Warner Bros. Discovery Inc. (NASDAQ:WBD)

The financial data reveals several notable trends related to the company’s leverage and coverage ratios over the five-year period from 2017 to 2021.

Leverage Ratios

The debt to equity ratio displays a consistent decline, decreasing from 3.21 in 2017 to 1.29 in 2021. When considering operating lease liabilities, a similar downward trend is observed, though the values are slightly higher on account of the additional liabilities, falling from 3.21 to 1.35 within the same timeframe.

The debt to capital ratio follows this improvement trajectory, reducing steadily from 0.76 in 2017 to 0.56 in 2021. Inclusion of operating lease liabilities marginally raises the ratio each year but does not materially affect the declining pattern.

Similarly, the debt to assets ratio declines from 0.66 in 2017 to 0.44 in 2021, with the ratio including operating lease liabilities showing a slight premium each year but maintaining a downward movement. This indicates a consistent reduction in total leverage relative to company assets.

The financial leverage ratio drops from 4.89 in 2017 to 2.97 in 2021, reflecting reduced reliance on debt financing relative to equity over time.

Coverage Ratios

Interest coverage, which measures the ability to meet interest obligations from earnings, shows substantial improvement from 0.71 in 2017 to a peak of 4.39 in 2019, though it declines to 3.26 by 2021. Despite the slight recent decrease, the ratio remains well above the initial level, indicating stronger earnings relative to interest expenses.

Fixed charge coverage follows a closely related pattern, improving from 0.77 in 2017 to a high of 3.90 in 2019 before decreasing somewhat to 2.95 in 2021. This trend suggests increased capacity to cover fixed financial charges over time, despite some tapering in recent years.

Overall, there is a clear trend of reduced leverage and improved ability to cover interest and fixed charges from 2017 through 2021, indicating a strengthening financial position with lower relative debt and enhanced earnings capacity. The slight moderation in coverage ratios after 2019 may warrant further monitoring, but the general movement suggests prudent debt management and operational resilience during the period under review.

Total Debt

The total debt exhibited a rising trend from 2017 to 2018, increasing from 14,785 million USD to 17,045 million USD. Subsequently, it decreased gradually over the following years, reaching 15,014 million USD by the end of 2021. This indicates an initial increase in leverage followed by a reduction in total debt levels.

Total Stockholders’ Equity

Stockholders’ equity demonstrated a consistent upward trajectory throughout the period. It rose from 4,610 million USD in 2017 to 11,599 million USD in 2021, showing a significant strengthening of the company’s equity base over these five years.

Debt to Equity Ratio

The debt to equity ratio showed a decreasing pattern, starting from a high of 3.21 in 2017 and steadily declining each year to 1.29 by the end of 2021. This reduction reflects an improving capital structure with the company progressively relying less on debt financing relative to equity.

Overall Analysis

The financial data indicates a favorable shift in the company’s leverage and capitalization profile. Though total debt initially increased, the subsequent declines paired with continuous equity growth resulted in a materially lower debt to equity ratio. This suggests a strategic move towards a stronger equity position and reduced financial risk over the analyzed period.

Total debt (including operating lease liability)

The total debt exhibited a rise from 14,785 million USD in 2017 to a peak of 17,045 million USD in 2018. Subsequently, there was a gradual decline across the following years, reaching 15,643 million USD by the end of 2021. This trend indicates an initial increase in leverage followed by a measured reduction in total liabilities.

Total Discovery, Inc. stockholders’ equity

Stockholders’ equity showed consistent growth throughout the period. Beginning at 4,610 million USD in 2017, it nearly doubled by 2018, then continued to increase steadily each year, culminating at 11,599 million USD by the end of 2021. This upward trajectory reflects improving net asset value and an enhanced capital base over the five-year span.

Debt to equity (including operating lease liability)

The debt-to-equity ratio experienced a significant decline, starting from a high of 3.21 in 2017, falling sharply to 2.03 in 2018, and continuing to decrease year on year to 1.35 in 2021. This progression demonstrates a strengthening equity position relative to debt, suggesting enhanced financial stability and reduced leverage risk over time.

The financial data reveals several noteworthy trends in the company’s debt and capital structure over the five-year period ending December 31, 2021.

Total Debt

Total debt increased significantly from approximately $14.8 billion in 2017 to a peak of $17 billion in 2018. Afterward, it showed a decreasing trend, falling to about $15.7 billion in 2019 and remaining relatively stable through 2020 and 2021, ending at roughly $15 billion.

Total Capital

Total capital exhibited a steady upward trend across the full timeframe. Starting at nearly $19.4 billion in 2017, it rose sharply by 31% to $25.4 billion in 2018 and then continued to grow more gradually to reach $26.6 billion by the end of 2021.

Debt to Capital Ratio

Reflecting the movements in total debt and capital, the debt to capital ratio declined from 0.76 in 2017 to 0.56 in 2021. This indicates a progressive reduction in leverage, with debt becoming a smaller component of the company’s capital structure over time. The most pronounced decrease occurred between 2017 and 2018, followed by a continuing but more moderate decline through the subsequent years.

Overall, the data suggest a deliberate effort to reduce leverage and enhance financial stability by increasing capital while controlling or slightly reducing the absolute level of debt. The consistent increase in total capital combined with the controlled reduction in debt levels indicates a strengthening balance sheet position over the studied period.

Total Debt (including operating lease liability)

The total debt showed an initial increase from 14,785 million US dollars in 2017 to 17,045 million in 2018. This was followed by a gradual decline over the subsequent years, reaching 15,643 million by the end of 2021. The trend suggests an effort to reduce debt levels after the peak in 2018, stabilizing at a lower amount over the latter years.

Total Capital (including operating lease liability)

Total capital increased consistently each year, starting from 19,395 million US dollars in 2017 and rising steadily to 27,242 million by the end of 2021. The growth in capital indicates ongoing investments or equity increases, which may support the company's expanding asset base or operational activities.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio declined year over year, from 0.76 in 2017 down to 0.57 in 2021. This declining ratio reflects an improving capital structure with a relative reduction in leverage. The company appears to be shifting towards a stronger equity position or reduced reliance on debt financing over the analyzed period.

Total Debt

The total debt exhibited a fluctuating trend over the five-year period. After an increase from 14,785 million USD in 2017 to a peak of 17,045 million USD in 2018, the debt level decreased in subsequent years, reaching 15,014 million USD by the end of 2021. This overall decline after 2018 suggests efforts to reduce liabilities or manage debt more effectively in recent years.

Total Assets

Total assets showed a steady upward trend during the period. Starting at 22,555 million USD in 2017, assets increased significantly to 32,550 million USD in 2018, rose further to 33,735 million USD in 2019, and continued their growth to 34,427 million USD in 2021. This consistent asset growth, albeit at a decelerating rate after 2018, indicates expansion or accumulation of resources over the years.

Debt to Assets Ratio

The debt to assets ratio declined steadily from 0.66 in 2017 to 0.44 in 2021, reflecting a gradual reduction in leverage. The sharpest decrease occurred between 2017 and 2018, dropping from 0.66 to 0.52, followed by a more moderate decline in the following years. By 2021, the ratio stabilized at 0.44, suggesting a more conservative capital structure with a greater proportion of assets financed by equity or other non-debt sources.

Total Debt (including operating lease liability)

The total debt showed an increase from 14,785 million USD at the end of 2017 to a peak of 17,045 million USD by the end of 2018. Subsequently, the debt level exhibited a declining trend, decreasing to 16,372 million USD in 2019, further to 16,308 million USD in 2020, and reaching 15,643 million USD by the end of 2021.

Total Assets

Total assets experienced consistent growth throughout the period analyzed. Starting from 22,555 million USD at the end of 2017, assets grew markedly by 44% to 32,550 million USD in 2018. The upward trend continued at a slower pace, rising to 33,735 million USD in 2019, 34,087 million USD in 2020, and finally 34,427 million USD in 2021.

Debt to Assets Ratio (including operating lease liability)

The ratio of debt to assets demonstrated a pronounced improvement over the period. Beginning with a high leverage ratio of 0.66 at the end of 2017, reflecting that debt represented 66% of total assets, the ratio dropped sharply to 0.52 in 2018. This downward trend continued gradually with ratios of 0.49 in 2019, 0.48 in 2020, and a further decrease to 0.45 at the end of 2021. This indicates a reduction in financial leverage and an improving balance between debt levels and asset base.

Summary Insights

The data reveals a strategic reduction in total debt after 2018 while assets steadily increased, leading to a consistent improvement in the debt-to-assets ratio. The trend suggests enhanced financial stability, with expansion in asset base outpacing reductions in debt, thereby lowering overall leverage risk. The decreasing debt-to-assets ratio over five years points to a stronger capitalization position and potentially improved creditworthiness.

Total Assets

The total assets show a steady increase over the five-year period, rising from $22,555 million in 2017 to $34,427 million in 2021. The most significant increase occurred between 2017 and 2018, with a growth of nearly $10,000 million. Subsequent years exhibit more moderate yet consistent growth, indicating an expansion in the asset base of the company.

Total Stockholders’ Equity

The total stockholders’ equity demonstrates a continuous upward trend from $4,610 million in 2017 to $11,599 million in 2021. The equity more than doubled over this time frame, reflecting a strengthening of the company's net worth. The growth in equity suggests either retained earnings accumulation or additional capital infusions, contributing to enhanced financial stability.

Financial Leverage

The financial leverage ratio steadily decreases from 4.89 in 2017 to 2.97 in 2021. This decline indicates a move towards lower reliance on debt relative to equity. The reduced leverage suggests improved financial risk management and potentially greater solvency, as the company appears to be deleveraging or increasing its equity base faster than its liabilities.

Overall Analysis

The data reveals a firm trend of asset growth accompanied by strengthening equity and decreasing leverage. These patterns imply an ongoing effort to improve the capital structure by enhancing net worth while moderating debt levels. The combination of increasing total assets and equity, together with declining financial leverage, points towards a more robust and financially sustainable position over the analyzed period.

Earnings before interest and tax (EBIT)

The EBIT demonstrated a significant increase from 2017 to 2019, rising from 338 million US dollars to 2971 million US dollars, indicating strong operational growth over this period. However, from 2019 onwards, EBIT showed a declining trend, decreasing to 2376 million US dollars in 2020 and further down to 2066 million US dollars in 2021, suggesting a weakening in operational profitability during these latter years.

Interest expense, net

The net interest expense increased notably from 475 million US dollars in 2017 to 729 million US dollars in 2018. Afterward, it experienced a gradual decline, falling to 677 million in 2019, 648 million in 2020, and 633 million in 2021. This trend indicates a reduction in the net interest burden over the period following the peak in 2018.

Interest coverage ratio

The interest coverage ratio, which measures the ability to meet interest obligations from EBIT, improved substantially from 0.71 in 2017 to a peak of 4.39 in 2019. This reflects enhanced capacity to cover interest expenses during this growth phase. However, from 2019 onwards, the ratio declined to 3.67 in 2020 and further to 3.26 in 2021, indicating a reduced but still reasonable ability to service interest obligations relative to EBIT.

Earnings Before Fixed Charges and Tax

The earnings before fixed charges and tax demonstrated a notable increasing trend from 2017 to 2019, rising significantly from 465 million USD to 3085 million USD. However, from 2019 onwards, there was a decline observed, with earnings dropping to 2492 million USD in 2020 and further to 2169 million USD in 2021. This suggests a peak in profitability before a gradual decrease in the most recent periods.

Fixed Charges

Fixed charges increased from 602 million USD in 2017 to a peak of 934 million USD in 2018, followed by a downward movement in the subsequent years. The fixed charges decreased to 791 million USD in 2019, with further reductions in 2020 and 2021, ending at 736 million USD. This indicates a trend of managing or reducing fixed financial obligations after 2018.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio shows a substantial improvement from 0.77 in 2017 to a peak of 3.9 in 2019, indicating enhanced ability to cover fixed charges from earnings before fixed costs. Post-2019, the ratio declined to 3.26 in 2020 and 2.95 in 2021 but remained well above the 2017 level, suggesting that despite the decline, the company maintains a relatively strong capacity to cover fixed charges.

Overall Trends and Insights

The data reflects a period of growth and strengthening financial position from 2017 to 2019, characterized by rising earnings and improving fixed charge coverage. Following 2019, a reversal in earnings growth is evident, accompanied by declining fixed charge coverage ratios, though still at a relatively healthy level. The fixed charges appear to have been controlled more tightly since 2018, contributing to sustaining coverage despite reduced earnings. This pattern may indicate external or operational challenges impacting profitability after the peak period, while fixed cost management remains a priority.