Coca-Cola Co. (NYSE:KO)

The solvency position, as indicated by the presented metrics, demonstrates a generally stable trend with some fluctuations over the five-year period. Overall, the company maintains a moderate level of debt relative to its equity, capital, and assets. A slight increase in leverage is observed towards the end of the period, but remains within a reasonable range.

Debt Levels

Debt to equity ratios, both with and without the inclusion of operating lease liabilities, decreased from 2021 to 2022, remained relatively flat through 2023, and then increased slightly in 2024 before decreasing again in 2025. The inclusion of operating lease liabilities consistently results in a higher ratio, indicating the impact of these obligations on the company’s debt profile. Debt to capital ratios follow a similar pattern, remaining consistently below 0.66. Debt to assets ratios exhibit minimal fluctuation, remaining consistently around 0.44-0.45.

Leverage

Financial leverage decreased from 4.10 in 2021 to 3.77 in 2023, then increased to 4.05 in 2024, before decreasing significantly to 3.26 in 2025. This suggests a changing reliance on debt financing, with a notable reduction in leverage in the final year of the observed period.

Coverage Ratios

Interest coverage ratios experienced a substantial increase from 2021 to 2022, followed by a decrease in 2023 and a further slight decrease in 2024. The ratio then improved in 2025, indicating a strengthening ability to meet interest obligations. Fixed charge coverage ratios mirrored this trend, with a peak in 2022, a decline in subsequent years, and an improvement in 2025. These ratios consistently remain above 7.0, suggesting a comfortable margin of safety regarding fixed charge obligations.

In summary, the company’s solvency appears healthy throughout the period. While debt levels remain consistent, the decrease in financial leverage in 2025, coupled with improved coverage ratios, suggests a strengthening financial position towards the end of the observed timeframe.

The debt to equity ratio exhibited fluctuations over the five-year period. Initially, the ratio decreased before stabilizing and then declining again. Total debt increased over the period, while equity attributable to shareowners demonstrated a more volatile pattern.

Debt to Equity Ratio - Overall Trend

The debt to equity ratio began at 1.86 in 2021. A decrease was observed in 2022, falling to 1.62, and remained at that level in 2023. The ratio then increased to 1.79 in 2024 before decreasing significantly to 1.41 in 2025. This indicates a lessening reliance on debt financing relative to equity in the most recent year.

Total Debt

Total debt decreased from US$42,761 million in 2021 to US$39,149 million in 2022. It then increased to US$42,064 million in 2023 and continued to rise, reaching US$44,522 million in 2024 and US$45,492 million in 2025. This represents a net increase in total debt over the five-year period.

Equity Attributable to Shareowners

Equity attributable to shareowners of the company increased from US$22,999 million in 2021 to US$24,105 million in 2022 and further to US$25,941 million in 2023. A slight decrease was noted in 2024, with equity falling to US$24,856 million. However, a substantial increase occurred in 2025, reaching US$32,169 million. This significant growth in equity in the final year contributed to the reduction in the debt to equity ratio.

The interplay between increasing debt and fluctuating equity levels resulted in the observed changes to the debt to equity ratio. The substantial increase in equity in 2025 appears to be the primary driver of the ratio’s decline to 1.41.

The debt to equity ratio, inclusive of operating lease liabilities, exhibited fluctuations over the five-year period. Total debt increased from 44,232 US$ millions in 2021 to 47,214 US$ millions in 2025, while equity attributable to shareowners demonstrated an overall upward trajectory, albeit with some interim variation.

Debt to Equity Ratio - Overall Trend

The debt to equity ratio decreased from 1.92 in 2021 to 1.68 in 2022, indicating a reduced reliance on debt financing relative to equity. This trend continued modestly into 2023, with a ratio of 1.67. A slight increase was observed in 2024, rising to 1.84, before decreasing again to 1.47 in 2025.

Debt Evolution

Total debt decreased between 2021 and 2022, from 44,232 US$ millions to 40,603 US$ millions. It then increased in subsequent years, reaching 43,426 US$ millions in 2023, 45,735 US$ millions in 2024, and finally 47,214 US$ millions in 2025. This suggests a renewed investment in debt financing in the later part of the period.

Equity Evolution

Equity attributable to shareowners increased from 22,999 US$ millions in 2021 to 24,105 US$ millions in 2022 and further to 25,941 US$ millions in 2023. A decrease was noted in 2024, with equity falling to 24,856 US$ millions, but it rebounded significantly in 2025, reaching 32,169 US$ millions. This substantial increase in equity in 2025 likely contributed to the lower debt to equity ratio observed in that year.

The interplay between debt and equity suggests a dynamic capital structure. While debt levels have generally increased, the more substantial growth in equity, particularly in 2025, has mitigated the overall leverage as measured by the debt to equity ratio.

The debt to capital ratio exhibits a generally stable pattern over the five-year period, with some fluctuation. Initial values indicate a moderate level of financial leverage, which shifts slightly over time.

Overall Trend

The debt to capital ratio decreased from 0.65 in 2021 to 0.62 in both 2022 and 2023. A slight increase to 0.64 was observed in 2024, followed by a further decrease to 0.59 in 2025. This suggests a modest reduction in reliance on debt financing relative to total capital employed towards the end of the period.

Total Debt

Total debt decreased from US$42,761 million in 2021 to US$39,149 million in 2022. It then increased to US$42,064 million in 2023 and continued to rise to US$44,522 million in 2024, before reaching US$45,492 million in 2025. This indicates a general upward trend in the absolute amount of debt outstanding, despite the fluctuations in the debt to capital ratio.

Total Capital

Total capital decreased from US$65,760 million in 2021 to US$63,254 million in 2022. It then increased to US$68,005 million in 2023, US$69,378 million in 2024, and further to US$77,661 million in 2025. The growth in total capital, particularly in the later years, appears to be a primary driver of the decreasing debt to capital ratio.

The observed pattern suggests that while the absolute level of debt has generally increased, the company has been successful in expanding its capital base at a faster rate, resulting in a lower proportion of debt financing. The decrease in the ratio in 2025 is the most pronounced, indicating a strengthening of the capital structure during that year.

The Debt to Capital ratio, inclusive of operating lease liabilities, exhibits a generally stable pattern over the five-year period, with some fluctuation. Total debt and total capital both increased over the period, but not consistently, resulting in a ratio that initially decreased, then increased slightly, before decreasing again.

Overall Trend

The ratio began at 0.66 in 2021, decreased to 0.63 in both 2022 and 2023, increased to 0.65 in 2024, and then decreased to 0.59 in 2025. This indicates a slight initial deleveraging followed by a modest increase in leverage, and then a further reduction in leverage by the end of the period.

Debt and Capital Movements

Total debt decreased from US$44,232 million in 2021 to US$40,603 million in 2022, contributing to the initial decline in the ratio. It then increased to US$43,426 million in 2023 and continued to rise to US$45,735 million in 2024, before reaching US$47,214 million in 2025. Total capital followed a similar pattern, decreasing from US$67,231 million in 2021 to US$64,708 million in 2022, increasing to US$69,367 million in 2023, then to US$70,591 million in 2024, and finally increasing significantly to US$79,383 million in 2025. The larger increase in total capital in 2025 is the primary driver of the ratio’s decrease that year.

Ratio Stability

Despite the fluctuations in both debt and capital, the Debt to Capital ratio remained within a relatively narrow range of 0.59 to 0.66 throughout the period. This suggests a consistent approach to capital structure management, with the company maintaining a moderate level of debt relative to its capital base.

The decrease in the ratio in 2025 suggests an improvement in the company’s solvency position, as the proportion of debt financing relative to total capital decreased. However, the increases in both debt and capital throughout the period warrant continued monitoring to assess the long-term sustainability of the capital structure.

The debt-to-assets ratio exhibits a relatively stable pattern over the five-year period. While fluctuations are present, the ratio remains within a narrow range, indicating a consistent, though not dramatically changing, level of financial leverage.

Overall Trend

The debt-to-assets ratio decreased from 0.45 in 2021 to 0.42 in 2022. It then experienced a slight increase to 0.43 in 2023, followed by a further increase to 0.44 in 2024. The most recent year, 2025, shows a marginal decrease back to 0.43.

Year-over-Year Changes

The largest year-over-year change occurred between 2021 and 2022, with a decrease of 0.03. Subsequent annual changes were smaller, generally ranging between 0.01 and 0.02 in either direction. This suggests that the company’s capital structure has remained relatively consistent, with moderate adjustments in the proportion of debt financing.

Debt and Asset Movements

Total debt decreased between 2021 and 2022, contributing to the initial decline in the ratio. While debt increased in subsequent years, total assets grew at a slightly faster rate, partially offsetting the impact on the debt-to-assets ratio. The growth in total assets appears to be a primary driver in moderating the ratio’s increase.

In conclusion, the debt-to-assets ratio demonstrates a pattern of stability with minor variations. The company maintains a moderate level of debt relative to its assets, and changes in this relationship are limited, suggesting a conservative approach to financial leverage.

The debt to assets ratio, incorporating operating lease liabilities, exhibits a relatively stable pattern over the five-year period. Total debt increased from $44.232 billion in 2021 to $47.214 billion in 2025, while total assets also grew from $94.354 billion to $104.816 billion over the same timeframe.

Debt to Assets Ratio Trend

The ratio began at 0.47 in 2021, decreased to 0.44 in both 2022 and 2023, and then increased slightly to 0.45 in both 2024 and 2025. This indicates a consistent level of financial leverage, with minor fluctuations. The initial decrease suggests a strengthening of the asset base relative to debt, followed by a stabilization as debt and assets grew at similar rates.

The modest increase in the ratio during the final two years of the period suggests a slight reliance on debt financing to support asset growth. However, the overall level remains consistent, indicating that the company has maintained a relatively balanced capital structure. The ratio’s stability suggests a controlled approach to debt management.

Debt and Asset Growth

Both total debt and total assets demonstrate an upward trend throughout the period. The increase in debt is not disproportionate to the increase in assets, which contributes to the stability of the debt to assets ratio. The growth in assets suggests potential expansion or investment activities, while the corresponding increase in debt may reflect financing for these initiatives.

In summary, the debt to assets ratio demonstrates a stable financial position with a slight increase in leverage towards the end of the analyzed period. The company appears to be managing its debt effectively in relation to its asset base.

The financial leverage of the company exhibits fluctuations over the five-year period. Total assets demonstrate a general upward trajectory, while equity attributable to shareowners shows an increase, with a slight dip in the fourth year before a substantial rise in the final year. These movements influence the observed financial leverage ratio.

Financial Leverage

The financial leverage ratio decreased from 4.10 in 2021 to 3.85 in 2022, indicating a reduced reliance on debt financing relative to equity. This trend continued with a further decrease to 3.77 in 2023. However, the ratio increased to 4.05 in 2024, suggesting a renewed increase in financial leverage. A significant decrease to 3.26 is then observed in 2025, representing the lowest level of leverage within the observed period.

The observed changes in equity attributable to shareowners appear to correlate with the fluctuations in financial leverage. The increase in equity in 2022 and 2023 likely contributed to the decreasing leverage ratio during those years. The dip in equity in 2024 may have contributed to the increase in leverage, while the substantial increase in equity in 2025 is strongly associated with the significant reduction in the leverage ratio.

Despite the overall increase in total assets, the company’s financial leverage has generally decreased, particularly in the final year of the period. This suggests that the growth in assets has been funded more by equity than by debt, improving the company’s solvency position in 2025.

The period under review demonstrates fluctuations in the company’s ability to meet its interest obligations. Earnings before interest and tax (EBIT) and interest expense both exhibit variability, impacting the resulting interest coverage ratio.

Earnings Before Interest and Tax (EBIT)

EBIT decreased from US$14,022 million in 2021 to US$12,568 million in 2022, representing a decline. A subsequent increase was observed in 2023, reaching US$14,479 million, followed by a further increase to US$14,742 million in 2024. The most substantial increase occurred between 2024 and 2025, with EBIT rising to US$17,652 million.

Interest Expense

Interest expense experienced a significant decrease from US$1,597 million in 2021 to US$882 million in 2022. It then rose to US$1,527 million in 2023 and continued to increase to US$1,656 million in 2024. The rate of increase slowed in 2025, with interest expense reported as US$1,654 million, remaining relatively stable compared to the prior year.

Interest Coverage Ratio

The interest coverage ratio was 8.78 in 2021. A substantial improvement was seen in 2022, with the ratio increasing to 14.25, largely driven by the decrease in interest expense. The ratio decreased to 9.48 in 2023, reflecting the increase in interest expense and a smaller increase in EBIT. A further decrease to 8.90 was observed in 2024. Finally, the ratio increased to 10.67 in 2025, driven by the significant increase in EBIT, despite a relatively stable interest expense.

Overall, while the interest coverage ratio experienced volatility, it remained above 8.78 throughout the period, suggesting a generally healthy ability to cover interest obligations. The most significant fluctuation occurred between 2021 and 2022, attributable to a substantial reduction in interest expense. The increase in EBIT in 2025 contributed to a strengthening of the ratio after a period of relative stability and decline.

The company’s fixed charge coverage exhibited fluctuations over the five-year period. Earnings before fixed charges and tax, the numerator in the calculation, demonstrated an initial decrease followed by a recovery and subsequent growth. Fixed charges, representing the company’s obligations requiring periodic payments, also showed variability, though generally remained relatively stable before increasing in later years.

Earnings Before Fixed Charges and Tax

Earnings before fixed charges and tax decreased from US$14,364 million in 2021 to US$12,965 million in 2022, representing a decline of approximately 10.4%. A subsequent recovery was observed in 2023, with earnings increasing to US$14,876 million. This upward trend continued into 2024, reaching US$15,104 million, and accelerated significantly in 2025, culminating in US$18,057 million. This indicates improving operational profitability over the latter part of the analyzed period.

Fixed Charges

Fixed charges decreased notably from US$1,939 million in 2021 to US$1,279 million in 2022, a reduction of approximately 33.9%. These charges then rose to US$1,924 million in 2023 and further to US$2,018 million in 2024. The increase continued into 2025, reaching US$2,059 million. The later increases suggest potentially higher debt servicing costs or other fixed obligations.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio began at 7.41 in 2021. A substantial increase was observed in 2022, with the ratio reaching 10.14. The ratio then decreased to 7.73 in 2023 and 7.48 in 2024, before increasing again to 8.77 in 2025. While the ratio remained above 7.0 throughout the period, the fluctuations suggest a varying ability to comfortably meet fixed obligations. The 2025 value represents the highest ratio observed during the analyzed timeframe, indicating improved coverage despite rising fixed charges.

Overall, the company demonstrated a generally healthy ability to cover its fixed charges, although the ratio experienced some volatility. The recent increase in both earnings before fixed charges and tax and the fixed charge coverage ratio in 2025 is a positive indicator.