Coca-Cola Co. (NYSE:KO)

Debt to Equity Ratio

The debt to equity ratio demonstrates a declining trend from 2.78 in March 2020 to a low of 1.53 in September 2023, indicating a gradual reduction in reliance on debt relative to equity. However, after this low point, the ratio slightly increased again to 1.87 by March 2025. Overall, this suggests a cautious deleveraging approach followed by a modest increase in debt financing towards the end of the period.

Debt to Capital Ratio

The debt to capital ratio mirrors the debt to equity trend with an initial decline from 0.74 in March 2020 down to 0.60 in September 2023. Subsequent quarters show a moderate increase to 0.65 by March 2025. This ratio’s pattern further confirms the company’s strategic effort to manage capital structure by lowering debt proportion initially and then gradually increasing it.

Debt to Assets Ratio

This ratio exhibits a downward movement from 0.54 in March 2020 to 0.41 in September 2023, reaching the lowest point in that quarter. Afterward, there is a slight upward trend, rising again to 0.48 by March 2025. The pattern reflects a decreased indebtedness relative to total assets initially, followed by a mild increase in leverage through assets in the latter periods.

Financial Leverage Ratio

Financial leverage shows a notable drop from 5.18 in March 2020 to 3.71 in September 2023, signaling a reduction in total assets financed by equity. Following this, the ratio increased somewhat to 3.88 by March 2025. While the initial decline points to risk reduction and de-risking strategies, the later rise suggests increased asset utilization or re-leveraging activity.

Interest Coverage Ratio

The interest coverage ratio data begins in December 2020 at 7.78 and rises considerably to a peak of 17.35 in December 2022, indicating an improvement in the company's ability to service its interest expenses through operational earnings. After peaking, the ratio declines steadily to around 8.99 by March 2025. This pattern reflects improved profitability and cash flow generating capacity in the earlier phase, followed by some moderation in coverage, although it remains at a relatively strong level.

Summary

Across all leverage-related ratios, there is a clear trend of declining indebtedness and financial risk from early 2020 through late 2023. Measures of debt relative to equity, capital, and assets all decreased, complemented by a reduction in financial leverage. Concurrently, interest coverage improved significantly, highlighting enhanced earnings relative to interest expenses. In the period from late 2023 through early 2025, these trends reversed slightly with mild increases in leverage measures and a decrease in interest coverage, yet remaining within stable and manageable levels. This indicates a shift to balanced financial risk-taking while maintaining satisfactory profitability and debt servicing capabilities.

Total Debt

The total debt exhibited some fluctuations over the analyzed periods. After peaking at approximately $52.9 billion in September 2020, total debt showed a notable decline by the end of that year, reaching around $42.8 billion in December 2020. From early 2021 to mid-2022, debt levels generally remained stable, fluctuating around $39 to $42 billion. However, starting in late 2022, a gradual upward trend is observed, with debt increasing from roughly $42.4 billion in the first quarter of 2023 to about $49.1 billion by the end of the first quarter of 2025. This recent rise indicates renewed borrowing or possible capital expenditures.

Equity Attributable to Shareowners

Equity attributable to shareowners demonstrated a steady increase during the initial periods, moving from approximately $18.2 billion in March 2020 to a peak of about $26.4 billion in March 2024. There were minor declines in some quarters, especially around mid-2022 and the first quarter of 2025, but the general trend over the observed timeframe was positive, reflecting accumulation of retained earnings and possibly share issuances or revaluations.

Debt to Equity Ratio

The debt to equity ratio showed a significant decline from a high of 2.99 in June 2020 to a low of 1.53 by September 2023, indicating an improvement in the capital structure with equity growing relative to debt or debt being reduced. This trend suggests deleveraging or an improving financial position during this period. However, following September 2023, the ratio experienced a steady increase to 1.87 by March 2025. This rise correlates with the increase in total debt seen in the same timeframe, suggesting increased leverage or changes in capital structure strategy.

Overall Insights

The company showed a trend of reducing leverage from mid-2020 through late 2023, as reflected in both declining total debt and increasing equity. This indicates a focus on strengthening the balance sheet during this period. Starting late 2023, the reversal in the debt to equity ratio and the increase in total debt together indicate a strategic shift involving increased borrowing, which may be aimed at financing growth initiatives or other investments. The steady rise in equity over most of the period suggests stable profitability and value accumulation for shareholders, despite the recent increase in leverage.

The analysis of the quarterly financial data reveals the trends in total debt, total capital, and debt to capital ratio over multiple periods from March 2020 to March 2025.

Total Debt

The total debt experienced a noticeable decline from $50,393 million in March 2020 to $42,793 million by December 2020. This was followed by some fluctuations with minor decreases and increases through 2021 and 2022, generally stabilizing in the range of approximately $39,000 million to $42,000 million. Starting in 2023, the total debt exhibited a gradual upward trend, reaching $49,111 million by December 2024 before slightly decreasing to $44,522 million in March 2025. Overall, while short-term fluctuations are evident, the longer-term trend shows an initial reduction in total debt followed by a gradual increase towards the later periods.

Total Capital

Total capital correspondingly declined from $68,551 million in March 2020 to $62,092 million in December 2020. Following this decline, the total capital showed modest variation with a general trend of recovery and growth, especially during 2021 and early 2023. It increased to a peak of $72,782 million in December 2024 before experiencing a minor dip to $69,378 million in March 2025. The data suggests a resilient capital base with a trend towards gradual growth after the initial contraction in 2020.

Debt to Capital Ratio

The debt to capital ratio began relatively high at 0.74 to 0.75 in early 2020, then steadily decreased to reach a low of approximately 0.60 by September 2023. This indicates improving capital structure with proportionally less reliance on debt over this period. However, from late 2023 onwards, the ratio showed a slight upward adjustment, rising to 0.65 by March 2025. Despite these later increases, the ratio remained below the levels observed at the start of the period. This movement implies an overall trend toward a more balanced capital structure with manageable leverage, supplemented by recent moderate increases in debt proportion relative to capital.

In summary, the data highlights an initial reduction in debt and capital during 2020, consistent with market uncertainties during that period. Subsequently, both total capital and debt show recovery and growth, with capital increasing at a somewhat steadier pace. The leverage ratio reflects a cautious deleveraging phase followed by slight increases in leverage as debt grows somewhat faster than capital in the last year under review. The overall financial position suggests prudent management of debt levels relative to capital, maintaining financial stability amidst fluctuating market conditions.

The analysis of the financial data reveals several significant trends regarding the company's debt, assets, and leverage ratios over the examined quarterly periods.

Total Debt

The total debt exhibits some variability with an overall pattern of fluctuation. Beginning near $50.4 billion in early 2020, it slightly increased to a peak around $52.9 billion by September 2020, before sharply declining close to $39 billion by the end of 2022. In 2023 and 2024, total debt generally trended upward again with values climbing back above $49 billion by late 2024, showing a notable resurgence in borrowing or debt accumulation towards the end of the period.

Total Assets

Total assets showed a general upward trajectory over the time frame, despite short-term fluctuations. Starting just below $94 billion in early 2020, assets dipped to the mid $87 billion range by the end of 2020 but subsequently recovered. From 2021 onwards, assets generally increased, stabilizing close to $100 billion or above from 2023 through 2025, peaking at over $106 billion in late 2024 before slightly declining again. This upward trend indicates growth or accumulation of company resources over time.

Debt to Assets Ratio

The debt to assets ratio declined steadily from around 0.54-0.55 in early 2020 down to approximately 0.41 in late 2023, indicating a reduction in leverage relative to the asset base. This suggests that while total debt and assets both fluctuated, the company's asset growth outpaced debt increases during this interval, reducing financial risk. Starting in early 2024, the ratio began to rise gradually again, reaching about 0.48 by early 2025, which reflects a relative increase in debt compared to assets, consistent with the observed increase in total debt during this period.

In summary, the financial data shows that the company managed to decrease its leverage ratio significantly between 2020 and 2023 due to growth in assets and reduction in debt levels. However, from 2024 onwards, there are signs of a leveraged rebound as debt rises faster than assets, leading to higher financial leverage by early 2025. Monitoring this trend will be essential to understand the implications for financial stability and risk management going forward.

The analysis of the quarterly financial data reveals fluctuating patterns in total assets, equity attributable to shareowners, and financial leverage over the observed periods.

Total Assets

Total assets exhibited variability throughout the period, initially increasing from approximately 94,013 million USD in March 2020 to a lower level near 87,296 million USD by December 2020. Subsequently, there was a gradual recovery with asset values rising again, reaching peaks above 106,000 million USD by September 2024. The most recent data shows some moderation in total assets, settling near 101,716 million USD by March 2025.

Equity Attributable to Shareowners

Equity attributable to shareowners generally demonstrated an upward trend despite periodic fluctuations. Starting near 18,158 million USD in March 2020, equity grew steadily, with notable incremental increases around the April 2021 and March 2023 periods. There were some slight declines after peaks, such as from March 2024 to March 2025, where equity dropped slightly from around 26,518 million USD to 26,202 million USD. Overall, equity expanded appreciably over the examined timeframe.

Financial Leverage

The financial leverage ratio displayed a declining trajectory during the early periods, falling from 5.18 in March 2020 to a low near 3.71 in September 2023, indicating reduced reliance on debt relative to equity. However, from late 2023 into 2024 financial leverage increased moderately again, rising to approximately 4.05 by December 2024 before slightly decreasing to 3.88 at March 2025. This suggests some degree of fluctuation in the company's capital structure, with periods of both deleveraging and increased leverage.

The earnings before interest and tax (EBIT) exhibited significant volatility over the observed quarterly periods. Initially, EBIT started at 3,203 million US dollars in the first quarter of 2020, followed by a decline to 2,471 million by mid-2020. Subsequently, it experienced fluctuations with intermittent increases and decreases across the quarters. Notably, there was a marked peak in the second quarter of 2021 reaching 4,398 million, followed by a decline towards the end of 2021 and early 2022. A resurgence is observed in the first quarter of 2023 with EBIT surpassing 4,400 million, indicating periods of strong operational performance. Despite fluctuations, the latter quarters maintain EBIT values generally above 3,000 million US dollars, reflecting relatively sustained profitability.

Interest expense demonstrated a generally increasing trend throughout the periods analyzed. Starting from 193 million US dollars in the first quarter of 2020, the expense rose sporadically with some fluctuations but trended upward to peak around the mid 400 millions by late 2024 and early 2025. This rising interest expense may indicate increased borrowing or higher interest rates impacting the company's financial costs.

The interest coverage ratio, representing the firm's ability to meet interest obligations from operating earnings, was not available for the earliest quarters but showed a trend from the last quarter of 2020 onwards. It initially was 7.78 and subsequently increased significantly in 2021, reaching peaks above 16 in some quarters. After peaking, the ratio gradually declined but remained robust, staying between approximately 8.7 and 12.5 in the latest periods. These levels indicate a generally strong capacity to cover interest expenses from operating earnings despite the rising interest costs, though a decreasing trend in recent quarters suggests a slight reduction in this buffer.

In summary, the company’s EBIT shows variable but generally robust performance with notable peaks indicating periods of enhanced profitability, while interest expenses have gradually increased, potentially affecting net profitability. The interest coverage ratio provides a positive insight into the company’s ability to manage interest costs, although the downward trend in more recent quarters may warrant monitoring for future financial health.

EBIT Trends

Variable with notable peaks, sustaining mostly above 3,000 million US dollars.

Interest Expense

Increasing trend, approximately doubling from early 2020 to late 2024.

Interest Coverage Ratio

Strong overall coverage, peaking above 16, with a moderate decline to around 9 in latest periods.