Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Generac Holdings Inc., solvency ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
A comprehensive review of the solvency metrics from 2017 to 2021 reveals a consistent and significant improvement in the overall financial stability and risk profile. There is a clear trend of aggressive deleveraging coupled with a substantial increase in the capacity to service debt obligations.
- Leverage and Debt Ratios
- A sustained downward trend is observed across all primary leverage indicators. The debt to equity ratio decreased from 1.66 in 2017 to 0.44 in 2021, while the debt to assets ratio fell from 0.46 to 0.20 over the same period. Similarly, the debt to capital ratio declined from 0.62 to 0.31. These movements indicate a strategic shift toward a more equity-funded capital structure and a reduced reliance on borrowed funds.
- Debt Coverage and Servicing Capacity
- The ability to meet financial obligations has strengthened considerably. The interest coverage ratio grew from 5.80 in 2017 to 21.99 in 2021, representing a significant increase in the margin of safety for interest payments. The fixed charge coverage ratio followed a similar trajectory, rising from 4.83 to 13.49, which confirms an improved ability to cover both interest and other fixed obligations from operating earnings.
- Financial Leverage and Lease Obligations
- Financial leverage declined steadily from 3.61 in 2017 to 2.20 in 2021, reflecting a lower systemic risk profile. The inclusion of operating lease liabilities in the debt ratios shows a minimal variance compared to standard debt ratios, suggesting that lease obligations are not a primary driver of the overall leverage position.
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Debt to Equity
Generac Holdings Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings | 72,035) | 39,282) | 58,714) | 45,583) | 20,602) | |
| Current portion of long-term borrowings and finance lease obligations | 5,930) | 4,147) | 2,383) | 1,977) | 1,572) | |
| Long-term borrowings and finance lease obligations, excluding current portion | 902,091) | 841,764) | 837,767) | 876,396) | 906,548) | |
| Total debt | 980,056) | 885,193) | 898,864) | 923,956) | 928,722) | |
| Stockholders’ equity attributable to Generac Holdings Inc. | 2,213,774) | 1,390,293) | 1,032,382) | 760,549) | 559,552) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.44 | 0.64 | 0.87 | 1.21 | 1.66 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.29 | — | — | — | — | |
| Eaton Corp. plc | 0.52 | — | — | — | — | |
| GE Aerospace | 0.87 | — | — | — | — | |
| Honeywell International Inc. | 1.06 | — | — | — | — | |
| Lockheed Martin Corp. | 1.07 | — | — | — | — | |
| RTX Corp. | 0.43 | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Capital Goods | 1.26 | — | — | — | — | |
| Debt to Equity, Industry | ||||||
| Industrials | 1.37 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= 980,056 ÷ 2,213,774 = 0.44
2 Click competitor name to see calculations.
Between the end of 2017 and the end of 2021, a significant improvement in the solvency position of the organization is evident. This improvement is characterized by a substantial reduction in financial leverage, driven primarily by a consistent and rapid expansion of stockholders' equity relative to total debt.
- Total Debt Trends
- Total debt levels remained relatively stable over the five-year period. A marginal decline was observed from 2017 through 2020, with debt decreasing from 928,722 thousand US$ to 885,193 thousand US$. An uptick occurred in 2021, with total debt increasing to 980,056 thousand US$, marking the highest debt level within the analyzed timeframe.
- Stockholders' Equity Growth
- Equity attributable to shareholders experienced aggressive and uninterrupted growth. Starting at 559,552 thousand US$ in 2017, the equity base expanded to 2,213,774 thousand US$ by December 31, 2021. This consistent upward trend indicates a strong accumulation of retained earnings or additional capital contributions, significantly strengthening the balance sheet.
- Debt to Equity Ratio Analysis
- The debt to equity ratio demonstrates a strong and continuous downward trajectory, falling from 1.66 in 2017 to 0.44 in 2021. This decline reflects a strategic shift toward a more conservative capital structure. The transition from a ratio where debt exceeded equity to a position where equity is more than double the total debt indicates a reduced reliance on external borrowing and a substantial decrease in solvency risk.
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Debt to Equity (including Operating Lease Liability)
Generac Holdings Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings | 72,035) | 39,282) | 58,714) | 45,583) | 20,602) | |
| Current portion of long-term borrowings and finance lease obligations | 5,930) | 4,147) | 2,383) | 1,977) | 1,572) | |
| Long-term borrowings and finance lease obligations, excluding current portion | 902,091) | 841,764) | 837,767) | 876,396) | 906,548) | |
| Total debt | 980,056) | 885,193) | 898,864) | 923,956) | 928,722) | |
| Operating lease liabilities, current (recorded in Other accrued liabilities) | 23,549) | 17,192) | 7,231) | —) | —) | |
| Operating lease liabilities, noncurrent (recorded in Operating lease and other long-term liabilities) | 80,370) | 46,558) | 29,778) | —) | —) | |
| Total debt (including operating lease liability) | 1,083,975) | 948,943) | 935,873) | 923,956) | 928,722) | |
| Stockholders’ equity attributable to Generac Holdings Inc. | 2,213,774) | 1,390,293) | 1,032,382) | 760,549) | 559,552) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.49 | 0.68 | 0.91 | 1.21 | 1.66 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.33 | — | — | — | — | |
| Eaton Corp. plc | 0.55 | — | — | — | — | |
| GE Aerospace | 0.94 | — | — | — | — | |
| Honeywell International Inc. | 1.11 | — | — | — | — | |
| Lockheed Martin Corp. | 1.19 | — | — | — | — | |
| RTX Corp. | 0.46 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 1.32 | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Industrials | 1.54 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= 1,083,975 ÷ 2,213,774 = 0.49
2 Click competitor name to see calculations.
The financial trajectory between 2017 and 2021 indicates a significant improvement in solvency and a substantial reduction in financial leverage. The company transitioned from a position where debt exceeded equity to one where equity serves as the dominant source of funding.
- Total Debt Trends
- Total debt, including operating lease liabilities, remained relatively stable from 2017 through 2020, fluctuating within a narrow range between approximately 924 million and 949 million US dollars. A more pronounced increase occurred in 2021, where total debt rose to 1.08 billion US dollars.
- Stockholders' Equity Expansion
- A consistent and aggressive upward trend is observed in stockholders' equity attributable to the company. Equity grew from 559.6 million US dollars in 2017 to 2.21 billion US dollars by 2021. This represents nearly a four-fold increase over the period, with the most substantial growth acceleration occurring between 2020 and 2021.
- Debt to Equity Ratio Analysis
- The debt to equity ratio exhibits a steady and significant decline, falling from 1.66 in 2017 to 0.49 in 2021. This downward progression indicates that the growth in equity has far outpaced the increase in debt, substantially lowering the financial risk profile and enhancing long-term solvency.
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Debt to Capital
Generac Holdings Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings | 72,035) | 39,282) | 58,714) | 45,583) | 20,602) | |
| Current portion of long-term borrowings and finance lease obligations | 5,930) | 4,147) | 2,383) | 1,977) | 1,572) | |
| Long-term borrowings and finance lease obligations, excluding current portion | 902,091) | 841,764) | 837,767) | 876,396) | 906,548) | |
| Total debt | 980,056) | 885,193) | 898,864) | 923,956) | 928,722) | |
| Stockholders’ equity attributable to Generac Holdings Inc. | 2,213,774) | 1,390,293) | 1,032,382) | 760,549) | 559,552) | |
| Total capital | 3,193,830) | 2,275,486) | 1,931,246) | 1,684,505) | 1,488,274) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.31 | 0.39 | 0.47 | 0.55 | 0.62 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Boeing Co. | 1.35 | — | — | — | — | |
| Caterpillar Inc. | 0.70 | — | — | — | — | |
| Eaton Corp. plc | 0.34 | — | — | — | — | |
| GE Aerospace | 0.47 | — | — | — | — | |
| Honeywell International Inc. | 0.51 | — | — | — | — | |
| Lockheed Martin Corp. | 0.52 | — | — | — | — | |
| RTX Corp. | 0.30 | — | — | — | — | |
| Debt to Capital, Sector | ||||||
| Capital Goods | 0.56 | — | — | — | — | |
| Debt to Capital, Industry | ||||||
| Industrials | 0.58 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital = Total debt ÷ Total capital
= 980,056 ÷ 3,193,830 = 0.31
2 Click competitor name to see calculations.
The financial data indicates a consistent improvement in the solvency position between 2017 and 2021, characterized by a significant reduction in the reliance on debt relative to total capital.
- Debt to Capital Ratio Trend
- A steady downward trajectory is observed in the debt to capital ratio, which declined from 0.62 in 2017 to 0.31 by the end of 2021. This represents a substantial reduction in the proportion of debt used to finance the company's assets over the five-year period, signaling a strengthened balance sheet and reduced financial leverage.
- Total Capital Growth
- Total capital experienced uninterrupted annual growth throughout the analyzed period, increasing from US$ 1,488,274 thousand in 2017 to US$ 3,193,830 thousand in 2021. This expansion of the capital base acted as the primary driver for the declining leverage ratio, suggesting strong growth in equity or retained earnings.
- Total Debt Dynamics
- Total debt remained relatively stable with a slight downward trend from 2017 to 2020, moving from US$ 928,722 thousand to US$ 885,193 thousand. While a moderate increase to US$ 980,056 thousand occurred in 2021, this rise was proportionally small compared to the growth in total capital, allowing the overall solvency ratio to continue its descent.
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Debt to Capital (including Operating Lease Liability)
Generac Holdings Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings | 72,035) | 39,282) | 58,714) | 45,583) | 20,602) | |
| Current portion of long-term borrowings and finance lease obligations | 5,930) | 4,147) | 2,383) | 1,977) | 1,572) | |
| Long-term borrowings and finance lease obligations, excluding current portion | 902,091) | 841,764) | 837,767) | 876,396) | 906,548) | |
| Total debt | 980,056) | 885,193) | 898,864) | 923,956) | 928,722) | |
| Operating lease liabilities, current (recorded in Other accrued liabilities) | 23,549) | 17,192) | 7,231) | —) | —) | |
| Operating lease liabilities, noncurrent (recorded in Operating lease and other long-term liabilities) | 80,370) | 46,558) | 29,778) | —) | —) | |
| Total debt (including operating lease liability) | 1,083,975) | 948,943) | 935,873) | 923,956) | 928,722) | |
| Stockholders’ equity attributable to Generac Holdings Inc. | 2,213,774) | 1,390,293) | 1,032,382) | 760,549) | 559,552) | |
| Total capital (including operating lease liability) | 3,297,749) | 2,339,236) | 1,968,255) | 1,684,505) | 1,488,274) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.33 | 0.41 | 0.48 | 0.55 | 0.62 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 1.34 | — | — | — | — | |
| Caterpillar Inc. | 0.70 | — | — | — | — | |
| Eaton Corp. plc | 0.36 | — | — | — | — | |
| GE Aerospace | 0.49 | — | — | — | — | |
| Honeywell International Inc. | 0.53 | — | — | — | — | |
| Lockheed Martin Corp. | 0.54 | — | — | — | — | |
| RTX Corp. | 0.31 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.57 | — | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.61 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 1,083,975 ÷ 3,297,749 = 0.33
2 Click competitor name to see calculations.
An analysis of the solvency position from 2017 to 2021 reveals a consistent strengthening of the capital structure. While total debt increased in absolute terms, the rate of growth in total capital significantly outpaced the accumulation of debt, resulting in a sustained reduction of the debt-to-capital ratio.
- Debt to Capital Ratio Trend
- A clear downward trajectory is observed in the debt-to-capital ratio, which declined from 0.62 in 2017 to 0.33 by the end of 2021. This represents a near-halving of the ratio over the five-year period, indicating a substantial shift toward a more equity-heavy capital structure and a reduced reliance on external leverage to fund operations.
- Total Capital Expansion
- Total capital, including operating lease liabilities, experienced aggressive growth, rising from US$ 1,488,274 thousand in 2017 to US$ 3,297,749 thousand in 2021. This increase of approximately 121% suggests significant capital accumulation, likely driven by retained earnings or additional equity infusions, which has served as the primary driver for the improved solvency ratios.
- Total Debt Dynamics
- Total debt remained relatively stable for the first four years of the period, fluctuating between US$ 923,956 thousand and US$ 948,943 thousand. A more pronounced increase occurred between 2020 and 2021, where debt rose to US$ 1,083,975 thousand. Despite this late-period increase, the absolute growth in debt was marginal compared to the expansion of the total capital base.
The convergence of these trends indicates a disciplined approach to leverage. The organization has successfully expanded its total capital base while maintaining debt levels at a controlled pace, thereby enhancing its long-term financial stability and reducing solvency risk.
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Debt to Assets
Generac Holdings Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings | 72,035) | 39,282) | 58,714) | 45,583) | 20,602) | |
| Current portion of long-term borrowings and finance lease obligations | 5,930) | 4,147) | 2,383) | 1,977) | 1,572) | |
| Long-term borrowings and finance lease obligations, excluding current portion | 902,091) | 841,764) | 837,767) | 876,396) | 906,548) | |
| Total debt | 980,056) | 885,193) | 898,864) | 923,956) | 928,722) | |
| Total assets | 4,877,780) | 3,235,423) | 2,665,669) | 2,426,314) | 2,019,964) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.20 | 0.27 | 0.34 | 0.38 | 0.46 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Boeing Co. | 0.42 | — | — | — | — | |
| Caterpillar Inc. | 0.46 | — | — | — | — | |
| Eaton Corp. plc | 0.25 | — | — | — | — | |
| GE Aerospace | 0.18 | — | — | — | — | |
| Honeywell International Inc. | 0.30 | — | — | — | — | |
| Lockheed Martin Corp. | 0.23 | — | — | — | — | |
| RTX Corp. | 0.20 | — | — | — | — | |
| Debt to Assets, Sector | ||||||
| Capital Goods | 0.28 | — | — | — | — | |
| Debt to Assets, Industry | ||||||
| Industrials | 0.30 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets = Total debt ÷ Total assets
= 980,056 ÷ 4,877,780 = 0.20
2 Click competitor name to see calculations.
The solvency profile from 2017 to 2021 demonstrates a significant strengthening of the financial position, characterized by a consistent reduction in the reliance on debt to finance assets.
- Debt to Assets Ratio Trend
- A sustained downward trajectory is observed in the debt to assets ratio, which declined from 0.46 in 2017 to 0.20 by the end of 2021. This represents a reduction of more than half the original ratio over the five-year period, indicating a substantially improved solvency position and a reduced risk profile regarding long-term obligations.
- Asset Expansion
- Total assets experienced aggressive and consistent growth throughout the period, increasing from approximately 2.02 billion US dollars in 2017 to 4.88 billion US dollars in 2021. The most significant acceleration occurred between 2020 and 2021, during which assets grew by approximately 1.64 billion US dollars.
- Debt Stability and Utilization
- Total debt levels remained relatively stable between 2017 and 2020, moving from 928.7 million US dollars to 885.2 million US dollars. While a moderate increase to 980.1 million US dollars occurred in 2021, the magnitude of asset growth far outweighed the increase in total debt, which served as the primary driver for the improving solvency ratio.
The divergence between relatively stable debt levels and rapid asset accumulation suggests that growth was primarily funded through sources other than long-term debt, thereby increasing the equity cushion and enhancing the overall financial stability of the organization.
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Debt to Assets (including Operating Lease Liability)
Generac Holdings Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term borrowings | 72,035) | 39,282) | 58,714) | 45,583) | 20,602) | |
| Current portion of long-term borrowings and finance lease obligations | 5,930) | 4,147) | 2,383) | 1,977) | 1,572) | |
| Long-term borrowings and finance lease obligations, excluding current portion | 902,091) | 841,764) | 837,767) | 876,396) | 906,548) | |
| Total debt | 980,056) | 885,193) | 898,864) | 923,956) | 928,722) | |
| Operating lease liabilities, current (recorded in Other accrued liabilities) | 23,549) | 17,192) | 7,231) | —) | —) | |
| Operating lease liabilities, noncurrent (recorded in Operating lease and other long-term liabilities) | 80,370) | 46,558) | 29,778) | —) | —) | |
| Total debt (including operating lease liability) | 1,083,975) | 948,943) | 935,873) | 923,956) | 928,722) | |
| Total assets | 4,877,780) | 3,235,423) | 2,665,669) | 2,426,314) | 2,019,964) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.22 | 0.29 | 0.35 | 0.38 | 0.46 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 0.43 | — | — | — | — | |
| Caterpillar Inc. | 0.46 | — | — | — | — | |
| Eaton Corp. plc | 0.27 | — | — | — | — | |
| GE Aerospace | 0.19 | — | — | — | — | |
| Honeywell International Inc. | 0.32 | — | — | — | — | |
| Lockheed Martin Corp. | 0.26 | — | — | — | — | |
| RTX Corp. | 0.21 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.29 | — | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.34 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 1,083,975 ÷ 4,877,780 = 0.22
2 Click competitor name to see calculations.
The solvency profile exhibited a consistent strengthening trend from 2017 through 2021. This improvement is characterized by a steady reduction in the debt-to-assets ratio, indicating a decrease in financial leverage and an increase in the proportion of assets financed through sources other than debt.
- Total Asset Expansion
- A significant and continuous increase in total assets was observed, growing from US$ 2,019,964 thousand in 2017 to US$ 4,877,780 thousand by the end of 2021. The most substantial acceleration occurred between 2020 and 2021, during which assets increased by approximately 50%.
- Debt Profile Analysis
- Total debt, including operating lease liabilities, remained relatively stable between 2017 and 2020, fluctuating minimally around the US$ 920 million to US$ 950 million range. A notable increase occurred in 2021, with total debt rising to US$ 1,083,975 thousand, reflecting a 14.2% increase compared to the previous year.
- Solvency Ratio Interpretation
- The debt-to-assets ratio declined every year during the period analyzed, falling from 0.46 in 2017 to 0.22 in 2021. Because the growth rate of total assets significantly outpaced the growth rate of total debt, the organization successfully reduced its relative reliance on borrowed capital, thereby enhancing its long-term financial stability.
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Financial Leverage
Generac Holdings Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 4,877,780) | 3,235,423) | 2,665,669) | 2,426,314) | 2,019,964) | |
| Stockholders’ equity attributable to Generac Holdings Inc. | 2,213,774) | 1,390,293) | 1,032,382) | 760,549) | 559,552) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.20 | 2.33 | 2.58 | 3.19 | 3.61 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 5.02 | — | — | — | — | |
| Eaton Corp. plc | 2.07 | — | — | — | — | |
| GE Aerospace | 4.93 | — | — | — | — | |
| Honeywell International Inc. | 3.47 | — | — | — | — | |
| Lockheed Martin Corp. | 4.64 | — | — | — | — | |
| RTX Corp. | 2.21 | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Capital Goods | 4.55 | — | — | — | — | |
| Financial Leverage, Industry | ||||||
| Industrials | 4.52 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= 4,877,780 ÷ 2,213,774 = 2.20
2 Click competitor name to see calculations.
Generac Holdings Inc. demonstrated a consistent strengthening of its solvency position between 2017 and 2021, characterized by significant asset growth and a simultaneous reduction in financial leverage.
- Asset Expansion
- Total assets exhibited a continuous upward trajectory, increasing from US$ 2,019,964 thousand in 2017 to US$ 4,877,780 thousand by the end of 2021. This represents a substantial expansion of the company's resource base, with the most significant growth occurring between 2020 and 2021.
- Equity Growth
- Stockholders' equity attributable to the company grew aggressively over the analyzed period, rising from US$ 559,552 thousand in 2017 to US$ 2,213,774 thousand in 2021. The growth rate of equity outpaced the growth rate of total assets, indicating a significant increase in the internal funding of the company's operations.
- Financial Leverage Trend
- The financial leverage ratio showed a steady and uninterrupted decline, moving from 3.61 in 2017 to 2.20 in 2021. This downward trend indicates a strategic shift toward a more conservative capital structure, reducing the company's reliance on debt relative to equity and improving its overall solvency and financial stability.
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Interest Coverage
Generac Holdings Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Generac Holdings Inc. | 550,494) | 350,576) | 252,007) | 238,257) | 159,386) | |
| Add: Net income attributable to noncontrolling interest | 6,075) | (3,358) | 301) | 2,963) | 1,749) | |
| Add: Income tax expense | 134,957) | 98,973) | 67,299) | 69,856) | 43,553) | |
| Add: Interest expense | 32,953) | 32,991) | 41,544) | 40,956) | 42,667) | |
| Earnings before interest and tax (EBIT) | 724,479) | 479,182) | 361,151) | 352,032) | 247,355) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 21.99 | 14.52 | 8.69 | 8.60 | 5.80 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Boeing Co. | -0.88 | — | — | — | — | |
| Caterpillar Inc. | 17.88 | — | — | — | — | |
| Eaton Corp. plc | 21.11 | — | — | — | — | |
| GE Aerospace | -0.96 | — | — | — | — | |
| Honeywell International Inc. | 22.09 | — | — | — | — | |
| Lockheed Martin Corp. | 14.27 | — | — | — | — | |
| RTX Corp. | 4.71 | — | — | — | — | |
| Interest Coverage, Sector | ||||||
| Capital Goods | 3.98 | — | — | — | — | |
| Interest Coverage, Industry | ||||||
| Industrials | 5.14 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Interest coverage = EBIT ÷ Interest expense
= 724,479 ÷ 32,953 = 21.99
2 Click competitor name to see calculations.
Between 2017 and 2021, a significant strengthening of the solvency position is observed, characterized by a substantial increase in the capacity to service interest obligations from operating profits.
- Earnings Before Interest and Tax (EBIT)
- A consistent and strong upward trajectory in EBIT is evident, increasing from 247,355 thousand US dollars in 2017 to 724,479 thousand US dollars in 2021. The growth was steady between 2018 and 2019, followed by an accelerated increase in 2020 and 2021, indicating a substantial expansion in operational profitability.
- Interest Expense
- Interest expenses remained relatively stable between 2017 and 2019, hovering around 41,000 to 42,000 thousand US dollars. A notable reduction occurred starting in 2020, with expenses dropping to approximately 32,953 thousand US dollars by 2021. This decline in the cost of debt servicing, occurring simultaneously with rising earnings, has contributed to a lower financial risk profile.
- Interest Coverage Ratio
- The interest coverage ratio demonstrates a robust expansion, rising from 5.80 in 2017 to 21.99 in 2021. The most significant acceleration occurred after 2019, where the ratio climbed from 8.69 to 21.99 over two years. This trend indicates that the margin of safety for debt obligations has widened considerably, reflecting a highly favorable solvency trend and a decreased reliance on external financing to meet interest payments.
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Fixed Charge Coverage
Generac Holdings Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to Generac Holdings Inc. | 550,494) | 350,576) | 252,007) | 238,257) | 159,386) | |
| Add: Net income attributable to noncontrolling interest | 6,075) | (3,358) | 301) | 2,963) | 1,749) | |
| Add: Income tax expense | 134,957) | 98,973) | 67,299) | 69,856) | 43,553) | |
| Add: Interest expense | 32,953) | 32,991) | 41,544) | 40,956) | 42,667) | |
| Earnings before interest and tax (EBIT) | 724,479) | 479,182) | 361,151) | 352,032) | 247,355) | |
| Add: Operating lease cost | 22,432) | 18,648) | 9,647) | 10,739) | 10,845) | |
| Earnings before fixed charges and tax | 746,911) | 497,830) | 370,798) | 362,771) | 258,200) | |
| Interest expense | 32,953) | 32,991) | 41,544) | 40,956) | 42,667) | |
| Operating lease cost | 22,432) | 18,648) | 9,647) | 10,739) | 10,845) | |
| Fixed charges | 55,385) | 51,639) | 51,191) | 51,695) | 53,512) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 13.49 | 9.64 | 7.24 | 7.02 | 4.83 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Boeing Co. | -0.64 | — | — | — | — | |
| Caterpillar Inc. | 12.73 | — | — | — | — | |
| Eaton Corp. plc | 10.40 | — | — | — | — | |
| GE Aerospace | -0.22 | — | — | — | — | |
| Honeywell International Inc. | 13.67 | — | — | — | — | |
| Lockheed Martin Corp. | 9.95 | — | — | — | — | |
| RTX Corp. | 3.66 | — | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Capital Goods | 3.06 | — | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Industrials | 3.44 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 746,911 ÷ 55,385 = 13.49
2 Click competitor name to see calculations.
An examination of the solvency metrics from 2017 through 2021 reveals a significant strengthening of the financial capacity to meet fixed obligations. The operational earnings have scaled rapidly while fixed costs have remained relatively constant, resulting in a substantial increase in the margin of safety.
- Earnings Before Fixed Charges and Tax
- A consistent upward trajectory is observed in earnings, rising from 258,200 thousand US$ in 2017 to 746,911 thousand US$ by 2021. The most pronounced growth occurred between 2020 and 2021, where earnings increased by approximately 50%.
- Fixed Charges
- Fixed obligations remained remarkably stable throughout the five-year period. After a slight decline between 2017 and 2019, charges held steady around 51 million US$ before a marginal increase to 55,385 thousand US$ in 2021.
- Fixed Charge Coverage Ratio
- The coverage ratio demonstrates a continuous and accelerating improvement, moving from 4.83 in 2017 to 13.49 in 2021. This trend indicates that the ability to cover fixed charges has nearly tripled over the analyzed period, which reflects a marked reduction in solvency risk and an increased capacity for financial flexibility.
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