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)
Air Products & Chemicals Inc., solvency ratios
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
- Debt to Equity
- The debt to equity ratio generally decreased from 0.81 in 2015 to a low of 0.30 in 2019, indicating a reduction in leverage relative to equity. However, in 2020, this ratio increased to 0.65, suggesting a notable rise in debt levels compared to equity.
- Debt to Equity (Including Operating Lease Liability)
- This ratio mirrors the trend of the standard debt to equity ratio, remaining the same from 2015 to 2016, declining sharply by 2019, and then increasing in 2020 to 0.69. The inclusion of operating lease liability slightly elevates the ratio in 2020, indicating the impact of lease obligations on leverage.
- Debt to Capital
- There is a clear decline in debt to capital from 0.45 in 2015 to 0.23 in 2019, showing a lower proportion of debt within the company's capital structure. In 2020, this ratio rises to 0.40, reflecting a reversal of the previous trend and an increased reliance on debt financing.
- Debt to Capital (Including Operating Lease Liability)
- The trend aligns closely with the standard debt to capital ratio but registers a marginally higher value of 0.41 in 2020. This indicates that operating lease liabilities contribute slightly to the total debt component, increasing overall leverage.
- Debt to Assets
- The ratio decreased steadily from 0.34 in 2015 and 2016 to 0.18 in 2019, indicating a reduced debt burden relative to total assets. In 2020, the ratio increased to 0.31, signifying a renewed increase in debt levels relative to the asset base.
- Debt to Assets (Including Operating Lease Liability)
- This measure follows a similar downward trend through 2019, then rises to 0.33 in 2020, slightly higher than the standard ratio, illustrating the incremental impact of operating lease liabilities on total leverage.
- Financial Leverage
- Financial leverage decreased from 2.41 in 2015 to 1.71 in 2019, indicating a reduction in total assets relative to equity and potentially lower financial risk. In 2020, this ratio rose to 2.08, suggesting increased leveraging consistent with the debt ratio trends observed.
- Interest Coverage
- Interest coverage exhibited some fluctuations, starting at 17.75 in 2015, peaking at 19.46 in 2016, then declining to 12.74 in 2017. The ratio improved thereafter, reaching 23.18 in 2020, demonstrating stronger earnings relative to interest expenses, which suggests an improved capacity to meet interest obligations despite increased debt.
- Fixed Charge Coverage
- The fixed charge coverage ratio follows a pattern similar to interest coverage, decreasing from 9.71 in 2015 to 8.6 in 2017 before increasing steadily to 13.8 in 2020. This indicates an enhanced ability to cover fixed financial obligations such as leases and interest over the period, particularly in 2020.
Debt Ratios
Coverage Ratios
Debt to Equity
Air Products & Chemicals Inc., debt to equity calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | 7,700) | 58,200) | 54,300) | 144,000) | 935,800) | 1,494,300) | |
| Current portion of long-term debt | 470,000) | 40,400) | 406,600) | 416,400) | 371,300) | 435,600) | |
| Long-term debt, excluding current portion | 7,132,900) | 2,907,300) | 2,967,400) | 3,402,400) | 4,918,100) | 3,949,100) | |
| Long-term debt, related party | 297,200) | 320,100) | 384,300) | —) | —) | —) | |
| Total debt | 7,907,800) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Total Air Products shareholders’ equity | 12,079,800) | 11,053,600) | 10,857,500) | 10,086,200) | 7,079,600) | 7,249,000) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 0.65 | 0.30 | 0.35 | 0.39 | 0.88 | 0.81 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Linde plc | 0.34 | — | — | — | — | — | |
| Sherwin-Williams Co. | 2.30 | — | — | — | — | — | |
| Debt to Equity, Sector | |||||||
| Chemicals | 0.48 | — | — | — | — | — | |
| Debt to Equity, Industry | |||||||
| Materials | 0.56 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Debt to equity = Total debt ÷ Total Air Products shareholders’ equity
= 7,907,800 ÷ 12,079,800 = 0.65
2 Click competitor name to see calculations.
The financial data reveals notable changes in both the debt levels and equity position over the six-year period.
- Total Debt
-
Total debt initially increased from approximately $5.88 billion in 2015 to a peak of $6.23 billion in 2016. Subsequently, a significant reduction was observed, dropping to about $3.96 billion in 2017 and further declining gradually to $3.33 billion by 2019. However, in 2020, there was a marked surge in total debt, reaching approximately $7.91 billion, the highest value within this timeframe.
- Total Shareholders’ Equity
-
Shareholders’ equity exhibited a growth trend over the period. Starting at nearly $7.25 billion in 2015, it slightly declined in 2016 but then increased steadily, surpassing $10 billion in 2017 and continuing to rise each year, reaching around $12.08 billion by 2020. This growth suggests strengthening in the company's equity base over the period.
- Debt to Equity Ratio
-
The debt to equity ratio decreased considerably from 0.81 in 2015 to a low of 0.30 in 2019, reflecting a reduction in leverage relative to equity during this period. This ratio indicates that debt was being managed down in relation to equity growth. However, the ratio increased to 0.65 in 2020, signaling a rise in leverage, consistent with the large increase in total debt observed that year, despite continued growth in equity.
Overall, the earlier years until 2019 indicate a deleveraging trend with growing equity and declining debt ratios. The sharp rise in debt in 2020 interrupts this trend, significantly increasing leverage while equity continues to expand. This may reflect strategic financing decisions or responses to operational needs during that year.
Debt to Equity (including Operating Lease Liability)
Air Products & Chemicals Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | 7,700) | 58,200) | 54,300) | 144,000) | 935,800) | 1,494,300) | |
| Current portion of long-term debt | 470,000) | 40,400) | 406,600) | 416,400) | 371,300) | 435,600) | |
| Long-term debt, excluding current portion | 7,132,900) | 2,907,300) | 2,967,400) | 3,402,400) | 4,918,100) | 3,949,100) | |
| Long-term debt, related party | 297,200) | 320,100) | 384,300) | —) | —) | —) | |
| Total debt | 7,907,800) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Current operating lease liabilities | 70,700) | —) | —) | —) | —) | —) | |
| Noncurrent operating lease liabilities | 335,800) | —) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 8,314,300) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Total Air Products shareholders’ equity | 12,079,800) | 11,053,600) | 10,857,500) | 10,086,200) | 7,079,600) | 7,249,000) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 0.69 | 0.30 | 0.35 | 0.39 | 0.88 | 0.81 | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Linde plc | 0.36 | — | — | — | — | — | |
| Sherwin-Williams Co. | 2.80 | — | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Chemicals | 0.54 | — | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Materials | 0.61 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Air Products shareholders’ equity
= 8,314,300 ÷ 12,079,800 = 0.69
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the company's total debt and equity levels over the examined periods. Total debt, including operating lease liabilities, shows a general downward trend from 2015 through 2019, decreasing from approximately $5.88 billion to $3.33 billion. However, there is a marked increase in 2020, with total debt more than doubling from the previous year to approximately $8.31 billion.
Shareholders’ equity demonstrates a consistent upward trajectory throughout the same timeframe. Starting at roughly $7.25 billion in 2015, equity grows steadily each year, reaching nearly $12.08 billion by 2020. This persistent increase indicates strengthening ownership value despite fluctuations in debt levels.
The debt-to-equity ratio, which measures financial leverage, corresponds with the observed movements in debt and equity. It begins at 0.81 in 2015 and rises slightly to 0.88 in 2016, reflecting a higher relative debt position against equity. The ratio then declines significantly over the next three years, hitting a low of 0.30 in 2019, indicating a conservative capital structure with notably reduced leverage. In 2020, this ratio rises again to 0.69, consistent with the spike in total debt during that year, though it remains below the levels seen in 2015 and 2016.
Overall, the data suggests that the company strengthened its equity base steadily, while managing to reduce debt levels and financial leverage from 2016 to 2019. The reversal in 2020, characterized by increased debt and elevated leverage, could indicate a strategic decision possibly related to financing needs or capital investment during that year. Despite the increase in debt in 2020, the company maintains a solid equity foundation.
Debt to Capital
Air Products & Chemicals Inc., debt to capital calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | 7,700) | 58,200) | 54,300) | 144,000) | 935,800) | 1,494,300) | |
| Current portion of long-term debt | 470,000) | 40,400) | 406,600) | 416,400) | 371,300) | 435,600) | |
| Long-term debt, excluding current portion | 7,132,900) | 2,907,300) | 2,967,400) | 3,402,400) | 4,918,100) | 3,949,100) | |
| Long-term debt, related party | 297,200) | 320,100) | 384,300) | —) | —) | —) | |
| Total debt | 7,907,800) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Total Air Products shareholders’ equity | 12,079,800) | 11,053,600) | 10,857,500) | 10,086,200) | 7,079,600) | 7,249,000) | |
| Total capital | 19,987,600) | 14,379,600) | 14,670,100) | 14,049,000) | 13,304,800) | 13,128,000) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.40 | 0.23 | 0.26 | 0.28 | 0.47 | 0.45 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Linde plc | 0.26 | — | — | — | — | — | |
| Sherwin-Williams Co. | 0.70 | — | — | — | — | — | |
| Debt to Capital, Sector | |||||||
| Chemicals | 0.33 | — | — | — | — | — | |
| Debt to Capital, Industry | |||||||
| Materials | 0.36 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= 7,907,800 ÷ 19,987,600 = 0.40
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the company's debt and capital structure over the six-year period ending in 2020. Total debt exhibited a general decline from 2015 to 2019, decreasing from 5,879,000 thousand US dollars in 2015 to 3,326,000 thousand US dollars in 2019. However, in 2020, there was a substantial increase in total debt, reaching 7,907,800 thousand US dollars, which represents a notable surge compared to previous years.
Total capital demonstrated a steady increase from 2015 through 2018, rising from 13,128,000 thousand US dollars to 14,670,100 thousand US dollars. A slight decrease occurred in 2019, dipping to 14,379,600 thousand US dollars, followed by a sharp increase in 2020 to 19,987,600 thousand US dollars, indicating a considerable expansion in the company’s capital base during the most recent year.
The debt to capital ratio mirrored these trends, starting at 0.45 in 2015 and gradually declining each year to a low of 0.23 in 2019. This decline indicates a decreasing reliance on debt relative to total capital in those years. However, in 2020, the ratio rose again to 0.40, reflecting the sharp rise in total debt and the expanded capital base. Despite the increased debt, the capital growth somewhat mitigated the rise in leverage, although the ratio remains higher than in the years 2017 to 2019.
In summary, the period from 2015 to 2019 was characterized by a reduction in debt and an increase in capital, leading to decreased leverage. The year 2020 reversed this trend, with a large increase in both debt and capital, and an elevated debt to capital ratio, suggesting a strategic shift or response to external factors affecting the company's financing structure.
Debt to Capital (including Operating Lease Liability)
Air Products & Chemicals Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | 7,700) | 58,200) | 54,300) | 144,000) | 935,800) | 1,494,300) | |
| Current portion of long-term debt | 470,000) | 40,400) | 406,600) | 416,400) | 371,300) | 435,600) | |
| Long-term debt, excluding current portion | 7,132,900) | 2,907,300) | 2,967,400) | 3,402,400) | 4,918,100) | 3,949,100) | |
| Long-term debt, related party | 297,200) | 320,100) | 384,300) | —) | —) | —) | |
| Total debt | 7,907,800) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Current operating lease liabilities | 70,700) | —) | —) | —) | —) | —) | |
| Noncurrent operating lease liabilities | 335,800) | —) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 8,314,300) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Total Air Products shareholders’ equity | 12,079,800) | 11,053,600) | 10,857,500) | 10,086,200) | 7,079,600) | 7,249,000) | |
| Total capital (including operating lease liability) | 20,394,100) | 14,379,600) | 14,670,100) | 14,049,000) | 13,304,800) | 13,128,000) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.41 | 0.23 | 0.26 | 0.28 | 0.47 | 0.45 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Linde plc | 0.27 | — | — | — | — | — | |
| Sherwin-Williams Co. | 0.74 | — | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Chemicals | 0.35 | — | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Materials | 0.38 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 8,314,300 ÷ 20,394,100 = 0.41
2 Click competitor name to see calculations.
The financial data over the six-year period reveals significant fluctuations in the company's debt levels and capital structure. The total debt, including operating lease liabilities, exhibited a notable decline from 2015 through 2019, followed by a sharp increase in 2020. Specifically, total debt decreased from approximately 5.88 billion US dollars in 2015 to around 3.33 billion US dollars in 2019, representing a steady reduction over four years. However, in 2020, total debt surged dramatically to approximately 8.31 billion US dollars, surpassing all previous years within the observed timeframe.
In parallel, total capital, inclusive of operating lease liabilities, demonstrated a generally upward trend with moderate growth each year until 2019. Total capital increased from approximately 13.13 billion US dollars in 2015 to a peak of about 14.67 billion US dollars in 2018, before slightly declining to 14.38 billion US dollars in 2019. The year 2020 saw a substantial jump in total capital to roughly 20.39 billion US dollars, indicating a significant expansion of the company's capital base coinciding with the debt increase in that year.
The debt-to-capital ratio further illustrates these dynamics. Initially, this ratio increased marginally from 0.45 in 2015 to 0.47 in 2016, then declined sharply to 0.28 in 2017 and continued decreasing to 0.23 by 2019. This downward trend suggests a progressive deleveraging strategy or improved capital structure resilience over these years. However, in 2020, the debt-to-capital ratio rose to 0.41, reflecting the substantial increase in debt relative to capital during that year. Although this ratio remains below the initial 2016 peak, the jump poses questions regarding the company's financial strategy or response to external factors in 2020.
- Total Debt
- Decreased steadily from 2015 to 2019, followed by a significant increase in 2020 exceeding previous levels.
- Total Capital
- Generally increased year-over-year until 2019, with a slight dip in 2019, then sharply rose in 2020.
- Debt-to-Capital Ratio
- Initially rose slightly in 2016, then decreased consistently through 2019, indicating deleveraging, but rose notably in 2020, reflecting higher leverage.
Overall, the trends suggest a period of debt reduction and capital stabilization from 2015 through 2019, followed by marked increases in financial leverage and capital base in 2020. These shifts may indicate strategic financial decisions or responses to market conditions in 2020, which warrant further examination in the context of the company's operational environment during that period.
Debt to Assets
Air Products & Chemicals Inc., debt to assets calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | 7,700) | 58,200) | 54,300) | 144,000) | 935,800) | 1,494,300) | |
| Current portion of long-term debt | 470,000) | 40,400) | 406,600) | 416,400) | 371,300) | 435,600) | |
| Long-term debt, excluding current portion | 7,132,900) | 2,907,300) | 2,967,400) | 3,402,400) | 4,918,100) | 3,949,100) | |
| Long-term debt, related party | 297,200) | 320,100) | 384,300) | —) | —) | —) | |
| Total debt | 7,907,800) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Total assets | 25,168,500) | 18,942,800) | 19,178,300) | 18,467,200) | 18,055,300) | 17,438,100) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.31 | 0.18 | 0.20 | 0.21 | 0.34 | 0.34 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Linde plc | 0.18 | — | — | — | — | — | |
| Sherwin-Williams Co. | 0.41 | — | — | — | — | — | |
| Debt to Assets, Sector | |||||||
| Chemicals | 0.23 | — | — | — | — | — | |
| Debt to Assets, Industry | |||||||
| Materials | 0.23 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Debt to assets = Total debt ÷ Total assets
= 7,907,800 ÷ 25,168,500 = 0.31
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a fluctuating trend over the analyzed period. It initially increased from approximately 5.88 billion US dollars in 2015 to about 6.23 billion in 2016, followed by a significant decline reaching around 3.33 billion in 2019. However, there was a substantial surge in 2020, with total debt rising sharply to roughly 7.91 billion US dollars, exceeding previous years' levels.
- Total Assets
- Total assets demonstrated a consistent upward trajectory from 2015 to 2020. Starting at approximately 17.44 billion US dollars in 2015, assets grew steadily each year, reaching approximately 25.17 billion in 2020. This growth trend indicates continuous asset accumulation despite the fluctuations observed in total debt.
- Debt to Assets Ratio
- The debt to assets ratio reflected a general decrease from 0.34 in 2015 and 2016 to a low of 0.18 in 2019, implying improved leverage and potentially stronger financial stability during this period. However, in 2020, this ratio rose markedly to 0.31, corresponding with the significant increase in total debt relative to assets. This reversal suggests a shift towards higher leverage in the most recent year analyzed.
Debt to Assets (including Operating Lease Liability)
Air Products & Chemicals Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Short-term borrowings | 7,700) | 58,200) | 54,300) | 144,000) | 935,800) | 1,494,300) | |
| Current portion of long-term debt | 470,000) | 40,400) | 406,600) | 416,400) | 371,300) | 435,600) | |
| Long-term debt, excluding current portion | 7,132,900) | 2,907,300) | 2,967,400) | 3,402,400) | 4,918,100) | 3,949,100) | |
| Long-term debt, related party | 297,200) | 320,100) | 384,300) | —) | —) | —) | |
| Total debt | 7,907,800) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Current operating lease liabilities | 70,700) | —) | —) | —) | —) | —) | |
| Noncurrent operating lease liabilities | 335,800) | —) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 8,314,300) | 3,326,000) | 3,812,600) | 3,962,800) | 6,225,200) | 5,879,000) | |
| Total assets | 25,168,500) | 18,942,800) | 19,178,300) | 18,467,200) | 18,055,300) | 17,438,100) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.33 | 0.18 | 0.20 | 0.21 | 0.34 | 0.34 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Linde plc | 0.20 | — | — | — | — | — | |
| Sherwin-Williams Co. | 0.50 | — | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Chemicals | 0.25 | — | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Materials | 0.25 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 8,314,300 ÷ 25,168,500 = 0.33
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a fluctuating trend over the periods analyzed. Starting at approximately 5.88 billion USD in 2015, it increased to about 6.23 billion USD in 2016. Subsequently, there was a significant decrease in debt, reaching roughly 3.96 billion USD in 2017, further declining to 3.81 billion USD in 2018, and continuing down to 3.33 billion USD in 2019. However, in 2020, the total debt rose sharply to approximately 8.31 billion USD, marking a notable increase compared to prior years.
- Total Assets
- Total assets steadily increased throughout the period. From around 17.44 billion USD in 2015, assets grew consistently each year, reaching nearly 18.06 billion USD in 2016, then 18.47 billion USD in 2017, further to 19.18 billion USD in 2018. A slight decrease was observed in 2019, where total assets fell to about 18.94 billion USD. Despite this minor decline, 2020 saw a pronounced increase in total assets to approximately 25.17 billion USD.
- Debt to Assets Ratio
- The debt to assets ratio mirrored the mixed behavior of total debt and total assets. Initially, the ratio was stable at 0.34 in both 2015 and 2016. It then decreased significantly to 0.21 in 2017, slightly declining further to 0.20 in 2018 and 0.18 in 2019, indicating a reduction in leverage relative to assets. In 2020, the ratio rose again to 0.33, closely aligning with the earlier higher levels, likely reflecting the substantial increase in total debt relative to the growth in total assets during that year.
- Summary
- Overall, the financial data reveals a pattern of a gradual reduction in debt and leverage from 2016 to 2019, paired with steady asset growth. The sudden surge in total debt and assets in 2020 significantly impacted the debt to assets ratio, bringing it back to levels similar to those observed at the beginning of the period. This shift in 2020 may imply strategic financial decisions or structural changes affecting the company’s capital structure and asset base during that year.
Financial Leverage
Air Products & Chemicals Inc., financial leverage calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Total assets | 25,168,500) | 18,942,800) | 19,178,300) | 18,467,200) | 18,055,300) | 17,438,100) | |
| Total Air Products shareholders’ equity | 12,079,800) | 11,053,600) | 10,857,500) | 10,086,200) | 7,079,600) | 7,249,000) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 2.08 | 1.71 | 1.77 | 1.83 | 2.55 | 2.41 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Linde plc | 1.86 | — | — | — | — | — | |
| Sherwin-Williams Co. | 5.65 | — | — | — | — | — | |
| Financial Leverage, Sector | |||||||
| Chemicals | 2.13 | — | — | — | — | — | |
| Financial Leverage, Industry | |||||||
| Materials | 2.47 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Financial leverage = Total assets ÷ Total Air Products shareholders’ equity
= 25,168,500 ÷ 12,079,800 = 2.08
2 Click competitor name to see calculations.
- Total assets
- The total assets of the company displayed an overall upward trend from 2015 to 2020. Starting at approximately 17.4 billion USD in 2015, assets steadily increased each year, reaching around 19.2 billion USD by 2018. A slight decline was observed in 2019, with assets decreasing marginally to approximately 18.9 billion USD. However, total assets significantly jumped to about 25.2 billion USD in 2020, indicating a substantial asset growth in that year.
- Total Air Products shareholders’ equity
- Shareholders’ equity showed notable variances over the analyzed period. Beginning at roughly 7.2 billion USD in 2015, equity slightly declined to approximately 7.1 billion USD in 2016. This was followed by a sharp increase to nearly 10.1 billion USD in 2017. The upward movement continued in subsequent years, reaching about 10.9 billion USD in 2018 and 11.1 billion USD in 2019. By 2020, shareholders’ equity further increased to approximately 12.1 billion USD, indicating strengthening equity position over time.
- Financial leverage
- The financial leverage ratio exhibited fluctuating trends across the years. Starting from 2.41 in 2015, the ratio increased slightly to 2.55 in 2016, suggesting a rise in the use of debt relative to equity. Subsequently, there was a marked reduction in leverage to 1.83 in 2017, continuing downward to 1.77 in 2018 and further declining to 1.71 in 2019. However, in 2020, the leverage ratio reversed this trend, increasing to 2.08. This indicates that the company initially reduced its reliance on debt but then increased financial leverage again toward the end of the period.
- Summary
- Overall, the company experienced growth in both total assets and shareholders’ equity, with significant asset increase in 2020. The financial leverage ratio showed a pattern of decrease from 2016 to 2019, reflecting a period of deleveraging, followed by an increase in 2020, suggesting renewed use of debt financing. These trends imply a potential strategic shift in capital structure management in the most recent year analyzed.
Interest Coverage
Air Products & Chemicals Inc., interest coverage calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income attributable to Air Products | 1,886,700) | 1,760,000) | 1,497,800) | 3,000,400) | 631,100) | 1,277,900) | |
| Add: Net income attributable to noncontrolling interest | 44,400) | 49,400) | 35,100) | 20,800) | 30,400) | 39,700) | |
| Less: Income (loss) from discontinued operations, net of tax | (14,300) | —) | 42,200) | 1,866,000) | (884,200) | —) | |
| Add: Income tax expense | 478,400) | 480,100) | 524,300) | 260,900) | 586,500) | 415,900) | |
| Add: Interest expense | 109,300) | 137,000) | 130,500) | 120,600) | 115,500) | 103,500) | |
| Earnings before interest and tax (EBIT) | 2,533,100) | 2,426,500) | 2,145,500) | 1,536,700) | 2,247,700) | 1,837,000) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 23.18 | 17.71 | 16.44 | 12.74 | 19.46 | 17.75 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Linde plc | 21.41 | — | — | — | — | — | |
| Sherwin-Williams Co. | 8.40 | — | — | — | — | — | |
| Interest Coverage, Sector | |||||||
| Chemicals | 12.73 | — | — | — | — | — | |
| Interest Coverage, Industry | |||||||
| Materials | 8.03 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,533,100 ÷ 109,300 = 23.18
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT exhibited significant fluctuations over the six-year period. It increased from approximately 1.84 billion in 2015 to a peak of nearly 2.25 billion in 2016, followed by a notable decline to about 1.54 billion in 2017. Subsequently, EBIT rebounded strongly, reaching 2.15 billion in 2018 and continuing an upward trend through 2019 and 2020, culminating in approximately 2.53 billion. Overall, the trend indicates recovery and growth after a downturn in 2017, with EBIT in 2020 exceeding all previous years.
- Interest expense
- Interest expense showed a gradual increase from 103.5 million in 2015 to 137 million in 2019, indicating a rising cost of debt or increased borrowing. However, in 2020, interest expense declined to about 109.3 million, the lowest level since 2016, suggesting a possible reduction in debt or more favorable borrowing terms during the latest year.
- Interest coverage ratio
- The interest coverage ratio, which measures the ability to pay interest expenses from EBIT, correlated closely with EBIT trends. Starting at 17.75 in 2015, it rose to 19.46 in 2016, declined sharply to 12.74 in 2017, and then improved steadily to 16.44 and 17.71 in 2018 and 2019, respectively. In 2020, the ratio surged to 23.18, its highest in the period, reflecting stronger EBIT combined with reduced interest expense. This indicates an enhanced capacity to meet interest obligations, reflecting improved financial stability and operational profitability in the most recent year.
Fixed Charge Coverage
Air Products & Chemicals Inc., fixed charge coverage calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income attributable to Air Products | 1,886,700) | 1,760,000) | 1,497,800) | 3,000,400) | 631,100) | 1,277,900) | |
| Add: Net income attributable to noncontrolling interest | 44,400) | 49,400) | 35,100) | 20,800) | 30,400) | 39,700) | |
| Less: Income (loss) from discontinued operations, net of tax | (14,300) | —) | 42,200) | 1,866,000) | (884,200) | —) | |
| Add: Income tax expense | 478,400) | 480,100) | 524,300) | 260,900) | 586,500) | 415,900) | |
| Add: Interest expense | 109,300) | 137,000) | 130,500) | 120,600) | 115,500) | 103,500) | |
| Earnings before interest and tax (EBIT) | 2,533,100) | 2,426,500) | 2,145,500) | 1,536,700) | 2,247,700) | 1,837,000) | |
| Add: Operating lease expense | 80,100) | 87,000) | 82,700) | 65,800) | 80,800) | 95,500) | |
| Earnings before fixed charges and tax | 2,613,200) | 2,513,500) | 2,228,200) | 1,602,500) | 2,328,500) | 1,932,500) | |
| Interest expense | 109,300) | 137,000) | 130,500) | 120,600) | 115,500) | 103,500) | |
| Operating lease expense | 80,100) | 87,000) | 82,700) | 65,800) | 80,800) | 95,500) | |
| Fixed charges | 189,400) | 224,000) | 213,200) | 186,400) | 196,300) | 199,000) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 13.80 | 11.22 | 10.45 | 8.60 | 11.86 | 9.71 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Linde plc | 7.79 | — | — | — | — | — | |
| Sherwin-Williams Co. | 4.13 | — | — | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Chemicals | 5.55 | — | — | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Materials | 4.84 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 2020 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,613,200 ÷ 189,400 = 13.80
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax exhibited fluctuations over the examined period. Initially, there was an increase from 1,932,500 thousand US dollars in 2015 to 2,328,500 thousand in 2016. This was followed by a notable decline to 1,602,500 thousand in 2017. Subsequently, the figure rose again reaching 2,228,200 thousand in 2018, then continued with an upward trend to 2,513,500 thousand in 2019 and further to 2,613,200 thousand in 2020, surpassing previous highs.
- Fixed charges
- Fixed charges remained relatively stable throughout the period with minor variations. The expenses started at 199,000 thousand US dollars in 2015 and experienced a slight decrease to 196,300 thousand in 2016 and again to 186,400 thousand in 2017. The charges then rose to 213,200 thousand in 2018, increased slightly to 224,000 thousand in 2019, before declining to 189,400 thousand in 2020. Overall, fixed charges did not display a clear upward or downward trend but rather fluctuated around a similar range.
- Fixed charge coverage ratio
- The fixed charge coverage ratio, which indicates the company's ability to cover fixed charges with earnings before fixed charges and tax, showed variability corresponding to changes in earnings and fixed charges. The ratio increased from 9.71 in 2015 to a peak of 11.86 in 2016. This was followed by a decrease to 8.6 in 2017, aligned with lower earnings in that year. Subsequently, the coverage improved, reaching 10.45 in 2018 and further increased to 11.22 in 2019. The most significant improvement occurred in 2020 when the ratio reached 13.8, reflecting a stronger capacity to cover fixed charges, likely due to increased earnings and reduced fixed charges relative to prior years.
- Overall Observation
- The financial data indicates a general improvement in the company's earnings capability over the latter years, after a dip in 2017. Fixed charges remained fairly consistent, indicating controlled operational obligations. The fixed charge coverage ratio suggests a strengthening financial position particularly in 2020, providing a greater buffer to meet fixed costs from operating earnings.