AutoZone Inc. (NYSE:AZO)

Debt to Capital and Related Ratios

The debt to capital ratio exhibited fluctuations over the observed periods, starting at 1.42 in 2018, experiencing a slight increase to 1.47 in 2019, followed by a notable decline to 1.18 in 2020. Subsequently, the ratio increased sharply to 1.48 in 2021 and spiked to 2.22 in 2022 before stabilizing slightly at 2.21 in 2023. When including operating lease liabilities, the debt to capital ratio showed a generally upward trajectory from 1.42 in 2018 to 1.64 in 2023, with more moderate fluctuations, especially between 2020 and 2021.

Debt to Assets and Inclusion of Operating Lease Liability

Debt to assets ratio, excluding operating lease liabilities, decreased from 0.55 in 2018 to a low of 0.38 in 2021, before rising again to 0.5 by 2023, indicating a reduction and subsequent partial reversal in leverage relative to total assets. However, when including operating lease liabilities, this ratio remained consistently higher and showed a steady upward trend from 0.55 in 2018 to 0.7 in 2023, suggesting increased recognition of operating leases as debt-like obligations.

Interest Coverage Ratio

Interest coverage improved progressively from 10.08 in 2018 to a peak of 16.58 in 2022, indicating an enhanced ability to meet interest obligations over the period. Despite this upward trend, there was a notable decline to 10.95 in 2023, signaling reduced coverage that may warrant further attention.

Fixed Charge Coverage Ratio

Fixed charge coverage demonstrated steady improvement over the years, rising from 4.3 in 2018 to 6.14 in 2022. This suggests increasing capacity to cover fixed financial charges such as lease payments and interest. However, similar to interest coverage, the ratio declined to 5.19 in 2023, potentially reflecting increased fixed obligations or decreased operating income.

Total debt

The total debt has generally increased over the analyzed period, rising from approximately 5.16 billion US dollars in August 2018 to about 7.96 billion US dollars in August 2023. This represents a steady upward trend, with a moderate dip observed in August 2021, where total debt declined slightly from the previous year before increasing again significantly in the following years.

Stockholders’ deficit

The stockholders’ deficit figures exhibit considerable fluctuation and an overall worsening trend. Beginning at a deficit of approximately 1.52 billion US dollars in August 2018, the deficit deepened to around 1.71 billion in August 2019, improved substantially in August 2020 to roughly 0.88 billion deficit, but then deteriorated again sharply thereafter. By August 2023, the stockholders’ deficit had expanded to approximately 4.35 billion US dollars. This indicates increasing negative equity over the last two years of the period under review.

Debt to equity ratio

While the debt to equity ratio values are not explicitly provided, the available data suggest a significant increase in financial leverage over the period. The combination of rising total debt and worsening stockholders’ deficit implies a higher ratio, indicating that the company’s reliance on debt financing relative to equity has grown substantially, potentially heightening financial risk.

The financial data reveals distinct trends in the company's leverage and equity position over the examined period.

Total Debt (including operating lease liability)

The total debt has shown a consistent upward trajectory from August 2018 to August 2023. Starting at approximately $5.16 billion in 2018, debt increased marginally to about $5.39 billion in 2019. A significant rise was observed in 2020, with total debt reaching approximately $8.46 billion. The debt levels stabilized somewhat in 2021 at around $8.42 billion before increasing again to $9.51 billion in 2022 and further to $11.13 billion in 2023. This indicates an overall increasing dependence on debt financing over the six-year period.

Stockholders’ Deficit

The stockholders’ deficit displayed considerable fluctuations throughout the timeframe. The deficit deepened from about -$1.52 billion in 2018 to approximately -$1.71 billion in 2019, improving significantly to nearly -$878 million in 2020. However, this improvement was short-lived as the deficit widened again to roughly -$1.80 billion in 2021. From 2021 onwards, the deficit increased dramatically, reaching about -$3.54 billion in 2022 and further deteriorating to nearly -$4.35 billion in 2023. This trend reflects growing negative equity and suggests worsening net asset positions.

Debt to Equity Ratio (including operating lease liability)

Data for the debt to equity ratio is missing throughout the periods, precluding direct analysis of this leverage metric. However, considering the trends in total debt and stockholders' deficit, the leverage appears to have increased significantly, likely resulting in a higher debt to equity ratio.

Overall, the company exhibits a pattern of increasing indebtedness combined with a growing stockholders’ deficit, indicative of a more leveraged financial structure with declining equity health over the six-year span. This situation may necessitate closer attention to solvency and capital structure management going forward.

The financial data indicates a fluctuating trend in the company's total debt over the six-year period. Total debt increased steadily from approximately $5.16 billion in 2018 to about $5.74 billion in 2020, followed by a slight decrease in 2021, and then a significant rise again in 2022 and 2023, reaching nearly $7.96 billion. This pattern suggests an overall increasing reliance on debt financing.

Total capital shows a less consistent trend. It remained relatively stable between 2018 and 2019, followed by a substantial increase in 2020, rising sharply from approximately $3.67 billion to $4.86 billion. However, after 2020, total capital experienced a marked decline, reaching a low of about $2.89 billion in 2022 before slightly recovering in 2023 to around $3.61 billion. This volatility reflects changes in the company's equity and debt structure overall.

The debt to capital ratio, an important indicator of leverage, generally mirrored the fluctuations in total debt and capital. Initially, the ratio rose slightly from 1.42 in 2018 to 1.47 in 2019, then declined to its lowest point of 1.18 in 2020, which aligns with the peak in total capital that year. However, after 2020, the ratio increased sharply, peaking at 2.22 in 2022 and maintaining a similar level at 2.21 in 2023. This indicates a significant shift toward greater debt reliance relative to total capital in recent years.

Overall, the data reveals an increasing trend in debt levels and leverage, especially after 2020. The notable decline in total capital alongside rising debt suggests the company has been increasingly financed through borrowing, resulting in higher financial risk. The elevated debt to capital ratios in the last two years highlight the intensified leverage position, which may warrant careful monitoring from a risk management perspective.

The financial data reveals notable trends in the company's leverage and capital structure over the six-year period analyzed.

Total debt (including operating lease liability)

The total debt increased significantly from approximately 5.16 billion USD in 2018 to 11.13 billion USD in 2023. The growth was especially pronounced between 2019 and 2020, where debt rose sharply from roughly 5.39 billion USD to 8.46 billion USD. Although the debt level slightly decreased in 2021 to about 8.42 billion USD, it subsequently resumed its upward trajectory, reaching the highest level in 2023. This suggests a continued reliance on debt financing over the years.

Total capital (including operating lease liability)

Total capital displayed more variability, beginning at approximately 3.64 billion USD in 2018 and exhibiting a steep increase to around 7.58 billion USD in 2020. However, this figure declined again through 2021 and 2022 to a low of about 5.97 billion USD before rebounding somewhat to 6.78 billion USD in 2023. The fluctuation indicates shifting levels of equity and debt combinations affecting the overall capital base.

Debt to capital (including operating lease liability) ratio

The debt to capital ratio started at a high level of 1.42 in 2018, increased slightly to 1.47 in 2019, then declined significantly to 1.12 in 2020, the lowest ratio observed in the period. Following this decline, the ratio rose again steadily through 2021 to 1.27, 2022 to 1.59, and reached a peak of 1.64 in 2023. This rising trend in recent years indicates an increasing proportion of debt relative to total capital, reflecting a more leveraged financial structure.

In summary, the data points to a substantial increase in total debt over the period, coupled with fluctuations in total capital. The increasing debt to capital ratio in the latter years suggests growing financial leverage, potentially impacting the company's risk profile and cost of capital. These trends warrant close monitoring to assess sustainability and financial flexibility going forward.

The financial data presents an overview of key balance sheet items and leverage ratios over a six-year period. The total debt and total assets exhibit notable trends that impact the overall financial structure.

Total Debt

The total debt has shown a consistent upward trajectory from 5,160,233 thousand US dollars in 2018 to 7,956,167 thousand US dollars in 2023. Despite a slight decline during 2021, the overall trend reflects increased borrowing or liabilities over time, particularly accelerating in the last two years.

Total Assets

Total assets increased substantially from 9,346,980 thousand US dollars in 2018 to 15,985,878 thousand US dollars in 2023. Significant growth occurred between 2019 and 2020, where assets surged by nearly 4.5 billion dollars, followed by steadier increases in subsequent years. This reflects expansion and asset accumulation throughout the period.

Debt to Assets Ratio

The debt to assets ratio declined from 0.55 in 2018 to a low of 0.38 in 2021, indicating that asset growth outpaced debt growth during most of the period. However, from 2022 onward, the ratio rose to 0.50 in 2023, suggestive of increased leverage as debt grew faster relative to assets. The declining ratio earlier pointed to a strengthening balance sheet, but the recent increase may signal heightened financial risk or strategic leverage use.

In summary, the company has expanded its asset base substantially while also increasing its debt load. The initial decrease in leverage suggests improving financial stability, but the recent upward shift in the debt to assets ratio warrants closer monitoring to assess the implications for credit risk and capital structure strategy.

Total Debt (Including Operating Lease Liability)

The total debt consistently increased over the years from 2018 to 2023. Beginning at approximately 5.16 billion US dollars in 2018, the debt rose moderately through 2019, followed by a significant jump in 2020 to over 8.46 billion. This elevated level persisted in 2021 before further increasing to approximately 9.51 billion in 2022 and reaching 11.13 billion in 2023. The trend indicates a continuous accumulation of debt over the six-year period.

Total Assets

Total assets also exhibited a growth trend from 2018 to 2023. The assets increased from about 9.35 billion US dollars in 2018 to approximately 15.99 billion by 2023. Notably, a substantial increase is seen between 2019 and 2020, with assets rising from close to 9.90 billion to over 14.42 billion. Afterward, the growth slows but remains positive through to 2023.

Debt to Assets Ratio (Including Operating Lease Liability)

The ratio of debt to assets showed some fluctuations but a generally increasing trend across the analyzed period. Starting at 0.55 in 2018 and slightly decreasing to 0.54 in 2019, the ratio then increased to 0.59 in 2020 and slightly declined to 0.58 in 2021. The most notable rise occurred in 2022 and 2023, with ratios climbing to 0.62 and 0.70, respectively. This suggests a growing proportion of the company’s assets is financed through debt over time.

Overall Insights

The data highlights a consistent strategy of leveraging financial resources, reflected by steady increases in both total debt and total assets. However, the faster rate of increase in debt compared to assets in recent years, especially noted in the jump of the debt to assets ratio in 2022 and 2023, may indicate higher financial risk or reliance on debt financing. This progression may warrant attention regarding debt management and capital structure sustainability going forward.

The financial data reveals several key trends regarding the company’s asset base and equity position over the analyzed periods.

Total assets

Total assets have exhibited a steady upward trajectory from August 2018 to August 2023. There was a marked increase from 9,346,980 thousand USD in 2018 to 15,985,878 thousand USD in 2023. This represents a significant growth in the asset base, suggesting ongoing investments or acquisitions contributing to the expansion of resources.

Stockholders’ deficit

Throughout the periods, the company has maintained a stockholders’ deficit, reflecting negative equity. This deficit fluctuated, initially at -1,520,355 thousand USD in 2018, worsening to -1,713,851 thousand USD in 2019. A notable reduction in the deficit occurred in 2020 to -877,977 thousand USD, indicating a temporary improvement in equity. However, from 2021 onward, the deficit expanded again substantially, reaching -4,349,894 thousand USD by 2023. This increasing negative equity suggests ongoing financial challenges or adjustments impacting shareholder value.

Financial leverage

No data was provided for financial leverage, and therefore, no conclusions can be drawn regarding leverage ratios or their impact on the company’s financial structure.

Overall, the data shows a company expanding its asset base while struggling with persistent and increasing shareholders’ deficit. This contrast may warrant further investigation into the composition of assets, liabilities, and operational performance to understand the underlying causes for the growing negative equity.

Earnings before Interest and Tax (EBIT)

There is a consistent upward trend in EBIT from 2018 to 2023. The EBIT increased from approximately 1.82 billion USD in 2018 to nearly 3.49 billion USD in 2023. This reflects an overall improvement in operating profitability, with notable accelerations between 2019 and 2021, and continued growth through 2023, although at a slightly slower pace in the last year.

Interest Expense, Less Capitalized Interest

Interest expense remained relatively stable from 2018 to 2022, ranging between about 180 million and 198 million USD. However, in 2023, there was a significant increase to over 318 million USD, representing a substantial rise in financing costs during the most recent year. This increase may influence the company’s financing structure or reflects higher debt levels or increased interest rates.

Interest Coverage Ratio

The interest coverage ratio, which measures the ability to cover interest expenses with EBIT, improved steadily from 10.08 in 2018 to a peak of 16.58 in 2022, indicating enhanced financial stability and stronger earnings relative to interest costs. However, in 2023, the ratio declined to 10.95, reflecting the considerable rise in interest expenses noted above. Despite the decline, the coverage remains above 10, signaling that earnings still comfortably cover interest obligations.

Earnings before fixed charges and tax

The earnings before fixed charges and tax displayed a consistent upward trend over the analyzed six-year period. Starting at 2,132,092 thousand US dollars in 2018, the figure rose each year to reach 3,923,802 thousand US dollars by 2023. This represents a significant growth, indicating an overall improvement in operational profitability and earnings capacity before accounting for fixed costs and taxes.

Fixed charges

Fixed charges showed a gradual increase from 495,763 thousand US dollars in 2018 to 598,686 thousand US dollars in 2022, followed by a more pronounced increase to 756,188 thousand US dollars in 2023. While the initial annual increments were moderate, the sharp rise in the final year suggests either increased interest expenses, lease obligations, or other fixed financial commitments, which may affect the company’s financial leverage and cost structure.

Fixed charge coverage ratio

The fixed charge coverage ratio improved steadily from 4.3 in 2018 to a peak of 6.14 in 2022, indicating an increasing ability of earnings to cover fixed financial obligations. However, in 2023, the ratio declined to 5.19. This decrease, despite higher earnings, is attributable to the disproportionate rise in fixed charges, signaling a potential reduction in the safety margin available to meet fixed financial commitments.