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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- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Analysis of Revenues
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Solvency Ratios (Summary)
Boston Scientific Corp., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The financial leverage ratios indicate a consistent downward trend over the five-year period analyzed. The debt to equity ratio decreased from 0.81 in 2018 to 0.51 in 2022, signifying a gradual reduction in reliance on debt relative to equity. When including operating lease liabilities, a similar downward trajectory is observed, with values moving from 0.81 to 0.53. This pattern extends to debt to capital and debt to assets ratios, which also show a steady decline, reflecting a strengthening capital structure and potentially reduced financial risk.
Specifically, the debt to capital ratio decreased from 0.45 in 2018 to 0.34 in 2022, and the debt to assets ratio fell from 0.34 to 0.28 in the same period. The inclusion of operating lease liabilities slightly increases these ratios but does not alter the overall trend.
Financial leverage ratios correspondingly dropped from 2.41 in 2018 to 1.85 in 2022, suggesting a decreasing degree of leverage and a more conservative balance sheet approach. This decline indicates improved equity financing relative to total assets.
Interest coverage ratios demonstrate notable volatility during the period. Initially, the ratio was at a relatively high level of 6.9 in 2018, sharply declining to 0.78 by the end of 2020. However, subsequent years saw a recovery, with the ratio increasing to 3.43 by 2022. This fluctuation points to a period of financial stress around 2020, where earnings were less sufficient to cover interest expenses, followed by gradual improvement.
Fixed charge coverage mirrors this pattern closely, declining from 5.27 in 2018 to a low of 0.76 in 2020 before rebounding to 2.69 by 2022. Such movements indicate initial challenges in covering fixed financial obligations, with partial recovery in recent years.
Overall, the data reveal a clear strategic movement towards reducing debt levels and financial leverage, alongside a temporary weakening in the ability to cover interest and fixed charges around 2020. The subsequent improvement in coverage ratios suggests efforts to enhance earnings or reduce interest burdens have had some success moving into 2022.
- Debt Ratios Trends
- All major debt ratios (debt to equity, debt to capital, debt to assets) have steadily declined from 2018 to 2022, indicating a reduction in financial leverage and improved balance sheet strength.
- Impact of Operating Lease Liabilities
- Including operating lease liabilities slightly increased the reported debt ratios each year but maintained the consistent downward trend.
- Financial Leverage
- Financial leverage declined over the period, reflecting a lower ratio of total assets to equity and indicating a more conservative capital structure.
- Interest and Fixed Charge Coverage Ratios
- Both ratios showed a marked decrease through 2020, signaling reduced capacity to meet interest and fixed financial obligations, followed by gradual recovery in 2021 and 2022, suggesting improving financial performance.
Debt Ratios
Coverage Ratios
Debt to Equity
Boston Scientific Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt obligations | ||||||
| Long-term debt | ||||||
| Total debt | ||||||
| Stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity1 | ||||||
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Debt to Equity, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Debt to Equity, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending in 2022.
- Total debt
- The total debt experienced an initial significant increase from approximately $7.06 billion in 2018 to about $10.01 billion in 2019. Following this peak, the debt gradually decreased over the next three years, reaching around $8.94 billion by 2022. This suggests a deliberate effort to reduce the debt burden after 2019.
- Stockholders’ equity
- Stockholders’ equity shows a steady and consistent upward trajectory throughout the period. Starting at about $8.73 billion in 2018, equity increased each year to reach nearly $17.57 billion in 2022. This reflects sustained growth in the company's net assets and possibly retained earnings or capital infusion.
- Debt to equity ratio
- The debt to equity ratio declined notably over the period. It started at 0.81 in 2018, decreased to 0.72 in 2019, and continued a downward trend to 0.51 by 2022. This trend indicates an improving capital structure with a reduction in financial leverage and suggests a strengthening equity base relative to debt.
Overall, the data depicts a company that, after a peak in debt in 2019, has managed to reduce its debt levels while simultaneously growing its equity. The decreasing debt-to-equity ratio over the years highlights an improving balance sheet strength and potentially lower financial risk.
Debt to Equity (including Operating Lease Liability)
Boston Scientific Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt obligations | ||||||
| Long-term debt | ||||||
| Total debt | ||||||
| Current operating lease liabilities (in Other current liabilities) | ||||||
| Long-term operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | ||||||
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data indicates several notable trends in the company’s capital structure over the five-year period ending December 31, 2022.
- Total Debt (including operating lease liability)
- The total debt level increased substantially from US$7,056 million in 2018 to a peak of US$10,351 million in 2019. Subsequently, it declined steadily each year, reaching US$9,343 million by the end of 2022. This pattern reflects an initial accumulation of debt followed by a gradual deleveraging phase.
- Stockholders’ Equity
- Stockholders’ equity expanded consistently throughout the period, increasing from US$8,726 million in 2018 to US$17,573 million in 2022. The equity value almost doubled over these five years, indicating strong growth in the company’s net assets and potentially accumulated retained earnings or additional equity financing.
- Debt to Equity Ratio (including operating lease liability)
- The debt to equity ratio declined steadily from 0.81 in 2018 to 0.53 in 2022. This reduction in the leverage ratio suggests a strengthening of the company’s financial position with lower reliance on debt financing relative to equity. The decreasing trend is consistent with the simultaneous increase in stockholders’ equity and the reduction in total debt after 2019.
Overall, the trends reveal an improving balance sheet strength, characterized by growing equity and a controlled, diminishing level of debt post-2019. The company appears to be managing its debt prudently, reducing financial risk while enhancing shareholder value through equity growth.
Debt to Capital
Boston Scientific Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt obligations | ||||||
| Long-term debt | ||||||
| Total debt | ||||||
| Stockholders’ equity | ||||||
| Total capital | ||||||
| Solvency Ratio | ||||||
| Debt to capital1 | ||||||
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Debt to Capital, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Debt to Capital, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt of the company experienced a significant increase from 2018 to 2019, rising from approximately 7.1 billion USD to over 10 billion USD. Following this peak, the debt levels declined steadily over the subsequent years, reaching approximately 8.9 billion USD by the end of 2022. This trend indicates an initial leveraged position that was later gradually reduced over the following three years.
- Total Capital
- Total capital exhibited a consistent upward trend throughout the observed period. Starting at around 15.8 billion USD in 2018, total capital increased substantially to nearly 23.9 billion USD in 2019. From 2019 onward, it continued to grow, albeit at a slower pace, reaching about 26.5 billion USD by 2022. This consistent increase suggests positive growth in the company’s overall capital base over time.
- Debt to Capital Ratio
- The debt to capital ratio declined steadily from 0.45 in 2018 to 0.34 in 2022. This downward trend signifies a reduction in financial leverage and an improving capital structure, indicating that the company has been increasing its equity or reducing its reliance on debt financing relative to the total capital employed.
Debt to Capital (including Operating Lease Liability)
Boston Scientific Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt obligations | ||||||
| Long-term debt | ||||||
| Total debt | ||||||
| Current operating lease liabilities (in Other current liabilities) | ||||||
| Long-term operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Stockholders’ equity | ||||||
| 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | ||||||
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 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.
- Total Debt (including operating lease liability)
- The total debt showed a significant increase from USD 7,056 million in 2018 to USD 10,351 million in 2019. Following this peak, the debt level experienced a gradual decline over the subsequent years, reaching USD 9,343 million by the end of 2022. This indicates a period of increased leverage in 2019, followed by efforts to reduce or stabilize debt levels.
- Total Capital (including operating lease liability)
- Total capital exhibited a steady upward trend throughout the five-year period, rising from USD 15,782 million in 2018 to USD 26,916 million in 2022. This consistent increase in capital suggests ongoing growth or reinvestment activities contributing to the expansion of the company's capital base.
- Debt to Capital Ratio (including operating lease liability)
- The debt to capital ratio declined steadily from 0.45 in 2018 to 0.35 in 2022. This trend reflects a decreasing reliance on debt financing relative to total capital, signaling an improvement in the company's capital structure and potentially a lower financial risk profile over the analyzed period.
Debt to Assets
Boston Scientific Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt obligations | ||||||
| Long-term debt | ||||||
| Total debt | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets1 | ||||||
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Debt to Assets, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Debt to Assets, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reflects the company's debt management and asset growth over a five-year period. The total debt exhibited a substantial increase from 2018 to 2019, rising from 7,056 million US dollars to 10,008 million US dollars. After this peak, a declining trend is evident, with total debt decreasing to 9,143 million US dollars in 2020, then slightly decreasing further to 9,065 million US dollars in 2021, and finally reaching 8,935 million US dollars in 2022.
Total assets demonstrated consistent growth throughout the period. From 20,999 million US dollars in 2018, the assets increased markedly to 30,565 million US dollars in 2019. Following this, the growth continued but at a slower pace, with total assets reaching 30,777 million US dollars in 2020, 32,229 million US dollars in 2021, and 32,469 million US dollars in 2022.
The ratio of debt to assets shows a steady decline over the five years, moving from 0.34 in 2018 down to 0.28 in 2022. This decreasing trend indicates an improvement in the company's leverage position, as the proportion of debt relative to total assets is reducing despite the fluctuations in absolute debt levels. The reduction in this ratio suggests enhanced financial stability and potentially a more conservative approach to debt financing over time.
- Total Debt
- Increased sharply in 2019, followed by a gradual decrease through 2022.
- Total Assets
- Consistent growth over the five-year period, with the most significant increase occurring between 2018 and 2019.
- Debt to Assets Ratio
- Steady decline each year, reflecting an improving leverage situation.
Debt to Assets (including Operating Lease Liability)
Boston Scientific Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current debt obligations | ||||||
| Long-term debt | ||||||
| Total debt | ||||||
| Current operating lease liabilities (in Other current liabilities) | ||||||
| Long-term 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Health Care Equipment & Services | ||||||
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
-
The total debt increased substantially from 2018 to 2019, rising from 7,056 million US dollars to 10,351 million US dollars. Following this peak in 2019, the debt level decreased steadily over the next three years, reaching 9,343 million US dollars by the end of 2022. This indicates a shift towards debt reduction after a significant increase in debt in 2019.
- Total Assets
-
Total assets experienced a continuous growth throughout the five-year period. Assets grew from 20,999 million US dollars in 2018 to 32,469 million US dollars in 2022. The most notable increase was observed between 2018 and 2019, where assets surged by over 45%. After that, asset growth was more moderate but consistent year over year.
- Debt to Assets Ratio (including operating lease liability)
-
The debt to assets ratio remained stable at 0.34 between 2018 and 2019 despite the increase in debt, likely due to the concurrent rise in assets. From 2020 onwards, the ratio showed a steady decline, moving from 0.31 in 2020 to 0.29 in 2022. This downward trend indicates an improving leverage position, reflecting either a reduction in debt relative to assets or stronger asset growth compared to debt.
Financial Leverage
Boston Scientific Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | ||||||
| Stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Financial leverage1 | ||||||
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Financial Leverage, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Financial Leverage, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
- The total assets increased steadily from 20,999 million US dollars at the end of 2018 to 32,469 million US dollars by the end of 2022. This represents a significant growth over the five-year period, indicating an expansion in the company's asset base. The growth was particularly notable between 2018 and 2019, with a substantial increase, followed by more moderate but consistent rises in subsequent years.
- Stockholders' Equity
- Stockholders' equity showed a robust upward trend, starting at 8,726 million US dollars in 2018 and rising to 17,573 million US dollars in 2022. This increase suggests strengthening financial health and an accumulation of retained earnings or additional equity financing over time. The year-on-year growth in equity was consistent, supporting the firm’s capital base expansion.
- Financial Leverage
- Financial leverage, expressed as a ratio, declined from 2.41 in 2018 to 1.85 in 2022. This downward trend indicates a gradual reduction in the company’s reliance on debt financing relative to equity. The consistent decrease each year points to an improvement in financial structure, implying lower financial risk and potentially greater stability.
Interest Coverage
Boston Scientific Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Solvency Ratio | ||||||
| Interest coverage1 | ||||||
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Interest Coverage, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Interest Coverage, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT shows a significant decline from 2018 to 2020, decreasing from 1,663 million US dollars in 2018 to a low of 282 million US dollars in 2020. However, there is a notable recovery in the following years, with EBIT increasing to 1,417 million US dollars in 2021 and further to 1,611 million US dollars in 2022, nearly reaching the 2018 level.
- Interest expense
- Interest expense exhibits fluctuations over the analyzed period. It rose sharply from 241 million US dollars in 2018 to 473 million US dollars in 2019, then decreased to 361 million US dollars in 2020. It remained relatively stable in 2021 at 341 million US dollars before increasing again to 470 million US dollars in 2022. This indicates variability in the company's debt servicing costs or changes in debt levels.
- Interest coverage ratio
- The interest coverage ratio, reflecting the company's ability to meet interest obligations from EBIT, mirrors the trends observed in EBIT and interest expense. It decreases substantially from a strong 6.9 in 2018 to 2.45 in 2019, and further declines to a concerning 0.78 in 2020, indicating potential difficulties in covering interest expenses from operating earnings. Subsequently, the ratio improves to 4.16 in 2021 and 3.43 in 2022, signaling a recovery in the company’s capacity to service interest, although it has not returned to the highest 2018 level.
Fixed Charge Coverage
Boston Scientific Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| U.S. federal statutory income tax rate | ||||||
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) | ||||||
| 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
| Fixed Charge Coverage, Sector | ||||||
| Health Care Equipment & Services | ||||||
| Fixed Charge Coverage, Industry | ||||||
| Health Care | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Preferred stock dividends, tax adjustment = (Preferred stock dividends × U.S. federal statutory income tax rate) ÷ (1 − U.S. federal statutory income tax rate)
= ( × ) ÷ (1 − ) =
2 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
3 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax show a fluctuating trend over the five-year period. The value decreased significantly from 1,755 million USD in 2018 to 374 million USD in 2020, indicating a considerable decline in profitability or operational performance during those years. However, a recovery trend is noted in 2021 and 2022, with earnings rising to 1,507 million USD and 1,702 million USD respectively, nearing the initial 2018 level.
- Fixed charges
- Fixed charges exhibit an overall increasing trend from 333 million USD in 2018 to 632 million USD in 2022. There was a substantial rise in fixed charges between 2018 and 2019, from 333 million to 553 million USD, after which the charges remained relatively stable around the 500 million USD mark until 2021, before increasing again in 2022.
- Fixed charge coverage ratio
- The fixed charge coverage ratio reflects the company's ability to cover fixed charges from earnings. It started at a comfortable level of 5.27 in 2018 but declined sharply to 2.24 in 2019 and further to 0.76 in 2020, indicating potential difficulties in covering fixed charges during that year. The ratio improved to 3.00 in 2021 and slightly declined again to 2.69 in 2022, suggesting a partial recovery but still lower coverage capacity compared to 2018 levels.
- Overall analysis
- The data reveals a period of financial stress around 2020, with a steep drop in earnings before fixed charges and tax, increased fixed charges, and a critically low fixed charge coverage ratio. Despite this setback, the company shows signs of recovery in the subsequent years, though fixed charge coverage remains below the initial 2018 level. The increasing fixed charges trend suggests growing financial obligations that could impact future earnings sustainability unless earnings continue to improve.