Linde plc (NASDAQ:LIN)

Asset Turnover

The total asset turnover ratio demonstrated an overall improvement from 0.31 in 2020 to 0.41 in 2023, stabilizing at 0.41 in 2024. Both reported and adjusted figures followed an identical trend, indicating enhanced efficiency in utilizing assets to generate revenue over the period.

Current Ratio

The current ratio showed a fluctuating but generally upward trend, with reported values rising modestly from 0.8 in 2020 to 0.89 in 2024. Adjusted current ratios were consistently higher than reported figures, increasing from 0.84 to 0.93. This suggests an improvement in the company’s short-term liquidity position and its ability to cover current liabilities.

Debt to Equity

The debt to equity ratio marked a noticeable increase from 0.34 in 2020 to 0.57 in 2024 in reported terms, with adjusted values rising from 0.3 to 0.5 over the same period. This upward trend implies a rising reliance on debt financing relative to equity.

Debt to Capital

There was a gradual increase in the debt to capital ratio, with reported figures moving from 0.26 in 2020 to 0.36 in 2024, and adjusted figures from 0.23 to 0.33. The growing proportion of debt in the capital structure further indicates a strategic shift toward greater leverage.

Financial Leverage

Financial leverage ratios gradually increased, with reported ratios rising from 1.86 in 2020 to 2.1 in 2024, and adjusted ratios from 1.56 to 1.77. This increase in leverage suggests higher use of debt relative to equity, which could amplify returns but also increase financial risk.

Net Profit Margin

Reported net profit margins showed a strong upward trajectory, increasing from 9.18% in 2020 to a peak of 19.89% in 2024. Adjusted margins, while lower during the mid-period, followed a similar pattern, improving from 10.2% to 16.43%. This indicates enhanced profitability and operational efficiency over time.

Return on Equity (ROE)

ROE exhibited a consistent increase, with reported values rising from 5.29% in 2020 to 17.23% in 2024. Adjusted ROE also increased, albeit at lower levels, from 4.89% to 11.95%. This reflects improved effectiveness in generating shareholder returns, likely supported by both profitability gains and increased financial leverage.

Return on Assets (ROA)

ROA grew steadily, with reported ROA moving from 2.83% in 2020 to 8.19% in 2024. Adjusted ROA was somewhat lower but showed similar improvement, increasing from 3.14% to 6.77%. The trend suggests better asset utilization and profitability on the asset base.

The analysis of the annual financial data reveals several notable trends in sales, assets, and asset turnover ratios over the five-year period ending in 2024.

Sales Trends

Sales show a consistent upward trajectory from 2020 through 2022, increasing steadily from US$27,243 million to US$33,364 million. However, the growth slows markedly in 2023 and 2024, with sales slightly declining in 2023 to US$32,854 million and then marginally increasing to US$33,005 million in 2024. This suggests a plateauing in revenue growth after the initial strong increases.

Total Assets

Total assets demonstrate a declining trend from 2020, beginning at US$88,229 million, decreasing significantly in 2021 to US$81,605 million, and continuing to fall through 2022 to US$79,658 million. Thereafter, total assets show a minor recovery in 2023 to US$80,811 million but decline again slightly to US$80,147 million in 2024. This overall reduction in asset base over the period might imply divestitures, asset optimization strategies, or other balance sheet adjustments.

Reported Total Asset Turnover

The reported total asset turnover ratio shows a positive development, rising from 0.31 in 2020 to a peak of 0.42 in 2022. Although it decreases slightly to 0.41 in both 2023 and 2024, it remains significantly higher than the starting point. This indicates improved efficiency in using assets to generate sales despite a shrinking asset base.

Adjusted Total Assets and Turnover

The values for adjusted total assets closely mirror those for total assets, following the same downward trend over the years. Correspondingly, the adjusted total asset turnover maintains the same pattern as the reported ratio, rising from 0.31 to 0.42 and stabilizing at 0.41 in the last two years. This consistency between reported and adjusted figures suggests reliability in the asset valuation approach used for the turnover calculations.

In summary, the financial data portrays a scenario where sales growth has moderated after strong initial increases, total assets have contracted over the period, and asset utilization efficiency has improved notably. The company appears to be generating more revenue per unit of asset, reflecting enhanced operational effectiveness or strategic asset management efforts, despite facing challenges in growing its asset base.

The analysis of the financial data over the five-year period reveals important trends in liquidity and working capital management. Both reported and adjusted measures of current assets and liabilities exhibit fluctuations that influence the company's current ratios, which are essential indicators of short-term financial health.

Current Assets and Liabilities

Reported current assets decreased slightly from 10,924 million in 2020 to 10,159 million in 2021, followed by a significant increase to 13,047 million in 2022. This rise was moderately sustained in 2023 and 2024, with values around 12,620 million and 12,945 million respectively. Current liabilities rose steadily from 13,740 million in 2020 to a peak of 16,479 million in 2022, then declined to 15,717 million in 2023 and further to 14,544 million in 2024. This pattern shows an initial tightening of liquidity in 2021, followed by improvements thereafter.

Reported Current Ratio

The reported current ratio remained below one throughout the period, starting at 0.8 in 2020 and dipping to 0.74 in 2021, indicating that current liabilities exceeded current assets. The ratio then rose back to 0.79 in 2022 and further stabilized at 0.8 in 2023, with a stronger improvement to 0.89 in 2024. This upward trend suggests a gradual enhancement in the firm's ability to cover short-term obligations with current assets.

Adjusted Current Assets and Liabilities

Adjusted figures present a similar trend but at slightly higher levels. Adjusted current assets increased from 11,395 million in 2020 to 10,564 million in 2021, then grew substantially to 13,452 million in 2022 and remained relatively stable through 2023 and 2024. Adjusted current liabilities followed a comparable pattern, increasing from 13,541 million in 2020 to a peak of 16,292 million in 2022, before decreasing in subsequent periods.

Adjusted Current Ratio

The adjusted current ratio started at 0.84 in 2020, declined to 0.79 in 2021, but then improved consistently to 0.83 in 2022 and 0.84 in 2023, culminating at the highest point of 0.93 in 2024. This indicates a healthier liquidity position when adjustments are considered, highlighting more conservative underlying assumptions or the exclusion of certain volatile items.

Overall, the data reflect a period of initial liquidity pressure in 2021, with current assets declining relative to liabilities, followed by a recovery phase in 2022 and beyond. The company's adjustments to current assets and liabilities suggest efforts to present a more accurate liquidity picture, with ratios improving steadily towards near parity by 2024. While the current ratios remain below 1.0 in the reported figures, the trend towards higher values suggests improved short-term financial stability.

Total debt

The total debt has demonstrated an overall upward trend from 2020 to 2024. Beginning at 16,317 million US dollars in 2020, it decreased to 14,383 million in 2021, followed by consistent increases each subsequent year, reaching 21,827 million by the end of 2024. This indicates a rising reliance on debt financing over the latter part of the period.

Total shareholders’ equity

Total equity has shown a steady decline over the period. Starting at 47,317 million US dollars in 2020, it decreased annually to 38,092 million by 2024. The decline suggests a reduction in net assets financed by shareholders, which could result from factors such as dividend payments, share repurchases, or operational losses.

Reported debt to equity ratio

The reported debt to equity ratio exhibited relative stability between 2020 and 2021, moving slightly from 0.34 to 0.33. However, it increased noticeably afterward, rising to 0.45 in 2022, 0.49 in 2023, and reaching 0.57 in 2024. This indicates that the company’s leverage increased over time, with debt growing faster than equity.

Adjusted total debt

The adjusted total debt follows a similar pattern to total debt, starting at 17,223 million in 2020, dipping slightly in 2021 to 15,216 million, and then consistently rising to 22,609 million by 2024. The adjustment suggests there may be additional debt-like obligations accounted for in this measure, showing a similar increasing financing risk trend.

Adjusted total equity

Adjusted total equity decreased from 56,858 million in 2020 to 45,381 million in 2024. This represents a decline over the five-year period, consistent with the trend observed in total shareholders' equity, pointing to a reduction in the capital base after adjustments.

Adjusted debt to equity ratio

The adjusted debt to equity ratio remained stable between 2020 and 2021 at approximately 0.3 and 0.29 respectively. From 2022 onwards, it showed an upward trend, increasing from 0.39 to 0.5 by the end of 2024. This reflects an increasing leverage position when considering adjusted figures, corroborating the increased debt reliance observed in the reported ratios.

Total Debt

The total debt exhibits a rising trend over the five-year period. Starting at 16,317 million US dollars at the end of 2020, it decreased slightly to 14,383 million in 2021, but then increased consistently each subsequent year, reaching 21,827 million by the end of 2024. This reflects a substantial increase in the company's debt burden over time.

Total Capital

Total capital shows a declining trend from 2020 through 2022, dropping from 63,634 million to 58,098 million. After 2022, there is a modest recovery with values reaching 59,919 million by the end of 2024; however, the capital remains below the 2020 level, indicating constrained growth in the capital base.

Reported Debt to Capital Ratio

This ratio decreases slightly from 0.26 in 2020 to 0.25 in 2021, reflecting the temporary reduction in debt and decline in capital. From 2021 onward, the ratio rises steadily, reaching 0.36 by 2024. This increase suggests an escalating proportion of debt relative to total capital, pointing to increased leverage and possibly higher financial risk.

Adjusted Total Debt

Adjusted total debt follows a pattern similar to reported total debt, beginning at 17,223 million in 2020, dipping to 15,216 million in 2021, then increasing year-on-year through 2024 to 22,609 million. The increase is more pronounced in the adjusted figures, signaling higher underlying leverage when considering additional debt adjustments.

Adjusted Total Capital

Adjusted total capital mirrors the trend in reported capital but at slightly higher absolute levels. It declines from 74,081 million in 2020 to 66,559 million in 2022, with a slight recovery to 67,990 million by 2024. The overall downward movement indicates a reduction in the capital base after adjustments.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio remains flat at 0.23 between 2020 and 2021, indicating stability in the company's leverage during this period. Starting in 2022, the ratio progressively increases to 0.33 by 2024. This rising leverage trend in adjusted terms highlights growing debt levels relative to capital, reflecting increased financial risk over the analyzed period.

The analysis of the financial data reveals several notable trends in the company’s asset base, equity position, and financial leverage over the five-year period.

Total Assets

Total assets showed a declining trend from US$88,229 million in 2020 to US$80,147 million in 2024, with minor fluctuations. The most significant decrease occurred between 2020 and 2021, followed by a gradual reduction through 2024, indicating possible divestitures, asset sales, or depreciation exceeding asset additions.

Total Shareholders’ Equity

Shareholders’ equity also consistently decreased from US$47,317 million in 2020 to US$38,092 million in 2024. This reduction was steady across the years, suggesting factors such as net losses, dividend distributions, share buybacks, or other equity adjustments impacting retained earnings and overall equity value.

Reported Financial Leverage

Reported financial leverage, measured as a ratio, increased from 1.86 in 2020 to 2.10 in 2024. The steady rise reflects an increasing proportion of debt relative to equity. This escalation may indicate greater reliance on debt financing or reduced equity levels affecting the leverage ratio.

Adjusted Total Assets

Adjusted total assets followed a very similar pattern to total assets, decreasing from US$88,432 million in 2020 to US$80,140 million in 2024. The close alignment between reported and adjusted assets suggests limited adjustments beyond the reported figures over the period.

Adjusted Total Equity

Adjusted total equity declined from US$56,858 million in 2020 to US$45,381 million in 2024. Similar to reported equity, the downward trend in adjusted equity signifies diminishing net worth when adjusting for certain factors not reflected in reported equity.

Adjusted Financial Leverage

The adjusted financial leverage ratio increased from 1.56 in 2020 to 1.77 in 2024. This increase, consistent with the reported leverage trend, also indicates progressively higher leverage, though at slightly lower levels than the reported leverage, possibly due to adjustments in equity or asset valuations.

In summary, the data illustrates a contraction in both asset base and equity, coupled with a rising leverage ratio over the analyzed period. This combination points to a financial structure with reduced equity buffer and increased debt load, which could imply higher financial risk or a strategic shift towards more debt financing. Continuous monitoring of leverage and equity trends is advisable to assess ongoing financial stability.

Net Income

The net income demonstrates a consistent upward trajectory over the analyzed period. Beginning at $2,501 million in 2020, it increased to $3,826 million in 2021 and continued to rise to $4,147 million in 2022. A substantial jump occurred in 2023, reaching $6,199 million, followed by a further increase to $6,565 million in 2024. This indicates strong profitability growth over the five-year span.

Sales

Sales showed steady growth from 2020 through 2022, increasing from $27,243 million to $33,364 million. However, in the subsequent years, 2023 and 2024, sales plateaued slightly around the $32,854 million to $33,005 million range, suggesting a leveling off after initial expansion.

Reported Net Profit Margin

The reported net profit margin followed a positive trend, increasing from 9.18% in 2020 to around 12.4% in 2021 and 2022. Thereafter, a marked improvement occurred in 2023, climbing sharply to 18.87%, and continuing to increase to 19.89% in 2024. This reflects enhanced profitability relative to sales during the later years.

Adjusted Net Income, Including Noncontrolling Interests

Adjusted net income exhibited some fluctuations. It rose from $2,778 million in 2020 to $3,362 million in 2021 but then declined to $2,943 million in 2022. A remarkable increase was seen in 2023, with adjusted net income reaching $6,156 million, before a decrease to $5,423 million in 2024. This pattern suggests variability possibly driven by adjustments or nonrecurring items affecting earnings.

Adjusted Net Profit Margin

The adjusted net profit margin started at 10.2% in 2020 and rose modestly to 10.92% in 2021 but decreased to 8.82% in 2022. This margin surged significantly in 2023 to 18.74%, reflecting a strong recovery or improvement in operating efficiency. However, it reduced somewhat to 16.43% in 2024, indicating some moderation in adjusted profitability.

Net Income

The net income of the company shows a consistent upward trend from 2020 to 2024. It increased significantly from $2,501 million in 2020 to $6,565 million in 2024, more than doubling over the five-year period. The most substantial jump occurred between 2022 and 2023, indicating a period of strong profitability growth.

Total Shareholders’ Equity

Total shareholders’ equity declined steadily over the same timeframe, decreasing from $47,317 million in 2020 to $38,092 million in 2024. This represents a reduction of nearly 20% over five years, suggesting the company may have returned capital to shareholders, incurred losses in some periods, or experienced asset reductions.

Reported Return on Equity (ROE)

Reported ROE exhibited a notable increase, from 5.29% in 2020 to 17.23% in 2024. The growth pathway indicates improving efficiency in generating profits relative to shareholders’ equity. The sharpest rise occurred between 2022 and 2023, aligned with the increase in net income despite declining equity.

Adjusted Net Income

The adjusted net income, which includes noncontrolling interests, conveys a less consistent pattern. It rose from $2,778 million in 2020 to a peak of $6,156 million in 2023 but decreased to $5,423 million in 2024. The dip in the final year contrasts with the continually rising reported net income, suggesting that noncontrolling interests or certain adjustments had a negative impact in 2024.

Adjusted Total Equity

Adjusted total equity declined similarly to reported equity, falling from $56,858 million in 2020 to $45,381 million in 2024. This consistent downward trend supports the observation of decreasing capital base when adjustments are accounted for.

Adjusted Return on Equity (ROE)

Adjusted ROE moved from 4.89% in 2020 to 11.95% in 2024, showing an overall improvement though less pronounced than reported ROE. Notably, adjusted ROE peaked at 13.02% in 2023 before decreasing slightly, reflecting the drop in adjusted net income in the same year.

Summary of Insights

The company demonstrates a strong growth in net profits alongside a shrinking equity base, which has driven significant increases in both reported and adjusted ROE measures. The divergence between reported and adjusted net income as well as ROE in 2023 and 2024 suggests the presence of adjustments or external factors impacting performance metrics. Overall, profitability has improved substantially, but the declining equity base warrants consideration from a capital preservation perspective.

The data reflects the financial performance and asset base of the company over a five-year period from 2020 to 2024.

Net Income

There is a notable upward trend in net income, increasing steadily from US$ 2,501 million in 2020 to US$ 6,565 million in 2024. The most significant growth occurs between 2022 and 2023, where net income rises by nearly 50%, suggesting improved profitability or operational efficiency during that time.

Total Assets

Total assets show a declining trend over the period, decreasing from US$ 88,229 million in 2020 to US$ 80,147 million in 2024. This represents a reduction of about 9% over five years, indicating possible asset disposals, depreciation, or less capital investment.

Reported Return on Assets (ROA)

The reported ROA improves consistently from 2.83% in 2020 to 8.19% in 2024. This increase aligns with the rise in net income and is achieved despite a contraction in total assets, suggesting enhanced asset utilization and profitability.

Adjusted Net Income including Noncontrolling Interests

Adjusted net income shows variability during the period, rising from US$ 2,778 million in 2020 to a peak of US$ 6,156 million in 2023, then declining to US$ 5,423 million in 2024. The fluctuation in adjusted net income, particularly the decrease in 2024, contrasts with the steady increase in reported net income during the same time.

Adjusted Total Assets

Adjusted total assets similarly decline from US$ 88,432 million in 2020 to US$ 80,140 million in 2024, mirroring the pattern in reported total assets. This consistent reduction may reflect underlying changes to asset valuation or structure.

Adjusted ROA

Adjusted ROA peaks at 7.60% in 2023, rising from 3.14% in 2020, but then declines to 6.77% in 2024. The decline after 2023 suggests a potential drop in profitability relative to asset base when adjustments are considered, highlighting some underlying volatility or nonrecurring factors impacting performance.

Overall, the company demonstrates improving profitability as measured by net income and reported ROA over the period, despite a gradual reduction in asset size. The adjusted metrics reveal more variability, with a decline in adjusted net income and ROA in 2024, which may warrant deeper investigation into the factors influencing these adjustments.