Chevron Corp. (NYSE:CVX)

Debt to Equity

The debt to equity ratio exhibits a clear downward trend from March 2021, starting at 0.34 and declining steadily to a low of 0.12 by September 2023. After this point, a slight upward movement is observed, with the ratio increasing to 0.20 by June 2025. This pattern indicates a reduction in reliance on debt financing relative to equity for an extended period, followed by a moderate increase towards the end of the timeline.

Debt to Capital

Similar to debt to equity, the debt to capital ratio consistently decreases from 0.26 in March 2021 to 0.11 in September 2023. Afterwards, the ratio exhibits a slight rise, reaching 0.17 by June 2025. This suggests a sustained effort to reduce overall debt within the company’s capital structure before a modest increase in leverage.

Debt to Assets

The debt to assets ratio declines from 0.19 in early 2021 to 0.08 by late 2023, pointing to a reduction in debt financing relative to total assets. From September 2023 onward, the ratio rises gradually to 0.12 by June 2025, indicating an increase in debt levels in proportion to assets during this period.

Financial Leverage

Financial leverage decreases gradually from 1.83 in March 2021 to a low of 1.59 by June 2023. Subsequently, it shows a moderate increase, reaching 1.71 by June 2025. This trend represents a period of de-leveraging followed by incremental leveraging, aligning coherently with the movements in debt-related ratios.

Interest Coverage

Interest coverage experienced significant volatility throughout the observed period. Initially, the ratio was negative at -11.85 in March 2021, implying an inability to cover interest expenses. Thereafter, there is a strong upward trend, peaking at 102.29 in March 2023, reflecting substantial improvement in earnings relative to interest obligations. Following this peak, the ratio steadily decreases to 27.24 by June 2025, indicating a reduction in the cushion available to meet interest payments, but still remaining positive and at relatively high levels compared to the starting point.

The analysis of the financial trends over the observed quarterly periods reveals several key points regarding the company's leverage and equity position.

Total Debt

Total debt consistently declined from March 31, 2021, starting at US$45,440 million, reaching a low point around December 31, 2022, close to US$23,339 million. Following this period, debt levels stabilized with minor fluctuations, slightly increasing again toward mid-2025, ending near US$29,467 million. This pattern indicates an initial significant reduction in leverage, followed by a moderate increase in debt exposure in the most recent quarters.

Total Stockholders’ Equity

Stockholders’ equity showed a steady upward trajectory from approximately US$131,888 million at the beginning of the period, peaking near US$165,265 million around September 30, 2023. After this peak, equity gradually declined, ending at around US$146,417 million by June 30, 2025. The initial growth suggests strong retained earnings or capital increases, whereas the later decline could reflect distributions, share buybacks, or losses in equity value.

Debt to Equity Ratio

The debt to equity ratio exhibited a downward trend from 0.34 in March 2021 to a low range near 0.12-0.15 in late 2022 and early 2023, reflecting a significant deleveraging phase. Subsequently, this ratio began to rise again gradually, reaching 0.20 by mid-2025. The increase correlates with the rising debt levels and declining equity, indicating a modestly higher financial leverage in recent quarters compared to the trough period.

Overall, the company initially prioritized reducing its debt substantially while increasing equity, resulting in a lower leverage profile. However, in the more recent periods, there appears to be a reversal of this trend with moderate debt accumulation and slight declines in equity, leading to increased leverage. This shift may imply changes in strategic financing decisions or external conditions affecting debt management and equity valuation.

Total Debt

The total debt exhibits a clear downward trend from March 31, 2021, through December 31, 2021, declining from $45,440 million to $31,369 million. This reduction continues more gradually into 2022, reaching a low of $20,559 million by September 30, 2023. However, starting late 2023 and through to June 30, 2025, total debt increases again, rising to approximately $29,467 million by the last reported period.

Total Capital

Total capital shows a modest decline initially, decreasing from $177,328 million on March 31, 2021, to $170,436 million by year-end 2021. During 2022, it climbs slightly to a peak of around $182,621 million at the end of the year, then fluctuates modestly through 2023 and 2024, with values mostly between $176,000 million and $185,000 million. Approaching mid-2025, total capital declines again to approximately $175,884 million.

Debt to Capital Ratio

This ratio decreases steadily from 0.26 in the first quarter of 2021 to a low of 0.11 in late 2023, reflecting the period in which debt is being actively reduced relative to capital. After this low, the ratio starts to increase again from late 2023 through mid-2025, reaching 0.17, indicating that debt is growing faster than or capital is declining relative to debt.

Overall Analysis

The data reveals a strategic reduction of debt during 2021 and through much of 2023, improving the company’s leverage position substantially. This deleveraging phase results in a significantly lower debt-to-capital ratio, indicative of reduced financial risk. However, from late 2023 onwards, the company appears to reverse this trend, with increasing debt levels and a corresponding rise in the debt-to-capital ratio, which might signify renewed borrowing or changes in capital structure strategy. Total capital remains relatively stable with moderate fluctuations, suggesting the company maintains a consistent capital base while managing its debt levels more actively.

Total Debt

The total debt exhibited a declining trend from March 31, 2021, through December 31, 2022, decreasing from approximately $45.4 billion to around $23.3 billion. This reduction indicates a significant effort to deleverage over this period. Starting March 31, 2023, total debt levels showed a generally increasing trend, rising from $23.2 billion to nearly $29.7 billion by March 31, 2025. Despite fluctuations, this rising trend in debt in the later periods may suggest increased borrowing or financing activities.

Total Assets

Total assets remained relatively stable across the entire period, oscillating around the $240 billion to $260 billion range. There was a gradual increase observed from March 31, 2021, reaching a peak near $263.9 billion in September 30, 2023. Subsequently, total assets exhibited a slight downward trend toward March 31, 2025, ending at approximately $250.8 billion. The relative stability in asset levels points to consistency in the company's asset base, with minor fluctuations not indicating any dramatic asset acquisitions or disposals.

Debt to Assets Ratio

The debt to assets ratio steadily decreased from 0.19 in March 31, 2021, to a low of 0.08 during late 2022 and into early 2023, reflecting a lower leverage position relative to the assets held. Beginning mid-2023, the ratio started to climb gradually, reaching 0.12 by March 31, 2025. This uptick corresponds with the increase in total debt observed during the same period, despite largely stable asset levels, implying a modest rise in financial leverage over the last few quarters.

Summary

Overall, the company demonstrated a clear deleveraging phase from early 2021 through late 2022, characterized by reduced total debt and dropping debt to asset ratios while maintaining stable asset levels. From early 2023 onward, a reversal in this trend is evident, with debt increasing and leverage ratios rising moderately. Assets have remained fairly constant throughout, suggesting that changes in leverage are primarily driven by variations in debt rather than asset fluctuations. This pattern suggests a strategic shift in the company's capital structure and financing approach in recent periods.

The analysis of the quarterly financial data reveals several key trends in the company's financial position over the period examined.

Total Assets

Total assets exhibited a general upward trend from March 2021, starting at approximately $241.6 billion, peaking around the third quarter of 2022 at approximately $259.7 billion. Following this peak, total assets showed a gradual decline through to June 2025, ending near $250.8 billion. This pattern indicates an initial expansion phase followed by a period of asset reduction or stabilization.

Total Stockholders’ Equity

Stockholders’ equity consistently increased from March 2021 at approximately $131.9 billion, reaching a high of about $165.3 billion in the third quarter of 2023. After this peak, equity values started to decrease progressively, falling to approximately $146.4 billion by June 2025. This suggests initial retained earnings growth or capital contributions that later reversed, potentially due to distributions, losses, or share repurchases.

Financial Leverage Ratio

The financial leverage ratio showed a steady decline from 1.83 in March 2021 to a low of around 1.59 by mid-2023, indicating a reduction in the proportion of total assets financed through debt relative to equity. However, post mid-2023, there was a modest increase in leverage, rising to approximately 1.72 by mid-2025. This change points to a possible increase in debt levels or a decrease in equity during this period.

Overall, the data suggest that the company experienced growth in asset base and equity through mid-2023, improving its financial strength and reducing leverage. Subsequently, a decline in both assets and equity accompanied by a rising leverage ratio indicates a shift towards higher financial risk or more leveraged financing strategy in recent quarters.

Earnings before Interest and Tax (EBIT)

The EBIT values showed significant fluctuations over the reported quarters. Starting from a relatively moderate level early in 2021, there was a sharp increase mid-2021 and a peak near the end of 2021 and into mid-2022. This peak phase was followed by a steady decline through to mid-2023, with a pronounced drop in the fourth quarter of 2023. Subsequently, EBIT experienced a partial recovery beginning in early 2024, though the levels remained below the peaks observed in 2021 and 2022. The downward trend persisted entering 2025, reaching some of the lowest values in the period analyzed.

Interest and Debt Expense

The interest and debt expense generally trended downward from early 2021 through mid-2022, reflecting a reduction in finance costs relative to the size of EBIT. From mid-2022 onwards, this expense remained relatively stable until early 2024, when a gradual increase began. This upward movement accelerated towards 2025, culminating in the highest interest and debt expense values of the entire period by mid-2025, suggesting a potential increase in debt servicing costs or borrowed capital.

Interest Coverage Ratio

The interest coverage ratio experienced marked improvement beginning in early 2021, moving from a negative value to substantial positive multiples by mid-2021. This ratio peaked sharply in late 2021 and mid-2022, indicating strong earnings capacity to cover interest expenses during this time. Following this peak, the coverage ratio demonstrated a consistent decline through late 2023. Although it remained above single digits, the trend reflects decreased ability to cover interest expenses relative to prior periods. Entering 2024 and continuing into 2025, the ratio further declined toward the lowest levels observed in the dataset, indicating a weakening cushion between operating earnings and interest obligations.

Overall Insights

The financial data reveals a cyclical performance pattern with strong earnings growth and improved interest coverage through 2021 and 2022, followed by a notable decline in earnings performance and deteriorating interest coverage starting in late 2022. The increase in interest expense in 2024 and 2025 alongside falling EBIT suggests rising financial leverage or increased debt costs, which impacts the firm’s ability to service debt comfortably. The declining interest coverage ratio signals that while earnings remained positive, the margin of safety against interest obligations has narrowed substantially towards the end of the observed period.