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
Hershey Co., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 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).
The solvency profile exhibits a consistent trend of deleveraging and improved financial stability between 2018 and 2022. There is a systematic reduction in the proportion of debt relative to equity, assets, and total capital, accompanied by a strengthening capacity to service fixed financial obligations.
- Leverage Ratios
- A significant downward trajectory is observed across all leverage metrics. The debt-to-equity ratio decreased from 3.19 in 2018 to 1.45 in 2022, while the debt-to-capital ratio fell from 0.76 to 0.59 over the same period. Even when accounting for operating lease liabilities, these ratios show a mirrored decline, indicating a fundamental shift toward a more conservative capital structure. Similarly, the debt-to-assets ratio declined from 0.58 to 0.44, and financial leverage dropped from 5.51 to 3.32, reflecting a decreased reliance on borrowed funds to finance assets.
- Coverage Ratios
- The ability to meet debt obligations has strengthened, particularly in the latter half of the analyzed period. The interest coverage ratio rose from 10.60 in 2018 to 14.68 in 2022, with a pronounced increase occurring between 2020 and 2021. The fixed charge coverage ratio followed a similar pattern, increasing from 8.79 in 2018 to 11.14 in 2022. These trends suggest that operational earnings have provided an expanding margin of safety for interest and fixed charge payments.
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Debt to Equity
Hershey Co., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt | 693,790) | 939,423) | 74,041) | 32,282) | 1,197,929) | |
| Current portion of long-term debt | 753,578) | 2,844) | 438,829) | 703,390) | 5,387) | |
| Long-term portion of long-term debt | 3,343,977) | 4,086,627) | 4,089,755) | 3,530,813) | 3,254,280) | |
| Total debt | 4,791,345) | 5,028,894) | 4,602,625) | 4,266,485) | 4,457,596) | |
| Total The Hershey Company stockholders’ equity | 3,299,544) | 2,757,229) | 2,234,352) | 1,739,222) | 1,398,721) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.45 | 1.82 | 2.06 | 2.45 | 3.19 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Coca-Cola Co. | 1.62 | 1.86 | — | — | — | |
| Mondelēz International Inc. | 0.85 | 0.69 | — | — | — | |
| PepsiCo Inc. | 2.28 | 2.51 | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Food, Beverage & Tobacco | 2.44 | 2.28 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Consumer Staples | 1.08 | 1.07 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to equity = Total debt ÷ Total The Hershey Company stockholders’ equity
= 4,791,345 ÷ 3,299,544 = 1.45
2 Click competitor name to see calculations.
A comprehensive evaluation of the solvency position from 2018 to 2022 indicates a significant strengthening of the capital structure. The organization transitioned from a highly leveraged position toward a more balanced financing model, characterized by a substantial increase in the equity base relative to total liabilities.
- Total Debt Dynamics
- Total debt exhibited moderate volatility over the five-year period. After an initial decrease from $4.46 billion in 2018 to $4.27 billion in 2019, debt levels rose steadily to a peak of $5.03 billion by December 31, 2021. A subsequent reduction to $4.79 billion was recorded in 2022. Despite these fluctuations, the absolute debt levels remained relatively stable when compared to the growth in equity.
- Stockholders' Equity Growth
- A consistent and monotonic upward trend is observed in total stockholders' equity. Equity grew from $1.40 billion in 2018 to $3.30 billion in 2022. This steady accumulation of equity suggests strong retained earnings or capital contributions, effectively expanding the company's financial cushion.
- Debt to Equity Ratio Progression
- The debt to equity ratio demonstrates a continuous decline, falling from 3.19 in 2018 to 1.45 in 2022. This trend signifies a systematic deleveraging of the balance sheet. The reduction in the ratio indicates that for every dollar of equity, the company now carries significantly less debt than it did at the start of the period, which reduces long-term financial risk and improves overall solvency.
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Debt to Equity (including Operating Lease Liability)
Hershey Co., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt | 693,790) | 939,423) | 74,041) | 32,282) | 1,197,929) | |
| Current portion of long-term debt | 753,578) | 2,844) | 438,829) | 703,390) | 5,387) | |
| Long-term portion of long-term debt | 3,343,977) | 4,086,627) | 4,089,755) | 3,530,813) | 3,254,280) | |
| Total debt | 4,791,345) | 5,028,894) | 4,602,625) | 4,266,485) | 4,457,596) | |
| Current operating lease liabilities | 31,787) | 36,292) | 36,578) | 29,209) | —) | |
| Non-current operating lease liabilities | 294,849) | 310,899) | 181,871) | 184,163) | —) | |
| Total debt (including operating lease liability) | 5,117,981) | 5,376,085) | 4,821,074) | 4,479,857) | 4,457,596) | |
| Total The Hershey Company stockholders’ equity | 3,299,544) | 2,757,229) | 2,234,352) | 1,739,222) | 1,398,721) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 1.55 | 1.95 | 2.16 | 2.58 | 3.19 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 1.68 | 1.92 | — | — | — | |
| Mondelēz International Inc. | 0.88 | 0.71 | — | — | — | |
| PepsiCo Inc. | 2.42 | 2.64 | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 2.53 | 2.36 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 1.20 | 1.19 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total The Hershey Company stockholders’ equity
= 5,117,981 ÷ 3,299,544 = 1.55
2 Click competitor name to see calculations.
Between 2018 and 2022, a consistent improvement in the solvency position is evident, characterized by a significant reduction in financial leverage. The overall trend indicates a strengthening of the balance sheet through the substantial growth of equity relative to debt obligations.
- Total Debt (including operating lease liability)
- Total debt exhibited a general upward trend for the majority of the analyzed period, rising from 4,457,596 thousand US dollars in 2018 to a peak of 5,376,085 thousand US dollars in 2021. A slight contraction occurred in 2022, with debt levels decreasing to 5,117,981 thousand US dollars.
- Total Stockholders' Equity
- Stockholders' equity demonstrated robust and uninterrupted growth throughout the five-year period. Starting at 1,398,721 thousand US dollars in 2018, equity increased each consecutive year, reaching 3,299,544 thousand US dollars by December 31, 2022. This represents more than a doubling of the equity base over the timeframe.
- Debt to Equity Ratio
- The debt to equity ratio experienced a continuous and steep decline, falling from 3.19 in 2018 to 1.55 in 2022. This steady downward trajectory confirms that equity growth significantly outpaced the accumulation of debt, resulting in a reduced reliance on borrowed funds and an improved solvency profile.
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Debt to Capital
Hershey Co., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt | 693,790) | 939,423) | 74,041) | 32,282) | 1,197,929) | |
| Current portion of long-term debt | 753,578) | 2,844) | 438,829) | 703,390) | 5,387) | |
| Long-term portion of long-term debt | 3,343,977) | 4,086,627) | 4,089,755) | 3,530,813) | 3,254,280) | |
| Total debt | 4,791,345) | 5,028,894) | 4,602,625) | 4,266,485) | 4,457,596) | |
| Total The Hershey Company stockholders’ equity | 3,299,544) | 2,757,229) | 2,234,352) | 1,739,222) | 1,398,721) | |
| Total capital | 8,090,889) | 7,786,123) | 6,836,977) | 6,005,707) | 5,856,317) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.59 | 0.65 | 0.67 | 0.71 | 0.76 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Coca-Cola Co. | 0.62 | 0.65 | — | — | — | |
| Mondelēz International Inc. | 0.46 | 0.41 | — | — | — | |
| PepsiCo Inc. | 0.69 | 0.72 | — | — | — | |
| Philip Morris International Inc. | 1.26 | 1.57 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Food, Beverage & Tobacco | 0.71 | 0.70 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Consumer Staples | 0.52 | 0.52 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 4,791,345 ÷ 8,090,889 = 0.59
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a consistent improvement in its capital structure between 2018 and 2022. While total debt levels exhibited volatility, the steady expansion of total capital has resulted in a significant reduction in the reliance on borrowed funds relative to the total capital base.
- Total Capital Growth
- A steady upward trajectory is observed in total capital, which increased from US$ 5,856,317 thousand in 2018 to US$ 8,090,889 thousand in 2022. This consistent year-over-year growth indicates a broadening of the financial base, suggesting an increase in equity or retained earnings that outpaced the growth of liabilities.
- Debt Volatility
- Total debt showed fluctuations during the period, decreasing in 2019, peaking in 2021 at US$ 5,028,894 thousand, and subsequently declining to US$ 4,791,345 thousand by the end of 2022. This pattern suggests a strategic approach to leveraging, where debt was utilized for specific needs but managed to avoid long-term unchecked growth.
- Debt to Capital Ratio Trend
- A continuous downward trend is evident in the debt to capital ratio, which declined from 0.76 in 2018 to 0.59 in 2022. This reduction indicates a strengthening of the solvency position, as the proportion of debt within the overall capital structure decreased steadily each year, reducing the organization's financial risk and increasing its long-term stability.
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Debt to Capital (including Operating Lease Liability)
Hershey Co., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt | 693,790) | 939,423) | 74,041) | 32,282) | 1,197,929) | |
| Current portion of long-term debt | 753,578) | 2,844) | 438,829) | 703,390) | 5,387) | |
| Long-term portion of long-term debt | 3,343,977) | 4,086,627) | 4,089,755) | 3,530,813) | 3,254,280) | |
| Total debt | 4,791,345) | 5,028,894) | 4,602,625) | 4,266,485) | 4,457,596) | |
| Current operating lease liabilities | 31,787) | 36,292) | 36,578) | 29,209) | —) | |
| Non-current operating lease liabilities | 294,849) | 310,899) | 181,871) | 184,163) | —) | |
| Total debt (including operating lease liability) | 5,117,981) | 5,376,085) | 4,821,074) | 4,479,857) | 4,457,596) | |
| Total The Hershey Company stockholders’ equity | 3,299,544) | 2,757,229) | 2,234,352) | 1,739,222) | 1,398,721) | |
| Total capital (including operating lease liability) | 8,417,525) | 8,133,314) | 7,055,426) | 6,219,079) | 5,856,317) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.61 | 0.66 | 0.68 | 0.72 | 0.76 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 0.63 | 0.66 | — | — | — | |
| Mondelēz International Inc. | 0.47 | 0.42 | — | — | — | |
| PepsiCo Inc. | 0.71 | 0.73 | — | — | — | |
| Philip Morris International Inc. | 1.26 | 1.55 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 0.72 | 0.70 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.54 | 0.54 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 5,117,981 ÷ 8,417,525 = 0.61
2 Click competitor name to see calculations.
A consistent improvement in the solvency position is observed over the five-year period ending December 31, 2022. Although total debt experienced a period of growth, the expansion of the total capital base occurred at a more rapid pace, resulting in a steady decline in the debt-to-capital ratio.
- Total Debt Trends
- Total debt, including operating lease liabilities, increased from US$ 4,457,596 thousand in 2018 to a peak of US$ 5,376,085 thousand in 2021. However, a reversal occurred in 2022, with total debt decreasing to US$ 5,117,981 thousand, indicating a reduction in leveraged liabilities in the most recent fiscal year.
- Total Capital Growth
- Total capital exhibited uninterrupted growth throughout the analyzed period. The capital base rose from US$ 5,856,317 thousand in 2018 to US$ 8,417,525 thousand by the end of 2022. This consistent upward trajectory suggests a strengthening of the overall financial structure.
- Debt to Capital Ratio Analysis
- The debt-to-capital ratio demonstrates a continuous downward trend, declining from 0.76 in 2018 to 0.61 in 2022. This indicates a systematic reduction in the proportion of debt used to finance the company's capital structure. The most significant compression of the ratio occurred between 2018 and 2020, followed by a further decline in 2022 driven by the simultaneous reduction in total debt and increase in total capital.
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Debt to Assets
Hershey Co., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt | 693,790) | 939,423) | 74,041) | 32,282) | 1,197,929) | |
| Current portion of long-term debt | 753,578) | 2,844) | 438,829) | 703,390) | 5,387) | |
| Long-term portion of long-term debt | 3,343,977) | 4,086,627) | 4,089,755) | 3,530,813) | 3,254,280) | |
| Total debt | 4,791,345) | 5,028,894) | 4,602,625) | 4,266,485) | 4,457,596) | |
| Total assets | 10,948,820) | 10,412,231) | 9,131,845) | 8,140,395) | 7,703,020) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.44 | 0.48 | 0.50 | 0.52 | 0.58 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Coca-Cola Co. | 0.42 | 0.45 | — | — | — | |
| Mondelēz International Inc. | 0.32 | 0.29 | — | — | — | |
| PepsiCo Inc. | 0.42 | 0.44 | — | — | — | |
| Philip Morris International Inc. | 0.70 | 0.67 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Food, Beverage & Tobacco | 0.45 | 0.44 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Consumer Staples | 0.30 | 0.30 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 4,791,345 ÷ 10,948,820 = 0.44
2 Click competitor name to see calculations.
A consistent improvement in solvency is observed over the five-year period from 2018 to 2022, characterized by a steady decline in the debt to assets ratio. This trend indicates a strategic shift toward a more conservative capital structure and a reduced reliance on leverage relative to the company's total resource base.
- Asset Growth Trends
- Total assets exhibited uninterrupted growth throughout the analyzed period, increasing from 7,703,020 thousand US dollars in 2018 to 10,948,820 thousand US dollars by December 31, 2022. This sustained expansion of the asset base provided a stabilizing effect on the company's overall solvency position.
- Debt Obligations Analysis
- Total debt followed a fluctuating trajectory rather than a linear trend. After a slight decrease in 2019, obligations rose for two consecutive years, peaking at 5,028,894 thousand US dollars in 2021, before declining to 4,791,345 thousand US dollars in 2022. Despite these intermittent increases, the total debt level in 2022 remained relatively close to the 2018 starting point.
- Debt to Assets Ratio Interpretation
- The debt to assets ratio decreased every year, moving from 0.58 in 2018 to 0.44 in 2022. The fact that this ratio declined even during years when total debt increased (2020 and 2021) demonstrates that asset accumulation significantly outpaced the acquisition of new debt. This divergence underscores a strengthening balance sheet and an enhanced capacity to cover liabilities with existing assets.
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Debt to Assets (including Operating Lease Liability)
Hershey Co., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Short-term debt | 693,790) | 939,423) | 74,041) | 32,282) | 1,197,929) | |
| Current portion of long-term debt | 753,578) | 2,844) | 438,829) | 703,390) | 5,387) | |
| Long-term portion of long-term debt | 3,343,977) | 4,086,627) | 4,089,755) | 3,530,813) | 3,254,280) | |
| Total debt | 4,791,345) | 5,028,894) | 4,602,625) | 4,266,485) | 4,457,596) | |
| Current operating lease liabilities | 31,787) | 36,292) | 36,578) | 29,209) | —) | |
| Non-current operating lease liabilities | 294,849) | 310,899) | 181,871) | 184,163) | —) | |
| Total debt (including operating lease liability) | 5,117,981) | 5,376,085) | 4,821,074) | 4,479,857) | 4,457,596) | |
| Total assets | 10,948,820) | 10,412,231) | 9,131,845) | 8,140,395) | 7,703,020) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.47 | 0.52 | 0.53 | 0.55 | 0.58 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | 0.44 | 0.47 | — | — | — | |
| Mondelēz International Inc. | 0.33 | 0.30 | — | — | — | |
| PepsiCo Inc. | 0.45 | 0.46 | — | — | — | |
| Philip Morris International Inc. | 0.71 | 0.69 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Food, Beverage & Tobacco | 0.47 | 0.46 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.33 | 0.33 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 5,117,981 ÷ 10,948,820 = 0.47
2 Click competitor name to see calculations.
An analysis of the solvency position between 2018 and 2022 reveals a consistent improvement in the company's debt-to-assets profile. While absolute debt levels increased for the majority of the period, the growth in total assets significantly outpaced the accumulation of liabilities, resulting in a strengthened overall solvency posture.
- Total Debt Trends
- Total debt, including operating lease liabilities, followed a general upward trajectory from December 31, 2018, through December 31, 2021, increasing from approximately $4.46 billion to $5.38 billion. A reduction was observed in the final year of the period, with debt levels decreasing to $5.12 billion by December 31, 2022.
- Total Asset Expansion
- Total assets experienced uninterrupted growth over the five-year observation period. Assets rose from $7.70 billion in 2018 to $10.95 billion by the end of 2022. This consistent growth indicates a substantial expansion of the balance sheet's asset base.
- Debt to Assets Ratio Interpretation
- The debt-to-assets ratio demonstrates a steady and continuous decline, moving from 0.58 in 2018 to 0.47 in 2022. This downward trend signifies that a decreasing proportion of the company's assets is financed through debt, reflecting an improved ability to cover total liabilities with assets and a reduced financial risk profile over the analyzed timeframe.
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Financial Leverage
Hershey Co., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 10,948,820) | 10,412,231) | 9,131,845) | 8,140,395) | 7,703,020) | |
| Total The Hershey Company stockholders’ equity | 3,299,544) | 2,757,229) | 2,234,352) | 1,739,222) | 1,398,721) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 3.32 | 3.78 | 4.09 | 4.68 | 5.51 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Coca-Cola Co. | 3.85 | 4.10 | — | — | — | |
| Mondelēz International Inc. | 2.65 | 2.37 | — | — | — | |
| PepsiCo Inc. | 5.38 | 5.76 | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Food, Beverage & Tobacco | 5.37 | 5.16 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Consumer Staples | 3.59 | 3.59 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Financial leverage = Total assets ÷ Total The Hershey Company stockholders’ equity
= 10,948,820 ÷ 3,299,544 = 3.32
2 Click competitor name to see calculations.
An analysis of the financial leverage from 2018 to 2022 reveals a consistent strengthening of the capital structure and a systemic reduction in financial risk.
- Financial Leverage Trend
- The financial leverage ratio demonstrates a sustained downward trajectory, declining from 5.51 at the end of 2018 to 3.32 by the end of 2022. This steady decrease indicates a strategic transition toward a less leveraged balance sheet, reducing the reliance on debt to finance asset growth.
- Asset and Equity Expansion
- Total assets grew consistently over the five-year period, increasing from 7,703,020 thousand US dollars in 2018 to 10,948,820 thousand US dollars in 2022. During the same interval, stockholders' equity experienced more accelerated growth, rising from 1,398,721 thousand US dollars to 3,299,544 thousand US dollars. The fact that equity grew at a faster rate than total assets is the primary driver for the reduction in the financial leverage ratio.
- Solvency and Risk Profile
- The observed patterns suggest a significant improvement in the solvency profile. The substantial increase in the equity base relative to total assets enhances the capacity to absorb financial shocks and reduces the long-term risk associated with financial obligations, pointing toward a more conservative and stable financial position.
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Interest Coverage
Hershey Co., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to The Hershey Company | 1,644,817) | 1,477,512) | 1,278,708) | 1,149,692) | 1,177,562) | |
| Add: Net income attributable to noncontrolling interest | —) | 5,307) | (3,295) | (2,940) | (6,511) | |
| Add: Income tax expense | 272,254) | 314,405) | 219,584) | 234,032) | 239,010) | |
| Add: Interest expense | 140,095) | 129,846) | 153,471) | 152,122) | 146,858) | |
| Earnings before interest and tax (EBIT) | 2,057,166) | 1,927,070) | 1,648,468) | 1,532,906) | 1,556,919) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 14.68 | 14.84 | 10.74 | 10.08 | 10.60 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 14.25 | 8.78 | — | — | — | |
| Mondelēz International Inc. | 9.39 | 16.08 | — | — | — | |
| PepsiCo Inc. | 10.57 | 5.94 | — | — | — | |
| Philip Morris International Inc. | 16.33 | 17.80 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 12.81 | 9.56 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Consumer Staples | 15.69 | 11.46 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,057,166 ÷ 140,095 = 14.68
2 Click competitor name to see calculations.
The financial performance regarding solvency and interest obligations shows a strengthening trend over the five-year period ending December 31, 2022. An increase in operating profitability relative to interest costs has enhanced the capacity to service debt.
- Earnings Before Interest and Tax (EBIT)
- Operating earnings demonstrated steady growth, rising from 1,556,919 thousand US dollars in 2018 to 2,057,166 thousand US dollars in 2022. While a marginal decline occurred in 2019, subsequent years showed accelerated growth, particularly between 2020 and 2021.
- Interest Expense
- Interest costs remained relatively stable across the analyzed period, fluctuating between a high of 153,471 thousand US dollars in 2020 and a low of 129,846 thousand US dollars in 2021. The reduction observed in 2021 contributed to a notable short-term improvement in the solvency profile.
- Interest Coverage Ratio
- The interest coverage ratio reflects a positive trajectory, increasing from 10.60 in 2018 to 14.68 in 2022. A significant upward shift occurred in 2021, where the ratio reached 14.84, driven by the simultaneous growth in operating profits and a decrease in interest expenses. This trend indicates a substantial and increasing cushion for meeting interest payments from operating income.
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Fixed Charge Coverage
Hershey Co., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net income attributable to The Hershey Company | 1,644,817) | 1,477,512) | 1,278,708) | 1,149,692) | 1,177,562) | |
| Add: Net income attributable to noncontrolling interest | —) | 5,307) | (3,295) | (2,940) | (6,511) | |
| Add: Income tax expense | 272,254) | 314,405) | 219,584) | 234,032) | 239,010) | |
| Add: Interest expense | 140,095) | 129,846) | 153,471) | 152,122) | 146,858) | |
| Earnings before interest and tax (EBIT) | 2,057,166) | 1,927,070) | 1,648,468) | 1,532,906) | 1,556,919) | |
| Add: Operating lease cost | 48,988) | 44,444) | 44,547) | 42,580) | 34,157) | |
| Earnings before fixed charges and tax | 2,106,154) | 1,971,514) | 1,693,015) | 1,575,486) | 1,591,076) | |
| Interest expense | 140,095) | 129,846) | 153,471) | 152,122) | 146,858) | |
| Operating lease cost | 48,988) | 44,444) | 44,547) | 42,580) | 34,157) | |
| Fixed charges | 189,083) | 174,290) | 198,018) | 194,702) | 181,015) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 11.14 | 11.31 | 8.55 | 8.09 | 8.79 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 10.14 | 7.41 | — | — | — | |
| Mondelēz International Inc. | 6.60 | 10.28 | — | — | — | |
| PepsiCo Inc. | 7.28 | 4.85 | — | — | — | |
| Philip Morris International Inc. | 12.59 | 13.43 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 9.14 | 7.60 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Consumer Staples | 9.12 | 7.50 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 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).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,106,154 ÷ 189,083 = 11.14
2 Click competitor name to see calculations.
The solvency profile regarding fixed charge obligations demonstrates a strengthening trend between 2018 and 2022. The ability to cover fixed charges has improved significantly, indicating a reduced risk of default on fixed financial commitments and an increased margin of safety.
- Earnings before fixed charges and tax
- A consistent upward trajectory is observed in earnings, growing from US$ 1,591,076 thousand in 2018 to US$ 2,106,154 thousand in 2022. Despite a marginal decrease in 2019, the subsequent acceleration in earnings from 2020 through 2022 indicates a substantial expansion in the operational capacity to service obligations.
- Fixed charges
- Fixed charges remained relatively stable throughout the five-year period, fluctuating within a narrow range between a low of US$ 174,290 thousand in 2021 and a high of US$ 198,018 thousand in 2020. This stability suggests a consistent debt structure or lease obligation level over the analyzed timeframe.
- Fixed charge coverage ratio
- The coverage ratio experienced a slight decline from 8.79 in 2018 to 8.09 in 2019, followed by a marked increase, peaking at 11.31 in 2021 and ending at 11.14 in 2022. The expansion of this ratio is primarily attributable to earnings growth outpacing the relatively static nature of fixed charges, thereby enhancing the overall solvency position.
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