatility between 2017 and 2021, characterized by an initial period of critical insufficiency followed by a strong recovery and a subsequent moderate decline in coverage capacity.
- Earnings Before Fixed Charges and Tax
- A substantial increase in earnings was observed from 2017 to 2019, with values rising from US$ 465 million to a peak of US$ 3,085 million. However, a downward trend followed this peak, with earnings declining to US$ 2,492 million in 2020 and further to US$ 2,169 million by the end of 2021.
- Fixed Charges
- Fixed charges experienced a sharp increase in 2018, reaching US$ 934 million. Following this peak, a consistent downward trajectory was maintained over the next three years, resulting in a reduction to US$ 736 million by December 31, 2021.
- Fixed Charge Coverage Ratio
- The coverage ratio indicates a critical solvency position in 2017, where the ratio of 0.77 suggests that earnings were insufficient to cover fixed obligations. A rapid recovery occurred between 2018 and 2019, with the ratio peaking at 3.90. Since 2019, the ratio has contracted to 3.26 in 2020 and 2.95 in 2021, reflecting a diminishing margin of safety despite the overall reduction in absolute fixed charges.
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