Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Solvency Ratios (Summary)
Freeport-McMoRan Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
The financial leverage ratios demonstrate a consistent downward trend over the observed periods, starting from 4.54 in the first quarter of 2020 and gradually decreasing to approximately 3.17 by the first quarter of 2025. This suggests a progressive reduction in the degree to which the company is utilizing debt relative to its equity base, indicating improving financial stability and potentially lower financial risk.
Regarding the debt-to-equity ratio, a similar declining pattern is evident, decreasing from a high of 1.14 in March 2020 to around 0.53 in March 2025. This reduction signifies that the company has been decreasing its reliance on debt financing compared to its equity, which aligns with the observed lower financial leverage. The decline in the debt-to-capital and debt-to-assets ratios further corroborates this trend, reflecting a steady decrease in debt as a proportion of total capital and assets respectively. These ratios moved from approximately 0.53 and 0.25 in early 2020 to near 0.35 and 0.17 in early 2025, respectively, indicating a general deleveraging strategy.
The interest coverage ratio, after initially missing data points, shows a marked improvement from 4.03 in December 2020 to an increasing trend peaking at 22.8 in December 2024, with a slight variation thereafter. This considerable increase denotes the company's enhanced capacity to service its debt obligations from operational earnings, reflecting stronger earnings performance relative to interest expenses and suggesting reduced credit risk.
A brief uptick in debt-related ratios around mid-2022 is notable, with the debt-to-equity ratio rising from 0.65 in March 2022 to 0.74 in June 2022 and the debt-to-capital and debt-to-assets also showing minor increases. However, the company appears to have resumed its deleveraging path immediately afterward, as these ratios decline steadily through to 2025. This may indicate a short-term borrowing event or capital restructuring that was subsequently managed or repaid.
- Debt to Equity
- Declined steadily from 1.14 (Q1 2020) to approximately 0.53 (Q1 2025) with a slight rise in mid-2022; overall improving leverage position.
- Debt to Capital
- Decreased from 0.53 (Q1 2020) to about 0.35 (Q1 2025), indicating reduced debt proportion in the company’s capital structure.
- Debt to Assets
- Fell from 0.25 (Q1 2020) to around 0.17 (Q1 2025), demonstrating a shrinking share of debt relative to the total asset base.
- Financial Leverage
- Reduced from 4.54 to approximately 3.17, showing less reliance on debt financing over time.
- Interest Coverage
- Improved substantially from 4.03 (Dec 2020) to above 22 by late 2024, highlighting significantly stronger earnings relative to interest expenses.
Debt Ratios
Coverage Ratios
Debt to Equity
Freeport-McMoRan Inc., debt to equity calculation (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= ÷ =
The analysis of the quarterly financial data reveals several notable trends across the observed periods. The total debt demonstrates relative stability with fluctuations but no clear long-term upward or downward trend. It starts at approximately US$10,074 million in March 2020, decreases slightly through the end of 2021, peaks again around mid-2022 at over US$11,000 million, and then gradually trends downward toward the first quarter of 2025, ending near US$9,404 million. This suggests active debt management with periods of increase followed by reductions.
In contrast, stockholders’ equity shows a consistent and steady increase throughout the entire timeline. Beginning at US$8,855 million in March 2020, the equity grows steadily each quarter, reaching approximately US$17,688 million by March 2025. This steady growth indicates improving financial strength and likely retention of earnings or capital contributions contributing positively to the equity base.
The debt to equity ratio trends downward overall, starting at 1.14 in the first quarter of 2020 and declining to just above 0.5 by early 2025. This ratio reflects an improving capital structure, with a decreased reliance on debt financing relative to equity. The decrease is especially pronounced from 2020 through 2021, with smaller adjustments and a marginal downward trend continuing through 2025. Occasional slight upticks occur but do not interrupt the general decline.
- Total Debt
- Shows fluctuations without a clear long-term trend, with a peak mid-2022 and a gradual decrease thereafter.
- Stockholders’ Equity
- Steadily increases across the observed quarters, signaling strengthening financial position.
- Debt to Equity Ratio
- Consistently declines over the periods, indicating enhanced balance sheet strength and reduced leverage risk.
Overall, the financial trends indicate prudent debt management coupled with robust equity growth, resulting in a stronger and more balanced financial position over time. The declining debt to equity ratio further corroborates improved financial leverage and reduced risk exposure.
Debt to Capital
Freeport-McMoRan Inc., debt to capital calculation (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
- Total debt
-
The total debt of the company exhibited moderate fluctuations over the observed periods. Starting at approximately $10,074 million in March 2020, it showed a slight downward trend into the fourth quarter of 2020, reaching around $9,450 million. Debt levels then increased in 2022, peaking at about $11,092 million in mid-year. Following this peak, total debt generally declined, reaching approximately $8,948 million by the first quarter of 2025, indicating a net reduction in debt over the nearly five-year span.
- Total capital
-
Total capital demonstrated a consistent upward trajectory throughout the entire period. Beginning at roughly $18,929 million in early 2020, the figure grew steadily, surpassing $27,000 million by late 2024. Minor fluctuations were noted, particularly towards the end of the data range, but overall capital expansion suggests ongoing investment or accumulation of equity and debt resources combined.
- Debt to capital ratio
-
The debt to capital ratio declined notably from 0.53 in March 2020 to a low of 0.34 in early 2025, indicating a structural shift towards lower leverage. This trend reflects either a reduction in total debt relative to capital, an increase in total capital outpacing debt, or a combination of both. The ratio decreased steadily with some short-term stability observed in mid-2023 through 2024, suggesting a deliberate approach to managing leverage risk.
- Overall insights
-
The data demonstrates a strategic deleveraging trend supported by growing total capital. The reduction in total debt following the mid-2022 peak, alongside the consistent expansion of capital, has driven the leverage ratio downward. This pattern suggests improved financial stability and possibly enhanced capacity to absorb risks or seek new funding under favorable conditions. The company's financial position appears to be strengthening, emphasizing conservative debt management amid ongoing capital growth.
Debt to Assets
Freeport-McMoRan Inc., debt to assets calculation (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
The financial data reveals distinct trends in the company's leverage and asset base over the observed quarterly periods.
- Total Debt
-
Total debt exhibited fluctuations throughout the period. Initially, the debt decreased gradually from approximately $10,074 million in early 2020 to around $9,450 million by the end of 2021. However, a notable increase occurred in mid-2022, rising to about $11,092 million, before declining again in the subsequent quarters. From late 2022 to the early months of 2025, the debt levels showed relative stability with minor variations, generally trending downwards toward $9,404 million by the first quarter of 2025. This pattern indicates management’s active debt management, possibly leveraging debt strategically around mid-2022 before reducing it gradually thereafter.
- Total Assets
-
Total assets steadily increased across the entire timeframe. Beginning at roughly $40,219 million in March 2020, assets showed consistent growth each quarter up to $56,022 million in the first quarter of 2025. This sustained upward trend suggests ongoing investments, asset acquisitions, or revaluation gains, reflecting an expansion of the company’s asset base over time.
- Debt to Assets Ratio
-
The debt to assets ratio demonstrates a clear declining trend. Starting at 0.25 in early 2020, the ratio decreased progressively, reaching values near 0.16 to 0.17 by early 2025. Despite the spike in total debt during 2022, the ratio continued to fall, indicating that the growth in assets outpaced increases in debt. The gradual reduction in this ratio implies strengthening financial stability and improved leverage position over the observed periods.
Overall, the data indicates a strategic focus on asset growth combined with effective debt management, resulting in a decreasing leverage ratio and potentially enhanced financial resilience.
Financial Leverage
Freeport-McMoRan Inc., financial leverage calculation (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
The financial data reveals several notable trends regarding the company's asset base, equity position, and leverage over the observed period.
- Total Assets
- The total assets exhibit a steady upward trend from March 31, 2020, to March 31, 2025. Starting at approximately $40.2 billion, the asset base increased gradually with minor fluctuations, reaching over $56 billion by the end of the period. This growth indicates continuous expansion or accumulation of resources.
- Stockholders’ Equity
- Stockholders’ equity also consistently increased from $8.9 billion in March 2020 to nearly $17.7 billion by March 2025. The equity growth aligns with the asset expansion, suggesting retained earnings or additional equity injections contributed to strengthening the company's capital structure over time.
- Financial Leverage
- The financial leverage ratio decreased significantly from 4.54 at the beginning of the period to around 3.12-3.17 in the later years. This declining trend indicates a reduction in reliance on debt relative to equity, pointing to improved solvency or a more conservative capital structure. The ratio stabilized around the 3.1–3.2 range in the final quarters, reflecting a relatively consistent balance between liabilities and equity after initial deleveraging.
Overall, the data illustrates a company expanding its asset base while concurrently strengthening its equity position and reducing leverage. These trends may imply prudent financial management, improved risk profile, and enhanced financial stability throughout the observed timeframe.
Interest Coverage
Freeport-McMoRan Inc., interest coverage calculation (quarterly data)
Based on: 10-Q (reporting date: 2025-03-31), 10-K (reporting date: 2024-12-31), 10-Q (reporting date: 2024-09-30), 10-Q (reporting date: 2024-06-30), 10-Q (reporting date: 2024-03-31), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31).
1 Q1 2025 Calculation
Interest coverage
= (EBITQ1 2025
+ EBITQ4 2024
+ EBITQ3 2024
+ EBITQ2 2024)
÷ (Interest expenseQ1 2025
+ Interest expenseQ4 2024
+ Interest expenseQ3 2024
+ Interest expenseQ2 2024)
= ( + + + )
÷ ( + + + )
=
The data reveals notable fluctuations and trends in earnings before interest and tax (EBIT), interest expense, and interest coverage over the reported quarters. The EBIT shows significant variability, starting with a negative value of -482 million US$ in the first quarter of 2020, followed by a general upward trend with peak values occurring around the December 2020 quarter at 1,705 million US$, and again near the end of 2021 and early 2022. After a decline in 2022, EBIT shows some recovery through 2023 and into 2024, though with periodic decreases, especially in the first quarter of 2025 where EBIT falls to 1,363 million US$.
Interest expense remains relatively stable over the periods, mostly fluctuating between approximately 70 million US$ and 171 million US$. This consistency suggests controlled borrowing costs despite changes in EBIT. The highest interest expenses appear closely following quarters with higher EBIT, indicating possible correlations with funding needs during higher activity periods.
The interest coverage ratio displays a clear improving trend. Starting from a ratio of 4.03 in the last quarter of 2020, it climbs steadily throughout subsequent periods to reach very high values around 22.8 by the first quarter of 2025. This rising interest coverage indicates improving ability to service interest obligations from EBIT, reflecting stronger operational profitability relative to debt costs.
- EBIT Trends
- Initial losses in early 2020 transition to significant profitability gains by late 2020 and sustained elevated EBIT through 2021 and early 2022. A slump in mid to late 2022 is followed by moderate recovery and some volatility into 2024 and early 2025.
- Interest Expense Stability
- Interest costs maintain a fairly narrow range, signifying stable financing costs despite fluctuating earnings. Minor declines in interest expenses are noted toward the latest quarters.
- Interest Coverage Improvement
- A substantial increase in the ratio over the period highlights a strengthening financial position, with EBIT growth outpacing interest expenses, reducing risk related to debt servicing.
Overall, the trends illustrate recovering and strengthening operational performance after early 2020 challenges, consistent control of financing costs, and a progressively robust capacity to meet interest obligations. The decline in EBIT observed in late 2022 and early 2025 periods warrants attention for potential operational or market challenges during those times.