Eaton Corp. plc (NYSE:ETN)

Debt to Equity Ratio

The debt to equity ratio demonstrates some fluctuations throughout the periods analyzed, with an initial decline from 0.59 in March 2020 to 0.54 in December 2020, followed by a notable increase to 0.79 in June 2021. Subsequently, the ratio declines again, stabilizing near 0.50 from early 2023 through mid-2024. Toward the end of the period, a gradual increase is observed, reaching 0.59 in June 2025. This pattern indicates periods of both deleveraging and leverage increases, with recent quarters showing a trend towards slight leverage growth.

Debt to Equity Ratio (Including Operating Lease Liability)

This ratio aligns closely with the traditional debt to equity ratio, showing a similar cyclical pattern: a decrease in 2020, a peak in mid-2021 at 0.81, followed by a decline and relative stabilization around 0.53 to 0.54 from early 2023 to mid-2024. A small upward trend appears towards the end of the dataset, reaching 0.62 by mid-2025. Including operating lease liabilities results in slightly higher levels, reflecting the impact of lease obligations on the company’s financial structure.

Debt to Capital Ratio

The debt to capital ratio also follows a pattern akin to the debt to equity ratios. Starting at 0.37 in early 2020, it dips slightly by the end of 2020, then rises to 0.44 in June 2021 before declining to around 0.32-0.34 in the subsequent years through mid-2024. There is a modest increase observed again in 2025, reaching 0.37 in June 2025. This suggests a consistent but moderate use of debt as a component of total capital over time.

Debt to Capital Ratio (Including Operating Lease Liability)

The inclusion of operating lease liabilities results in slightly higher debt-to-capital ratios, maintaining a similar trend to the conventional debt to capital. Peaks and troughs appear aligned with those of the debt to equity including leases ratio, spanning from 0.38 in March 2020, peaking around 0.45 in mid-2021, and then showing a decline followed by stabilization and a slight uptick in the last two periods up to 0.38 in June 2025.

Debt to Assets Ratio

This ratio remains relatively stable compared to other leverage measures, starting at 0.27 in early 2020, declining marginally to 0.25 at the end of 2020, increasing again to about 0.30 by March 2021, and then consistently hovering between 0.24 and 0.27 through the latest periods. This indicates a stable proportion of assets financed through debt over the timeframe, with minor fluctuations.

Debt to Assets Ratio (Including Operating Lease Liability)

The measure including operating lease liabilities closely follows the traditional debt to assets ratio but consistently sits slightly higher, reflecting the additional liabilities from leases. A pattern of slight increases and decreases is evident, with the ratio fluctuating between 0.25 and 0.31 across the reporting periods.

Financial Leverage

Financial leverage ratios maintain a relatively tight range, beginning at 2.17 in March 2020 and showing a downward trend toward 2.00 by mid-2024. A gradual increase in leverage is observable in the final reported quarters, reaching approximately 2.18 by June 2025. This suggests a controlled use of equity relative to total assets, with mild variability over time.

Interest Coverage Ratio

Interest coverage markedly improves over the period, starting from 12.72 in December 2020 (the first available value), increasing steadily to a peak of 40.37 by September 2024. Despite a minor decline in the final quarters, the levels remain strong, suggesting increasing ability to cover interest expenses from operating earnings. This indicates improving profitability or lower interest obligations relative to earnings.

Summary Insights

Overall, the data reveals a variable leverage profile with peaks in mid-2021, potentially reflecting external economic conditions or strategic financing decisions. Since early 2023, leverage ratios show a general tendency toward stability with modest fluctuations. The consistently higher ratios when including operating lease obligations underscore the impact of lease liabilities on the financial structure. The improvement in interest coverage ratio indicates stronger earnings performance or more favorable financing terms, enhancing the company's capacity to service debt. The combination of stable debt to assets ratios and improving interest coverage suggests sound financial management and a balance between risk and growth opportunities.

Total Debt

The total debt exhibited a fluctuating trend over the analyzed period. Initially, there was a gradual decrease from US$8,429 million in March 2020 to US$8,058 million by December 2020. Subsequently, a significant increase occurred in the first half of 2021, peaking at US$12,102 million in June 2021. After this spike, total debt declined notably by the end of 2021 to US$8,579 million and oscillated around that level throughout 2022. In 2023 and into early 2024, total debt modestly increased, reaching US$9,269 million by December 2023. The final observed quarters showed further variability, with a peak at US$10,996 million in June 2025, indicating renewed borrowing or financing activity toward the end of the period.

Total Eaton Shareholders’ Equity

Shareholders’ equity generally demonstrated a positive growth trajectory over the entire timeframe. Starting at US$14,245 million in March 2020, equity steadily increased, reaching a notable high of US$19,292 million by June 2024. Although there were small periods of stagnation and slight decreases during late 2022 and mid-2024, the overall trend reflected consistent accumulation of equity capital. By June 2025, shareholders’ equity stabilized around US$18,606 million, which remained higher compared to the early period values, implying retained earnings growth or additional equity injections.

Debt to Equity Ratio

The debt to equity ratio displayed fluctuations that align with the debt and equity movements. The ratio declined from 0.59 in March 2020 to a low of 0.49 by December 2023, indicating an improving capital structure with relatively more equity backing compared to debt. However, subsequent quarters revealed a gradual increase, reaching 0.59 again by June 2025. This shift signals a rise in leverage toward the end of the period, consistent with the increased total debt observed. Notably, the ratio peaked sharply at 0.79 in June 2021, corresponding to the debt spike in that quarter. Overall, the ratio stayed within a moderate range, suggesting balanced financial risk with some periods of higher leverage.

The analysis of the quarterly financial data reveals several notable trends regarding debt levels, equity, and leverage ratios over the observed periods.

Total debt (including operating lease liability)

The total debt exhibits some volatility across the quarters. Initially, it decreased gradually from 8,763 million US$ in March 2020 to 8,384 million US$ by December 2020. A significant increase followed in the first two quarters of 2021, peaking at 12,468 million US$ in June 2021. Subsequently, the debt decreased again towards the end of 2021 and remained relatively stable with slight fluctuations, generally ranging between approximately 9,000 million US$ and 10,500 million US$ through 2022 and 2023. In 2024 and the first half of 2025, debt levels showed a moderate upward trend, ultimately rising to 11,583 million US$ by June 2025.

Total Eaton shareholders’ equity

Shareholders' equity demonstrates a steady and consistent upward trend throughout the entire period. Starting from 14,245 million US$ in March 2020, equity gradually increased each quarter, reaching 19,292 million US$ by June 2024. Minor fluctuations occurred towards the end of 2024 and early 2025, but equity remained relatively high, closing at 18,606 million US$ in June 2025. This progression indicates ongoing strengthening of the company's net asset base over time.

Debt to equity (including operating lease liability)

The debt-to-equity ratio shows noticeable variability, reflecting the changes in debt and equity. Initially, the ratio decreased from 0.62 in March 2020 to 0.56 in December 2020, indicating a relative improvement in leverage. A sharp increase occurred in the first half of 2021, peaking at 0.81 in June 2021, coinciding with the peak in debt levels. Subsequently, the ratio generally declined, hitting lows around 0.51 to 0.54 during 2022 and the first half of 2023, consistent with decreasing debt and increasing equity. In 2024, the ratio increased slightly, fluctuating near 0.55 and ending at 0.62 in June 2025, reflecting a moderate rise in leverage towards the latest periods.

Overall, the financial data indicates a company managing its capital structure actively, balancing increases in shareholders' equity with fluctuations in debt levels. The upward trend in equity suggests strengthening financial foundations, while the periodic increases in debt and leverage ratios point towards occasional increases in borrowing or financing activities. The recent gradual increase in debt and leverage could warrant monitoring to ensure it aligns with the company's long-term financial strategy and risk tolerance.

The financial data demonstrates fluctuations in the company's leverage and capital structure over the examined periods. The analysis focuses on total debt, total capital, and the debt-to-capital ratio, revealing notable trends and variations.

Total Debt

Total debt experienced variability across the reported quarters. Initially, debt showed a slight decrease from US$8,429 million at March 31, 2020, to US$8,058 million at December 31, 2020. Subsequently, a marked increase occurred, peaking at US$12,102 million in June 30, 2021. After this peak, debt decreased steadily through to December 31, 2021, followed by minor fluctuations ranging mostly between approximately US$8,700 million and US$10,996 million in the last observed quarters. The latter part of the timeline shows an increasing trend towards the end of the period, culminating in the highest reported value of US$10,996 million at June 30, 2025.

Total Capital

Total capital displayed a generally upward trend with some moderate volatility. Beginning at US$22,674 million on March 31, 2020, capital gradually increased, peaking at approximately US$29,056 million on June 30, 2024. There were periods of minor declines or plateauing, such as from mid-2022 to early 2023, but the overall trajectory indicates steady capital growth. The data at June 30, 2025, shows a further increase to US$29,602 million, representing the highest level in the dataset.

Debt-to-Capital Ratio

The debt-to-capital ratio exhibits clear fluctuations that correspond with changes in both debt and capital. Initially, the ratio decreased slightly from 0.37 in early 2020 to 0.35 by December 31, 2020. A subsequent sharp rise occurred in the first half of 2021, with the ratio peaking at 0.44 in June 30, 2021, indicating a higher proportion of debt relative to total capital. Following this peak, the ratio generally declined and stabilized around 0.33 to 0.34 for most of 2022 and 2023, suggesting a relatively balanced capital structure during that period. Towards the end of the dataset, the ratio trends upward again, reaching 0.37 by June 30, 2025, which may suggest increasing leverage in the recent quarters.

Overall, the data reflects periods of increased leverage, notably in the first half of 2021, followed by phases of relative deleveraging and capital growth. The recent upward movement in the debt-to-capital ratio toward the end of the reporting period may warrant further monitoring to assess implications for financial risk and capital management strategies.

The quarterly financial data reveals notable trends concerning the company's debt and capital structure over the observed periods. Total debt, including operating lease liabilities, exhibits varying fluctuations with an overall increasing trajectory from March 2020 through June 2025. Initially, debt decreased slightly from 8,763 million US dollars in March 2020 to 8,384 million US dollars by December 2020, followed by a significant increase peaking at 12,468 million US dollars in June 2021. Subsequently, debt levels decreased again before showing a gradual rising trend toward 11,583 million US dollars by June 2025.

Total capital, incorporating operating lease liabilities, consistently increased throughout the observed timeline. Starting at 23,008 million US dollars in March 2020, capital rose steadily to reach 30,189 million US dollars by June 2025. This steady growth indicates a strengthening in the company's total financial base, with only minor short-term decreases or stagnation in certain quarters.

The debt-to-capital ratio fluctuates within a range between 0.34 and 0.45, reflecting changes in debt relative to total capital. Early in the period, the ratio remained relatively stable near 0.36 to 0.38. It spiked to a high of 0.45 in June 2021, coinciding with the peak in total debt. Following this peak, the ratio trended downward and stabilized in the mid-0.30s range, specifically between 0.34 and 0.38 throughout the latter periods, indicating moderate leverage levels relative to capital.

Total Debt Trend

Initially declines slightly, sharply rises mid-2021, then trends upward moderately thereafter.

Total Capital Trend

Displays consistent growth over time, increasing total financial resources significantly.

Debt to Capital Ratio Trend

Exhibits volatility with a peak in mid-2021, followed by stabilization in a moderate leverage range.

Overall, the company demonstrates a dynamic approach to managing its capital structure, balancing incremental increases in debt with steady growth in capital. The observed leverage ratios suggest a focus on maintaining manageable debt loads relative to capital, especially following the mid-2021 peak. This pattern may reflect strategic financial management decisions in response to market conditions or business developments during the period.

The analysis of the quarterly financial data reveals several notable trends in the company's debt level, asset base, and leverage ratio over the observed period.

Total Debt

Total debt exhibits a fluctuating pattern with an overall increasing trend from early 2020 to mid-2025. Initially, there is a moderate decline from $8,429 million in March 2020 to $8,058 million by December 2020. This is followed by a significant rise peaking at $12,102 million in June 2021. Subsequently, debt decreases again, fluctuating between approximately $8,600 million and $9,800 million until late 2024, then rising toward the end of the period, reaching $10,996 million by June 2025.

Total Assets

Total assets display a generally upward trajectory throughout the timeframe. Starting near $30,845 million in March 2020, assets increase steadily to approximately $40,507 million by June 2025. While there are periods of minor declines or plateaus—such as slight dips around late 2022 and early 2025—the overall asset base expansion suggests growth and accumulation.

Debt to Assets Ratio

The debt to assets ratio demonstrates relative stability with modest oscillations between 0.24 and 0.33. Initially around 0.27 in early 2020, the ratio peaks at 0.33 in June 2021 during the time of highest gross debt, indicating increased leverage. Thereafter, it consistently trends downward or remains steady, reaching lows around 0.24 from late 2022 through early 2025 before edging back up to approximately 0.27 at mid-2025.

This ratio behavior reflects the balance between growing assets and fluctuating debt, with the company managing to maintain leverage at moderate levels despite varying debt amounts.

In summary, the company has expanded its asset base significantly over the examined period, while total debt levels have varied, peaking mid-2021 and late mid-2025. The leverage, as represented by the debt to assets ratio, remains controlled in a moderate range, indicating prudent financial management of debt relative to asset growth.

The analysis of the quarterly financial data reveals notable trends and fluctuations in the financial position over the observed periods.

Total Debt (including operating lease liability)

The total debt exhibited some volatility with periods of increase and decrease. Starting at 8,763 million USD in Q1 2020, it slightly declined until Q4 2020, then surged significantly to reach a peak of 12,468 million USD in Q2 2021. Following this peak, debt levels generally declined and fluctuated around the 9,000 to 10,000 million USD range through 2022 and early 2023. From mid-2023 onwards, debt once again rose, culminating in a high of 11,583 million USD in Q2 2025. This pattern suggests periods of strategic borrowing likely aligned with investments or operational needs, with intermittent repayments or debt management actions.

Total Assets

Total assets showed a consistent upward trend throughout the entire period. Beginning at approximately 30,845 million USD in Q1 2020, assets steadily increased with minor fluctuations, reaching 40,507 million USD by Q2 2025. This growth indicates expansion or appreciation in asset base over time, reflecting either organic growth, acquisitions, or revaluations.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio fluctuated between 0.25 and 0.34, showing moderate variability. Initial readings in 2020 hovered around 0.26-0.28, then rose to a peak of 0.34 in Q2 2021, coinciding with the peak in total debt. Subsequently, the ratio decreased and stabilized mostly between 0.25 and 0.27 from late 2021 through early 2024 despite the steady growth in total assets, indicating relatively controlled leverage. However, a slight increase back to 0.29 was observed in Q2 2025 alongside the rise in total debt, pointing to a marginal increase in financial leverage at the end of the period.

In summary, the company has increased its asset base steadily over the five-year span while managing debt levels with some periods of aggressive borrowing and subsequent normalization. The debt to assets ratio suggests an overall prudent leverage approach, maintaining financial risk within moderate bounds despite fluctuations in debt levels. The recent increase in both debt and leverage ratio in 2025 may warrant attention for future capital structure and risk management strategies.

Total assets

The total assets demonstrated a generally increasing trend over the analyzed periods, starting at 30,845 million US dollars at the end of March 2020 and rising to 40,507 million US dollars by the end of June 2025. There were minor fluctuations, such as a slight decrease observed between June 2025 and March 2025. The overall pattern indicates steady asset growth with occasional short-term decreases, suggesting expansion activities with moments of revaluation or asset sales.

Total Eaton shareholders’ equity

Total shareholders' equity showed gradual growth from 14,245 million US dollars as of March 2020 to 18,606 million US dollars by June 2025. The equity experienced some periods of decline, notably between September 2022 and June 2023, but these were followed by recoveries. This indicates consistent strengthening of the company’s equity base over time despite some volatility that may be related to income variations, dividend payments, or other equity changes.

Financial leverage

Financial leverage fluctuated between 2.00 and 2.39 across the quarters. Starting at 2.17 in March 2020, it peaked at 2.39 in June 2021, indicating a relatively higher use of debt financing at that time. Thereafter, there was a downward trend to reach a low of 2.00 in March 2024, suggesting a period of deleveraging or equity growth relative to liabilities. The leverage ratio increased again slightly to 2.18 by June 2025. Overall, financial leverage remained within a moderate range, reflecting steady capital structure management with some emphasis on balancing debt and equity.

The quarterly financial data reveal significant fluctuations and trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratios over the observed periods.

Earnings Before Interest and Tax (EBIT)

The EBIT values exhibit considerable variability across quarters, starting at 655 million US dollars in March 2020 and dropping sharply to 85 million in June 2020. Subsequently, there is a recovery and general upward trend, with some volatility, reaching notable peaks in September 2021 (1150 million) and December 2023 (1114 million). From 2023 onward, EBIT generally maintains elevated levels above 1000 million, demonstrating stronger operating profitability in recent periods compared to early 2020.

Interest Expense, Net

Interest expense fluctuates moderately, with values ranging mostly between 26 and 50 million US dollars, except for two spikes: June 2025, when it reaches 71 million, and March 2025 at 42 million. It does not show a clear upward or downward trend but demonstrates some periodic volatility. In earlier periods, costs were generally in the range of 30-40 million, with occasional variations.

Interest Coverage Ratio

The interest coverage ratio, calculated as the ratio of EBIT to interest expense, is missing for some early periods but displays a robust increasing trend over the data range. Beginning near 12.72 in September 2020, it improves steadily to reach as high as 40.37 in December 2024. Toward the end of the timeline, the ratio slightly declines but remains strong, indicating a solid ability to cover interest expenses from operating earnings. The rising interest coverage ratio suggests improving financial health and diminished risk related to debt servicing.

Overall, the data suggest that operating profits have generally improved and stabilized at higher levels after initial volatility, while interest expenses have fluctuated without a clear trend. Consequently, the company's ability to cover interest expenses from earnings has markedly strengthened through the observed periods, reflecting enhanced operational efficiency and financial resilience.