GE Aerospace (NYSE:GE)

The financial data exhibits notable trends in leverage and coverage ratios over the five-year period. A marked decline is observed in the debt-related ratios from 2020 through 2023, followed by an upward adjustment in 2024. Specifically, the debt to equity ratio decreased significantly from 2.11 in 2020 to 0.77 in 2023, indicating a reduction in reliance on debt relative to equity. However, this trend reversed somewhat in 2024, with the ratio increasing to 1, suggesting a moderate rise in debt levels compared to equity in that year.

When including operating lease liabilities, the debt to equity ratio follows a similar pattern, decreasing from 2.2 in 2020 to 0.84 in 2023 before rising to 1.05 in 2024. This consistency indicates that lease liabilities do not disproportionately affect the overall leverage trend.

The debt to capital ratio shows a decrease from 0.68 in 2020 to 0.43 in 2023, followed by a rise to 0.5 in 2024. This ratio, including lease liabilities, mirrors this pattern closely, suggesting stabilization of capital structure with a slight increase in debt use at the end of the period.

Debt to assets ratios demonstrate a reduction from 0.3 in 2020 to 0.13 in 2023, with a subsequent increase to 0.16 in 2024, reinforcing the trend of lowering debt burden relative to assets until 2023, then a mild increase in the following year.

Financial leverage decreases from 7.13 in 2020 to a low of 4.93 in 2021, with a subsequent slight increase up to 6.37 by 2024. This fluctuation suggests a gradual change in the capital structure, with leverage being managed down initially but increasing moderately towards the later years.

Coverage ratios show substantial variability. Interest coverage turns negative in 2021 at -0.96 but recovers strongly to 10.12 in 2023 before declining slightly to 8.73 in 2024, indicating an initial difficulty in covering interest expenses followed by a significant improvement in earnings relative to interest obligations. Fixed charge coverage exhibits a similar trajectory, moving from 1.93 in 2020 to -0.22 in 2021, then improving to 6.19 by 2024. This pattern suggests initial financial stress impacting the ability to cover fixed charges, followed by enhanced capacity in later years.

Overall, the data reflect a period of deleveraging and financial stabilization through 2023, succeeded by a moderate increase in leverage measures and steady, strong improvement in coverage ratios. The initial challenges, as seen in negative interest and fixed charge coverage in 2021, appear to have been overcome by 2023 with sustained better performance thereafter.

Debt to Equity

Declined significantly from 2020 to 2023, then increased moderately in 2024.

Debt to Capital

Fell steadily through 2023, followed by a small rise in 2024, consistent with debt to equity trends.

Debt to Assets

Showed gradual reduction until 2023 with a slight upturn in 2024.

Financial Leverage

Decreased initially but experienced a moderate rebound through 2024.

Interest Coverage

Negative in 2021, then a robust recovery by 2023 and maintained good levels in 2024.

Fixed Charge Coverage

Followed a similar negative-to-positive recovery path as interest coverage, improving substantially by 2024.

Total debt

The total debt exhibits a significant declining trend from 2020 to 2024. Starting at $75,066 million in 2020, it reduces sharply to $35,185 million in 2021, followed by a gradual decrease through to $19,273 million in 2024. This indicates a substantial deleveraging over the five-year period.

Shareholders’ equity

Shareholders' equity initially increases from $35,552 million in 2020 to a peak of $40,310 million in 2021. Afterwards, it shows a continuous decrease each year, dropping to $19,342 million by 2024. This decline after 2021 suggests a reduction in net asset value or accumulated losses impacting equity.

Debt to equity ratio

The debt to equity ratio shows considerable improvement from 2.11 in 2020 to below 1.00 in subsequent years until 2023, reaching a low of 0.77 in 2023. However, there is a slight uptick to 1.00 in 2024. This ratio movement reflects the strong debt reduction relative to equity initially, followed by a relative stabilization and modest increase driven by decreasing equity towards the end of the period.

Total Debt (including operating lease liability)

The total debt showed a significant decline from 78,039 million US dollars in 2020 to 20,378 million US dollars in 2024. The most substantial reduction occurred between 2020 and 2021, decreasing by nearly half, followed by a steady downward trend in subsequent years. This indicates a continuous effort to deleverage the company's financial obligations over the period analyzed.

Shareholders’ Equity

Shareholders’ equity initially increased from 35,552 million US dollars in 2020 to a peak of 40,310 million US dollars in 2021. After this peak, equity declined over the next three years, reaching 19,342 million US dollars by the end of 2024. This downward movement after 2021 may suggest challenges in retaining earnings or possibly higher distributions or losses affecting the equity base.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio decreased markedly from 2.2 in 2020 to below 1.0 in the subsequent three years, hitting a low of 0.84 in 2023, which reflects a substantial improvement in the company's leverage position. However, in 2024, the ratio increased slightly to 1.05, indicating a mild rise in relative debt compared to equity. Overall, the leverage profile improved significantly compared to the initial period but showed a slight reversal at the end of the period assessed.

Total Debt

The total debt exhibits a pronounced downward trend over the observed period. Starting at $75,066 million in 2020, the debt level substantially decreased by more than half in 2021 to $35,185 million. Subsequent years continue to demonstrate a reduction in total debt, falling to $32,350 million in 2022, further to $20,964 million in 2023, and reaching $19,273 million in 2024. This indicates a consistent deleveraging strategy or debt repayment effort by the company.

Total Capital

Total capital also shows a decreasing pattern throughout the time frame. Beginning at $110,618 million in 2020, it dropped significantly to $75,495 million in 2021. The decline continues steadily through the years, reaching $68,716 million in 2022, $48,342 million in 2023, and finally $38,615 million in 2024. This trend suggests a reduction in the company's overall capital base, possibly due to asset sales, restructuring, or other changes in financing structure.

Debt to Capital Ratio

The debt to capital ratio decreased from 0.68 in 2020 to 0.47 in both 2021 and 2022, indicating improved capital structure with lower relative debt burden initially. It further reduced slightly to 0.43 in 2023, highlighting continued debt reduction relative to total capital. However, an inflection occurs in 2024 where the ratio increases to 0.50, suggesting a relative increase in debt or a faster decline in capital compared to debt. This shift may indicate a change in financing policy or capital structure priorities for that year.

Total debt (including operating lease liability)

The total debt has exhibited a substantial downward trend over the analyzed periods. Starting from approximately $78 billion at the end of 2020, it decreased sharply to about $38 billion in 2021, representing nearly a 51% reduction. Following this steep decline, the debt continued to diminish more moderately to around $35 billion in 2022, then further decreased to approximately $23 billion in 2023, and finally reached roughly $20 billion by the end of 2024. This consistent reduction indicates a strong deleveraging effort or significant debt repayment over the years.

Total capital (including operating lease liability)

The total capital followed a downward trajectory similar to total debt, though at a less pronounced rate. It declined from about $114 billion at the end of 2020 to approximately $78 billion in 2021, a decrease of roughly 31%. The subsequent years saw continued declines to around $71 billion in 2022, $50 billion in 2023, and approximately $40 billion in 2024. This suggests that the overall capital base of the company has contracted consistently throughout the period, potentially due to asset sales, repayments, or other capital restructuring activities.

Debt to capital ratio (including operating lease liability)

The debt-to-capital ratio decreased significantly from 0.69 at the end of 2020 to 0.49 in 2021, reflecting a relatively stronger reduction in debt compared to capital. This ratio remained stable at 0.49 in 2022, indicating proportional changes in debt and capital during that year. In 2023, the ratio declined further to 0.46, showing continued improvement in the company’s leverage position. However, by the end of 2024, the ratio increased slightly to 0.51, suggesting that total debt grew somewhat relative to capital or that capital shrank more rapidly than debt in that final period.

Total Debt

The total debt demonstrates a consistent declining trend over the analyzed period. Starting at $75,066 million in 2020, the debt decreases significantly to $19,273 million by 2024. This reduction reflects a deliberate deleveraging effort or debt repayment strategy, highlighting a focus on strengthening the balance sheet and reducing financial risk.

Total Assets

Total assets also exhibit a downward trend, decreasing from $253,452 million in 2020 to $123,140 million in 2024. This decline may point to asset sales, divestitures, or contractions in operational scale. Despite the reduction, asset levels remain substantial, indicating continued asset base though notably smaller compared to the starting period.

Debt to Assets Ratio

The debt to assets ratio fluctuates but generally trends downward from 0.30 in 2020 to a low of 0.13 in 2023, before slightly increasing to 0.16 in 2024. This pattern suggests an overall improvement in leverage, with the company reducing debt faster than assets initially, enhancing the solvency position. The slight uptick in the final year may indicate some new financing or a relative decrease in asset value compared to the previous year.

The financial data reveals a general declining trend in both total debt and total assets over the five-year period from 2020 to 2024. Total debt, including operating lease liabilities, decreased significantly from US$78,039 million in 2020 to US$20,378 million in 2024. This represents a substantial reduction in debt levels, with the most pronounced decrease occurring between 2020 and 2021.

Similarly, total assets also followed a downward trend, falling from US$253,452 million in 2020 to US$123,140 million in 2024. The asset base shrank consistently year over year, indicating potential divestitures, asset impairments, or other reductions in asset holdings.

Regarding leverage, the debt to assets ratio (including operating lease liabilities) decreased from 0.31 in 2020 to a low of 0.14 in 2023, indicating a declining proportion of debt relative to assets, thus pointing to reduced financial risk over this period. However, in 2024, the ratio increased slightly to 0.17, suggesting a moderate rise in leverage compared to the prior year despite the ongoing reduction in both debt and assets.

Total Debt

Steadily declined by approximately 74% from 2020 to 2024, with the sharpest drop occurring between 2020 and 2021.

Total Assets

Contracts by more than 50% over the period, indicating significant downsizing or asset disposals.

Debt to Assets Ratio

Declined overall, demonstrating an improvement in leverage, with a slight increase in 2024 possibly reflecting a relative shift in capital structure.

Overall, the data suggests a concerted effort toward deleveraging and lowering the asset base, leading to a more conservative financial position by the end of the observed period. The slight uptick in leverage in the final year warrants monitoring for potential shifts in capital management strategy.

Total Assets

Total assets demonstrated a consistent downward trend over the five-year period. Starting from 253,452 million USD in 2020, the assets decreased each year, reaching 123,140 million USD by the end of 2024. This represents a significant reduction of over 50%, indicating a potential strategy of asset divestiture, impairment, or other balance sheet adjustments.

Shareholders’ Equity

Shareholders’ equity fluctuated during the period, initially increasing from 35,552 million USD in 2020 to a peak of 40,310 million USD in 2021. Subsequently, equity declined sharply each year, falling to 19,342 million USD by the end of 2024. This downward movement, especially the decline since 2021, may suggest losses, dividend payments exceeding earnings, or share repurchase activities impacting the equity base negatively.

Financial Leverage

Financial leverage, measured as a ratio, showed a notable decrease from 7.13 in 2020 to 4.93 in 2021, indicating a reduction in the proportion of total assets financed by equity. However, after 2021, leverage steadily increased each year, reaching 6.37 by 2024. This rising trend suggests the company has been increasing its debt relative to equity over recent years, possibly reflecting higher borrowing or reduced equity levels, correlating with the observed decrease in shareholders’ equity.

Summary of Trends

The data reveals a company experiencing a contraction in asset size along with fluctuating equity that ultimately diminishes significantly by 2024. Concurrently, financial leverage decreased initially but reversed direction, increasing over the last three years studied. This overall pattern indicates potential shifts in capital structure and financial strategy, with a move towards higher debt reliance amidst reductions in both asset base and equity capital.

The financial trends exhibit significant fluctuations over the analyzed period, particularly concerning earnings, financial charges, and coverage ratios.

Earnings before interest and tax (EBIT)

The EBIT value demonstrates high volatility from 2020 through 2024. In 2020, EBIT was notably strong at 8,470 million US dollars. However, in 2021, there was a sharp decline to a negative 1,807 million US dollars, indicating a period of operational loss. The company recovered in 2022, returning to a positive EBIT of 3,019 million US dollars, followed by a robust increase in 2023 to 11,309 million US dollars. The figure slightly decreased in 2024 to 8,606 million US dollars, still remaining considerably higher than the pre-2021 levels. This pattern suggests a significant disruption in the business during 2021, followed by a recovery and growth phase.

Interest and other financial charges

Interest and financial charges showed a gradual but meaningful decline over the period. Starting at 3,273 million US dollars in 2020, these costs decreased in successive years, reaching 986 million US dollars by 2024. This represents a reduction of approximately 70% over five years, potentially indicating improved debt management, refinancing, or reduced borrowing costs.

Interest coverage

The interest coverage ratio, which measures the ability to cover interest expenses with operating earnings, reflects a parallel trend to EBIT. It was 2.59 in 2020, signifying moderate coverage. In 2021, the ratio fell to -0.96, consistent with the negative EBIT figure and indicating inability to cover interest expenses from operating profit. The ratio rebounded significantly in 2022 to 1.88 and then saw a dramatic increase in 2023 to 10.12, suggesting a strong capacity to service debt. In 2024, the interest coverage slightly decreased to 8.73, but remained at a healthy level.

Overall, the data reveals a period of operational difficulty in 2021, as evidenced by negative EBIT and insufficient interest coverage, followed by a recovery marked by increasing profitability and improved capacity to manage financial obligations. The consistent reduction in interest expenses further supports the view of strengthening financial health and operational efficiency from 2022 onward.

Earnings before fixed charges and tax

The earnings showed significant volatility over the observed period. Starting with a robust positive figure of 9,542 million US dollars in 2020, there was a steep decline to a negative 726 million US dollars in 2021. The earnings then recovered to 4,074 million US dollars in 2022 and continued to increase substantially to 12,129 million US dollars in 2023, before declining slightly to 9,088 million US dollars in 2024. This indicates a period of significant operational and financial challenges in 2021, followed by a strong recovery and growth phase.

Fixed charges

The fixed charges decreased consistently over the years. Beginning at 4,945 million US dollars in 2020, these charges dropped to 3,257 million in 2021, then continued to decline gradually to 3,028 million in 2022, 2,311 million in 2023, and reached their lowest point at 1,468 million in 2024. This trend reflects a reduction in fixed financial obligations or interest expenses, which could contribute to improved financial flexibility.

Fixed charge coverage ratio

The fixed charge coverage ratio, which measures the ability to cover fixed financial charges with earnings, exhibited considerable variation. It started at 1.93 in 2020, indicating earnings were nearly double the fixed charges. However, the ratio plunged to -0.22 in 2021, corresponding with the negative earnings that year, implying an inability to cover fixed charges. The coverage improved moderately to 1.35 in 2022, then surged to 5.25 in 2023 and further to 6.19 in 2024, demonstrating strong ability to meet fixed charges and reflecting improved earnings and lower fixed charges over time.