Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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Solvency Ratios (Summary)
AT&T Inc., solvency ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Debt to Equity
- The debt to equity ratio demonstrated an overall increasing trend from 0.97 in 2020 to a peak of 1.39 in 2022, followed by a decline to 1.18 in 2024. When including operating lease liabilities, the ratio follows a similar pattern, increasing from 1.13 in 2020 to 1.62 in 2022, then decreasing to 1.38 by 2024. This suggests a rise in leverage up to 2022, with some deleveraging or equity growth thereafter.
- Debt to Capital
- This ratio increased steadily from 0.49 in 2020 to 0.58 in 2022, before slightly decreasing to 0.54 by 2024. Incorporating operating lease liabilities showed a comparable trajectory, rising from 0.53 to 0.62 in 2022 and then declining to 0.58 by 2024. The data indicates an initial increase in the proportion of debt financing within the total capital structure, followed by a moderate reduction.
- Debt to Assets
- The debt to assets ratio rose gradually from 0.30 in 2020 to 0.34 in 2022 and 2023, then fell to 0.31 in 2024. Including operating lease liabilities, the ratio increased from 0.35 to 0.39 between 2020 and 2023, decreasing slightly to 0.37 in 2024. This trend points to an incremental increase in asset financing through debt, then a marginal decline.
- Financial Leverage
- Financial leverage increased notably from 3.25 in 2020 to a peak of 4.13 in 2022, followed by a decrease to 3.78 by 2024. This indicates that the company’s assets were increasingly financed by debt or other liabilities up to 2022, with a subsequent reduction in leverage levels.
- Interest Coverage
- The interest coverage ratio exhibited significant volatility. It surged from a low 0.64 in 2020 to 4.91 in 2021, then dropped sharply to 0.49 in 2022. Subsequently, it recovered to 3.96 in 2023 and slightly declined to 3.47 in 2024. These fluctuations imply varying ability to cover interest expenses, with notable strains in 2020 and 2022, and improved coverage in other years.
- Fixed Charge Coverage
- Fixed charge coverage mirrored the interest coverage pattern, rising from 0.78 in 2020 to 3.06 in 2021, falling again to 0.72 in 2022, and recovering to 2.29 by 2024. This indicates a similar variability in the capacity to cover fixed financial obligations, with periods of financial stress in 2020 and 2022 followed by improved coverage.
Debt Ratios
Coverage Ratios
Debt to Equity
AT&T Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt maturing within one year | ||||||
| Long-term debt, excluding maturing within one year | ||||||
| Total debt | ||||||
| Stockholders’ equity attributable to AT&T | ||||||
| Solvency Ratio | ||||||
| Debt to equity1 | ||||||
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Debt to Equity, Sector | ||||||
| Telecommunication Services | ||||||
| Debt to Equity, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity attributable to AT&T
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt experienced a fluctuating trend over the five-year period. It rose significantly from approximately $157.2 billion in 2020 to a peak of $177.4 billion in 2021. Afterward, there was a marked decline in total debt, dropping to $135.9 billion in 2022, then slightly increasing to $137.3 billion in 2023, followed by a further reduction to $123.5 billion by the end of 2024. This indicates a strategic effort to reduce overall leverage after 2021.
- Stockholders’ Equity Attributable to AT&T
- Equity levels showed initial growth from $161.7 billion in 2020 to a peak of $166.3 billion in 2021. However, there was a sharp decline in 2022, where equity dropped to $97.5 billion, representing a significant reduction. In 2023 and 2024, equity recovered moderately to $103.3 billion and $104.4 billion, respectively, suggesting some restoration of shareholder value following the dip.
- Debt to Equity Ratio
- The debt to equity ratio increased from 0.97 in 2020 to a higher level of 1.07 in 2021, reflecting an increase in leverage partly due to the rise in total debt and higher equity levels that year. In 2022, this ratio sharply increased to 1.39, primarily driven by the pronounced decrease in equity alongside a reduction in debt that was less proportionally significant. Subsequently, the ratio declined slightly to 1.33 in 2023 and further to 1.18 in 2024, indicating a gradual deleveraging process and a relative improvement in the equity base compared to debt.
- Summary of Financial Trends
- Overall, the data reveal a period of increased leverage and instability in equity during 2021 and 2022, with efforts to reduce debt and stabilize equity thereafter. The notable decrease in equity in 2022 suggests potential impacts from operational challenges or restructuring activities during that year. The gradual reduction in debt levels combined with moderately recovering equity by 2024 points towards improving financial stability and a more balanced capital structure moving forward.
Debt to Equity (including Operating Lease Liability)
AT&T Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt maturing within one year | ||||||
| Long-term debt, excluding maturing within one year | ||||||
| Total debt | ||||||
| Current operating lease liabilities (included in Accounts payable and accrued liabilities) | ||||||
| Noncurrent operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Stockholders’ equity attributable to AT&T | ||||||
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Telecommunication Services | ||||||
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity attributable to AT&T
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several key trends in the company's capital structure over the five-year period.
- Total debt (including operating lease liability)
- Initially, total debt increased from US$182,984 million in 2020 to US$202,321 million in 2021, indicating a rise in leverage. However, from 2021 onward, the company reduced its total debt consistently, with figures declining to US$158,096 million in 2022, a slight increase to US$158,423 million in 2023, and further reduction to US$144,456 million by 2024. This pattern suggests a strategic move towards debt reduction after 2021.
- Stockholders’ equity attributable to the company
- Equity displayed a somewhat contrasting trend compared to debt. It grew from US$161,673 million in 2020 to US$166,332 million in 2021, signaling potential retention of earnings or capital infusion. However, a significant decline occurred in 2022, falling sharply to US$97,500 million. Following this decline, equity exhibited modest recovery by increasing to US$103,297 million in 2023 and slightly further to US$104,372 million in 2024. The sharp drop in 2022 may indicate considerable losses, asset revaluations, or dividend distributions, followed by stabilization.
- Debt to equity ratio (including operating lease liability)
- This ratio increased steadily from 1.13 in 2020 to 1.22 in 2021, reflecting higher leverage. It peaked at 1.62 in 2022, corresponding with the simultaneous increase in total debt and sharp decline in equity that year, indicative of a heavier reliance on debt financing relative to equity. After 2022, the ratio improved, decreasing to 1.53 in 2023 and further to 1.38 in 2024, consistent with the reductions in debt levels and gradual equity recovery.
In summary, the company exhibited an initial increase in leverage up to 2021, followed by a notable deleveraging trend from 2022 to 2024. The pronounced equity decline in 2022 appears to be a pivotal event influencing the capital structure, leading to the highest debt-to-equity ratio in that year. The subsequent period shows efforts toward financial stabilization with debt reduction and partial equity restoration, resulting in a more balanced leverage position by 2024.
Debt to Capital
AT&T Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt maturing within one year | ||||||
| Long-term debt, excluding maturing within one year | ||||||
| Total debt | ||||||
| Stockholders’ equity attributable to AT&T | ||||||
| Total capital | ||||||
| Solvency Ratio | ||||||
| Debt to capital1 | ||||||
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Debt to Capital, Sector | ||||||
| Telecommunication Services | ||||||
| Debt to Capital, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends in capital structure and debt management over the five-year period under review.
- Total Debt
- The total debt exhibited a fluctuating trend. It increased from 157,245 million US dollars at the end of 2020 to a peak of 177,354 million in 2021. Subsequently, it declined significantly in the following years, reaching 123,532 million by the end of 2024. This decline after 2021 suggests a concerted effort to reduce debt levels or repay obligations.
- Total Capital
- Total capital followed a different pattern. It grew from 318,918 million in 2020 to 343,686 million in 2021, indicating expansion or increased investment. However, there was a sharp decline in 2022 to 233,390 million, followed by a moderate recovery and stabilization around the 227,904 million mark by 2024. This substantial decrease in capital in 2022 hints at possible divestitures, asset write-downs, or other capital structure adjustments impacting total capital.
- Debt to Capital Ratio
- The debt to capital ratio increased from 0.49 in 2020 to 0.58 in 2022, indicating a growing reliance on debt relative to total capital. This trend reversed slightly after 2022, with the ratio decreasing to 0.54 by 2024. Despite the reduction, the ratio remained higher than the 2020 level, suggesting the capital structure maintained a relatively high proportion of debt financing.
Overall, the data reveals a period of increased leverage up to 2022, followed by debt reduction and some recovery in capital. The changes in total capital and debt levels indicate significant restructuring or strategic financial actions affecting the company's balance sheet composition during this timeframe.
Debt to Capital (including Operating Lease Liability)
AT&T Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt maturing within one year | ||||||
| Long-term debt, excluding maturing within one year | ||||||
| Total debt | ||||||
| Current operating lease liabilities (included in Accounts payable and accrued liabilities) | ||||||
| Noncurrent operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Stockholders’ equity attributable to AT&T | ||||||
| Total capital (including operating lease liability) | ||||||
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Telecommunication Services | ||||||
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals distinct trends and shifts in the company's capital structure and debt levels.
- Total Debt (Including Operating Lease Liability)
- The total debt increased from US$182,984 million in 2020 to US$202,321 million in 2021, indicating a build-up of leverage during this period. Subsequently, there was a significant reduction in debt in 2022 to US$158,096 million, stabilizing near this lower level with slight variations observed in 2023 and 2024, finishing at US$144,456 million. This trend suggests a strategic focus on deleveraging or paying down debt after the peak in 2021.
- Total Capital (Including Operating Lease Liability)
- Total capital showed an upward trajectory from 2020 to 2021, increasing from US$344,657 million to US$368,653 million. However, a sharp decline occurred in 2022 to US$255,596 million, followed by a modest recovery to US$261,720 million in 2023, and a slight contraction to US$248,828 million in 2024. This pattern reflects considerable capital restructuring or revaluation occurring primarily in 2022, with partial stabilization thereafter.
- Debt to Capital Ratio (Including Operating Lease Liability)
- The debt to capital ratio rose from 0.53 in 2020 to 0.55 in 2021, corresponding with the increase in total debt relative to capital. Despite the subsequent drop in total debt in 2022, the ratio increased further to 0.62, indicating that total capital decreased at a greater rate than debt. The ratio then slightly declined to 0.61 in 2023 and further to 0.58 in 2024, suggesting an improving balance between debt and capital but remaining higher than the initial years. This implies that the company's leverage remained relatively elevated despite debt reduction efforts, due to the more pronounced decline in total capital.
In summary, the data suggest a period of increased leverage followed by a notable deleveraging phase coinciding with a marked reduction in total capital. Although debt levels decreased after 2021, the capital base contracted even more sharply, which resulted in an elevated debt-to-capital ratio peaking in 2022 and only partially reversing in subsequent years. This pattern may reflect the company's strategic adjustments in financing and capital management during the observed timeframe.
Debt to Assets
AT&T Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt maturing within one year | ||||||
| Long-term debt, excluding maturing within one year | ||||||
| Total debt | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets1 | ||||||
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Debt to Assets, Sector | ||||||
| Telecommunication Services | ||||||
| Debt to Assets, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a fluctuating trend over the observed period. From 2020 to 2021, there was a noticeable increase in debt, rising from 157,245 million USD to 177,354 million USD. However, starting in 2022, the total debt decreased significantly, reaching 135,890 million USD. This reduction continued slightly into 2023 and 2024, with debt levels recorded at 137,331 million USD and 123,532 million USD respectively. This pattern suggests a strategic effort to reduce debt burdens following a peak in 2021.
- Total Assets
- Total assets showed an initial growth from 525,761 million USD in 2020 to 551,622 million USD in 2021. Subsequently, there was a pronounced decline in asset values beginning in 2022, dropping to 402,853 million USD, and remaining relatively stable through 2023 and 2024 with slight decreases to 407,060 million USD and 394,795 million USD respectively. This downward shift indicates a contraction in asset base after 2021, which may be linked to divestitures or asset impairments.
- Debt to Assets Ratio
- The debt to assets ratio increased modestly from 0.3 in 2020 to 0.32 in 2021, and further rose to 0.34 in 2022 and maintained at 0.34 in 2023. By 2024, this ratio decreased to 0.31. This trend reflects an initial rise in leverage relative to assets through 2023, coinciding with the reduction in total assets outpacing the reduction in debt. The subsequent decrease in 2024 suggests some improvement in the balance between debt and asset levels.
Debt to Assets (including Operating Lease Liability)
AT&T Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt maturing within one year | ||||||
| Long-term debt, excluding maturing within one year | ||||||
| Total debt | ||||||
| Current operating lease liabilities (included in Accounts payable and accrued liabilities) | ||||||
| Noncurrent operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Telecommunication Services | ||||||
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends regarding the company's debt levels, asset base, and leverage ratios over the five-year period analyzed.
- Total Debt (including operating lease liability)
- The total debt showed an increase from 182,984 million USD in 2020 to a peak of 202,321 million USD in 2021. After this peak, there was a consistent decline over the next three years, reaching 144,456 million USD by 2024. This suggests a strategic reduction in debt following the 2021 high.
- Total Assets
- Total assets increased from 525,761 million USD in 2020 to a maximum of 551,622 million USD in 2021. Subsequently, there was a marked decrease in total assets over the following three years, falling to 394,795 million USD by 2024. This substantial decline in asset base after 2021 indicates possible divestitures, asset impairments, or other factors reducing the overall asset holdings.
- Debt to Assets Ratio (including operating lease liability)
- The debt to assets ratio exhibited an overall increasing trend from 0.35 in 2020 to 0.39 in 2022 and 2023, reflecting a higher proportion of debt relative to assets during these years. In 2024, the ratio decreased to 0.37, indicating a slight improvement in leverage, likely influenced by the continued reduction in total debt combined with the lower asset base.
In summary, the company experienced a peak in both debt and assets in 2021, followed by a period of reducing debt alongside a more pronounced reduction in total assets. The leverage ratio peaked mid-period but showed signs of improvement in the final year. The data suggests a focus on deleveraging efforts and a contraction in asset size that had implications on the company's capital structure and financial risk profile.
Financial Leverage
AT&T Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | ||||||
| Stockholders’ equity attributable to AT&T | ||||||
| Solvency Ratio | ||||||
| Financial leverage1 | ||||||
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Financial Leverage, Sector | ||||||
| Telecommunication Services | ||||||
| Financial Leverage, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity attributable to AT&T
= ÷ =
2 Click competitor name to see calculations.
The annual financial data reveals notable trends in the company's asset base, equity position, and financial leverage over the five-year period ending December 31, 2024.
- Total Assets
- The total assets exhibit a declining trend beginning from 551,622 million US dollars in 2021 and decreasing to 394,795 million US dollars by 2024. This reduction follows an initial increase from 525,761 million in 2020 to 551,622 million in 2021. The significant drop from 2021 to 2022 suggests a possible divestiture, asset impairment, or strategic shift that resulted in a smaller asset base in subsequent years.
- Stockholders’ Equity Attributable to AT&T
- Stockholders’ equity shows relative stability from 2020 to 2021, increasing slightly from 161,673 million to 166,332 million US dollars. However, a sharp decline occurs in 2022 down to 97,500 million, followed by modest recovery into 2023 and 2024, reaching 104,372 million. This pattern indicates challenges affecting retained earnings or other equity components during 2022, possibly linked to the asset reductions noted.
- Financial Leverage
- Financial leverage starts at 3.25 times in 2020, marginally rising to 3.32 in 2021, before increasing further to a peak of 4.13 in 2022. Subsequently, leverage decreases to 3.94 in 2023 and 3.78 by 2024. The peak leverage in 2022 aligns with the period of decreased equity and total assets, implying increased reliance on debt financing during that year. The reduction in leverage post-2022 suggests efforts toward deleveraging or improving the capital structure.
In summary, the data indicates that the company experienced a contraction in asset size and equity during the period, particularly in 2022, accompanied by heightened financial leverage. The gradual improvement in equity and reduction in leverage after 2022 may reflect strategic financial management to strengthen the balance sheet and reduce risk exposure.
Interest Coverage
AT&T Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to AT&T | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Loss from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Solvency Ratio | ||||||
| Interest coverage1 | ||||||
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Interest Coverage, Sector | ||||||
| Telecommunication Services | ||||||
| Interest Coverage, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
An analysis of the annual financial data reveals notable fluctuations in the key profitability and leverage-related metrics over the five-year period. The Earnings Before Interest and Tax (EBIT) exhibits significant volatility, showing a sharp increase in 2021 followed by substantial declines in the subsequent years, though maintaining levels above those seen in 2020 and 2022.
Specifically, EBIT surges from 5,069 million USD in 2020 to a peak of 33,831 million USD in 2021, then drops sharply to 3,014 million USD in 2022. Afterward, it recovers to 26,552 million USD in 2023 but declines again to 23,457 million USD in 2024. This pattern suggests periods of extraordinary operational performance or one-off events influencing earnings, with a general tendency toward fluctuation rather than steady growth or decline.
Interest expense demonstrates a downward trend from 7,925 million USD in 2020 to 6,108 million USD in 2022, indicating possible debt reduction or refinancing at lower rates during this period. However, interest expense rises slightly in 2023 and 2024 to 6,704 million USD and 6,759 million USD, respectively, reflecting potential changes in debt structure or interest rates.
The interest coverage ratio, which assesses the company's ability to meet its interest obligations from operating earnings, closely mirrors the volatility in EBIT. It reaches a high of 4.91 in 2021, indicating strong coverage that year, but plunges to 0.49 in 2022, signaling a significant risk of insufficient earnings relative to interest expense. Recovery is observed in 2023 and 2024, with ratios of 3.96 and 3.47, respectively, suggesting improved but still modest coverage capacity compared to the peak year.
- EBIT
- Marked by high volatility with a peak in 2021, significant drops in 2022 and 2024, and partial recovery in 2023.
- Interest Expense
- General decline through 2022, followed by slight increases in 2023 and 2024.
- Interest Coverage Ratio
- Strong performance in 2021, critical decline in 2022, with recovery thereafter but below peak levels.
Overall, the data indicates cycles of operational strength and weakness impacting the company's ability to comfortably cover interest obligations. The interrelation between fluctuating EBIT and interest coverage ratios highlights operational risk and financial leverage considerations that warrant attention for future financial planning and risk management strategies.
Fixed Charge Coverage
AT&T Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Statutory federal income tax rate | ||||||
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to AT&T | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Loss from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Add: Operating lease cost | ||||||
| Earnings before fixed charges and tax | ||||||
| Interest expense | ||||||
| Operating lease cost | ||||||
| Preferred stock dividends | ||||||
| Preferred stock dividends, tax adjustment1 | ||||||
| Preferred stock dividends, after tax adjustment | ||||||
| Fixed charges | ||||||
| Solvency Ratio | ||||||
| Fixed charge coverage2 | ||||||
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors3 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
| Fixed Charge Coverage, Sector | ||||||
| Telecommunication Services | ||||||
| Fixed Charge Coverage, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Preferred stock dividends, tax adjustment = (Preferred stock dividends × Statutory federal income tax rate) ÷ (1 − Statutory federal income tax rate)
= ( × ) ÷ (1 − ) =
2 2024 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
3 Click competitor name to see calculations.
The analysis of the financial data reveals notable variations in the company's earnings before fixed charges and tax as well as in its fixed charges over the observed periods.
- Earnings Before Fixed Charges and Tax
- This metric exhibits significant fluctuations throughout the years. It surged markedly in 2021, reaching a peak of 39,624 million US dollars, followed by a sharp decline in 2022 to 8,451 million US dollars. Thereafter, it rebounded in 2023 to 32,129 million US dollars but decreased again in 2024 to 29,233 million US dollars. The pattern indicates a highly volatile earnings trend with substantial variations year over year.
- Fixed Charges
- The fixed charges show a gradual and consistent decrease from 14,065 million US dollars in 2020 to 11,802 million US dollars in 2022, but then slightly increased in 2023 and 2024, reaching 12,791 million US dollars. This trend suggests a reduction in fixed charges over the initial years, followed by a modest rebound in the latter period.
- Fixed Charge Coverage Ratio
- The coverage ratio reflects the company's ability to meet its fixed charges from earnings before fixed charges and tax. This ratio follows a pattern similar to earnings, with notable highs in 2021 (3.06) and 2023 (2.56) indicating strong coverage, while experiencing declines in 2020 (0.78), 2022 (0.72), and 2024 (2.29). Despite some recovery, the coverage ratio remains below the 2021 peak in the latest period, pointing to fluctuating but generally adequate capacity to cover fixed charges, albeit with some risk during periods of lower earnings.
Overall, the data suggest a company experiencing variable earnings performance with relatively stable fixed charges in later years, leading to varying degrees of fixed charge coverage. While the ability to cover fixed charges improved significantly in certain years, the volatility in earnings poses potential risks to sustained financial stability.