Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
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Solvency Ratios (Summary)
Linde plc, solvency ratios
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Debt to equity ratio
- The debt to equity ratio exhibits a consistent upward trend from 0.34 in 2020 to 0.57 in 2024. This increase suggests a gradual rise in financial leverage, indicating that the company is progressively relying more on debt financing relative to equity over the five-year period.
- Debt to equity ratio (including operating lease liability)
- This metric follows a similar increasing pattern as the standard debt to equity ratio, rising from 0.36 in 2020 to 0.59 in 2024. The inclusion of operating lease liability slightly raises the ratio but the upward trend remains parallel, reflecting increasing overall indebtedness including lease commitments.
- Debt to capital ratio
- The debt to capital ratio also demonstrates a steady rise from 0.26 in 2020 to 0.36 in 2024. This indicates that the proportion of debt within the total capital structure increases over time, consistent with the growing use of debt identified in other leverage ratios.
- Debt to capital ratio (including operating lease liability)
- Including operating lease liabilities results in slightly higher values than the standard debt to capital ratio, increasing from 0.27 in 2020 to 0.37 in 2024. The trend mirrors the growth observed in the non-including lease liability figures, which reinforces a rising dependence on debt and lease obligations for capital funding.
- Debt to assets ratio
- The debt to assets ratio gradually increases from 0.18 in 2020 to 0.27 in 2024, indicating that debt forms an increasing share of the company's total asset base. This confirms a growing leverage position when observed from an asset perspective.
- Debt to assets ratio (including operating lease liability)
- The inclusion of operating lease liabilities results in slightly higher debt to assets ratios, increasing from 0.20 to 0.28 over the analyzed period. This pattern is consistent with other leverage measures and highlights the impact of lease obligations on the overall indebtedness scale.
- Financial leverage ratio
- Financial leverage rises moderately from 1.86 in 2020 to 2.10 in 2024. This reflects an increasing use of debt financing relative to equity, which aligns with the upward trends seen in the debt-related ratios. The steady increase suggests a deliberate strategy or developing necessity to raise leverage.
- Interest coverage ratio
- The interest coverage ratio shows notable variability, peaking at 45.60 in 2021 before declining to 19.06 in 2024. Despite strong coverage levels throughout, the downward trajectory after 2021 may indicate rising interest expenses or shrinking earnings relative to interest obligations, potentially reducing the margin of safety for meeting interest payments.
- Fixed charge coverage ratio
- This ratio improves significantly from 7.79 in 2020 to a peak around 13.32 in 2022, followed by a slight decline to 12.10 in 2024. Overall, it maintains a high level, indicating robust ability to cover fixed charges, although the recent modest decline suggests some weakening in coverage capacity.
Debt Ratios
Coverage Ratios
Debt to Equity
Linde plc, debt to equity calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | ||||||
| Current portion of long-term debt | ||||||
| Current finance lease liabilities | ||||||
| Long-term debt, excluding current portion | ||||||
| Long-term finance lease liabilities | ||||||
| Total debt | ||||||
| Total Linde plc shareholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity1 | ||||||
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Debt to Equity, Sector | ||||||
| Chemicals | ||||||
| Debt to Equity, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to equity = Total debt ÷ Total Linde plc shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited an upward trend over the five-year period. From US$16,317 million at the end of 2020, it initially decreased to US$14,383 million by the end of 2021. However, thereafter, it increased significantly each year, reaching US$18,070 million in 2022, US$19,566 million in 2023, and US$21,827 million in 2024. This pattern indicates a shift towards increased leverage or borrowing by the company in recent years.
- Total Shareholders’ Equity
- Shareholders’ equity showed a consistent decline throughout the period. Starting at US$47,317 million in 2020, it decreased steadily to US$44,035 million in 2021, and then continued to drop to US$40,028 million in 2022. This downward trend persisted in the following years, ending at US$39,720 million in 2023 and US$38,092 million in 2024. The reduction suggests a possible decrease in the company's net asset base or retained earnings.
- Debt to Equity Ratio
- The debt to equity ratio remained relatively stable between 0.33 and 0.34 in 2020 and 2021, reflecting a balanced capital structure. From 2022 onwards, the ratio increased noticeably: it reached 0.45 in 2022, 0.49 in 2023, and further rose to 0.57 by 2024. This increasing leverage ratio corresponds with rising total debt and declining equity, indicating a higher reliance on debt financing relative to equity.
- Overall Analysis
- The data reveals a strategic shift in the company’s capital structure characterized by increasing leverage. This is evidenced by a consistent increase in total debt coupled with a diminishing shareholders’ equity base over the analyzed period. Consequently, the debt to equity ratio has grown significantly, suggesting elevated financial risk and a heavier dependence on external funding. These trends warrant further review regarding the company’s borrowing costs, debt servicing capacity, and potential impacts on financial stability.
Debt to Equity (including Operating Lease Liability)
Linde plc, debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | ||||||
| Current portion of long-term debt | ||||||
| Current finance lease liabilities | ||||||
| Long-term debt, excluding current portion | ||||||
| Long-term finance lease liabilities | ||||||
| Total debt | ||||||
| Current operating lease liabilities | ||||||
| Long-term operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Total Linde plc shareholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Chemicals | ||||||
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Linde plc shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt exhibited an overall upward trend across the periods analyzed. Starting at 17,223 million USD at the end of 2020, it initially decreased in 2021 to 15,216 million USD. However, from 2021 onward, the debt levels increased steadily, reaching 22,609 million USD by the end of 2024. This represents a significant rise in debt exposure, with the highest value observed in the last reported year.
- Total Linde plc Shareholders’ Equity
- Shareholders’ equity showed a continuous decline throughout the five-year period. Beginning at 47,317 million USD in 2020, it decreased each year to 44,035 million USD in 2021, then further down to 38,092 million USD by the end of 2024. The equity reduction indicates diminishing net asset value attributable to shareholders over time.
- Debt to Equity Ratio (including operating lease liability)
- The debt to equity ratio followed an increasing trajectory. It remained relatively stable around 0.35 to 0.36 between 2020 and 2021. From 2022, the ratio rose notably, reaching 0.47 and continuing to rise through 2023 and 2024, peaking at 0.59. This trend suggests a growing reliance on debt financing relative to equity, reflecting increasing financial leverage and potential risk.
- Summary of Financial Leverage and Capital Structure Trends
- The data reveal a pattern of increasing financial leverage over the analyzed period. The combination of rising total debt and decreasing shareholders’ equity has led to an escalating debt to equity ratio. This pattern may imply heightened risk exposure and a possible shift in balance sheet strategy towards greater debt utilization. It is important to monitor how this evolution impacts the company’s financial stability and cost of capital in future periods.
Debt to Capital
Linde plc, debt to capital calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | ||||||
| Current portion of long-term debt | ||||||
| Current finance lease liabilities | ||||||
| Long-term debt, excluding current portion | ||||||
| Long-term finance lease liabilities | ||||||
| Total debt | ||||||
| Total Linde plc shareholders’ equity | ||||||
| Total capital | ||||||
| Solvency Ratio | ||||||
| Debt to capital1 | ||||||
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Debt to Capital, Sector | ||||||
| Chemicals | ||||||
| Debt to Capital, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt demonstrates a generally increasing trend over the period. Initially, it decreased from 16,317 million US dollars at the end of 2020 to 14,383 million US dollars by the end of 2021. However, a significant rise is observed in the following years, reaching 18,070 million in 2022, then further increasing to 19,566 million in 2023, and finally climbing to 21,827 million in 2024.
- Total Capital
- Total capital presents a declining trend from 63,634 million US dollars at the end of 2020 to 58,098 million by the end of 2022. Slight recovery is observed thereafter, with figures edging up to 59,286 million in 2023 and 59,919 million in 2024, though total capital remains below the level recorded in 2020.
- Debt to Capital Ratio
- The debt to capital ratio reflects an overall upward trajectory over the years. It starts at 0.26 in 2020 and slightly dips to 0.25 in 2021, aligning with the temporary reduction in total debt and capital. From 2022 onwards, the ratio increases steadily, reaching 0.31, 0.33, and finally 0.36 by the end of 2024. This indicates an increasing proportion of debt relative to total capital in the company’s financial structure across the period analyzed.
Debt to Capital (including Operating Lease Liability)
Linde plc, debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | ||||||
| Current portion of long-term debt | ||||||
| Current finance lease liabilities | ||||||
| Long-term debt, excluding current portion | ||||||
| Long-term finance lease liabilities | ||||||
| Total debt | ||||||
| Current operating lease liabilities | ||||||
| Long-term operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Total Linde plc shareholders’ equity | ||||||
| Total capital (including operating lease liability) | ||||||
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Chemicals | ||||||
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= ÷ =
2 Click competitor name to see calculations.
- Total debt (including operating lease liability)
- The total debt has shown a fluctuating upward trend over the examined periods. It decreased from US$17,223 million in 2020 to US$15,216 million in 2021, indicating a reduction in leverage or repayment activity during that year. Following 2021, the total debt consistently increased, reaching US$18,791 million in 2022, US$20,315 million in 2023, and further to US$22,609 million in 2024. This pattern suggests an increasing reliance on debt financing in the latter years.
- Total capital (including operating lease liability)
- Total capital experienced a declining trend from 2020 to 2022, moving from US$64,540 million down to US$58,819 million. This contraction might point to a reduction in equity, retained earnings, or a shift in capital structure. However, from 2022 onwards, total capital stabilized and showed slight growth, increasing to US$60,035 million in 2023 and further marginally to US$60,701 million in 2024, indicating some recovery or stabilization of the capital base.
- Debt to capital (including operating lease liability)
- The debt to capital ratio remained relatively stable with a slight decline from 0.27 in 2020 to 0.26 in 2021, aligning with the observed decrease in total debt. Post-2021, the ratio increased steadily, rising to 0.32 in 2022, 0.34 in 2023, and reaching 0.37 in 2024. This increase reflects a growing proportion of debt within the overall capital structure, consistent with the rising total debt levels and the moderated changes in total capital. Such a trend may indicate heightened financial leverage over the period.
Debt to Assets
Linde plc, debt to assets calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | ||||||
| Current portion of long-term debt | ||||||
| Current finance lease liabilities | ||||||
| Long-term debt, excluding current portion | ||||||
| Long-term finance lease liabilities | ||||||
| Total debt | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets1 | ||||||
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Debt to Assets, Sector | ||||||
| Chemicals | ||||||
| Debt to Assets, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt of the company demonstrates a generally upward trajectory over the five-year period. Starting at $16,317 million in 2020, it decreased to $14,383 million in 2021, indicating a temporary reduction in leverage. However, from 2021 onwards, the debt consistently increased, reaching $21,827 million by the end of 2024. This trend suggests increasing reliance on debt financing in the later years.
- Total Assets
- Total assets show a downward trend over the period, beginning with $88,229 million in 2020 and gradually declining to $80,147 million by 2024. The most notable drop occurred between 2020 and 2021, with further slight decreases in subsequent years. This decrease in assets may indicate divestitures, depreciation outpacing asset growth, or other operational factors reducing the asset base.
- Debt to Assets Ratio
- The debt to assets ratio remains steady at 0.18 during 2020 and 2021, reflecting stable leverage relative to asset size in those years. Starting in 2022, the ratio increases consistently, reaching 0.27 by 2024. This increase aligns with the rising total debt and falling total assets, signifying a growing proportion of debt financing relative to the company's asset base. The rising ratio points to higher financial leverage and potentially increased financial risk.
Debt to Assets (including Operating Lease Liability)
Linde plc, debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | ||||||
| Current portion of long-term debt | ||||||
| Current finance lease liabilities | ||||||
| Long-term debt, excluding current portion | ||||||
| Long-term finance lease liabilities | ||||||
| Total debt | ||||||
| Current operating lease liabilities | ||||||
| Long-term operating lease liabilities | ||||||
| Total debt (including operating lease liability) | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Chemicals | ||||||
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt (including Operating Lease Liability)
-
The total debt shows an overall upward trend from 2020 to 2024. The debt decreased from 17,223 million US$ in 2020 to 15,216 million US$ in 2021, indicating a reduction in leverage or repayment efforts during this period. However, from 2021 onward, the debt increased steadily each year, reaching 22,609 million US$ by the end of 2024. This represents a significant increase of approximately 48.6% from the lowest point in 2021 to 2024, suggesting increased borrowing or obligations over the latter three years.
- Total Assets
-
Total assets decreased from 88,229 million US$ in 2020 to 81,605 million US$ in 2021, indicating a contraction in asset base. This declining trend continued subtly through 2022 to 2024, with total assets slightly falling from 79,658 million US$ in 2022 to 80,147 million US$ in 2024, showing marginal fluctuations but generally a lower level compared to 2020. Overall, the asset base contracted by about 9.2% over the five-year period.
- Debt to Assets Ratio (including Operating Lease Liability)
-
The debt to assets ratio increased steadily over the period, moving from 0.20 in 2020 to 0.28 in 2024. This upward trend indicates a growing proportion of debt relative to the total asset base. Initially, the ratio decreased slightly from 0.20 in 2020 to 0.19 in 2021, consistent with the reduction in total debt and assets during that year. From 2021 onwards, the ratio rose each year, reflecting the combined effect of increasing debt levels and relatively stable or slightly declining assets, culminating in a 40% increase in the ratio by 2024 compared to 2020.
- Summary of Financial Position Trends
-
The data reflects a financial profile characterized by increasing leverage, as evidenced by rising total debt and a higher debt to assets ratio. The asset base has contracted slightly over the five-year horizon, intensifying the impact of rising debt on leverage metrics. This pattern suggests a strategic shift towards increased borrowing, possibly for expansion, acquisition, or operational funding purposes, but it also implies elevated financial risk due to the higher leverage ratio. The decrease in assets during the initial years followed by stabilization could indicate asset sales, depreciation, or other balance sheet adjustments.
Financial Leverage
Linde plc, financial leverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | ||||||
| Total Linde plc shareholders’ equity | ||||||
| Solvency Ratio | ||||||
| Financial leverage1 | ||||||
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Financial Leverage, Sector | ||||||
| Chemicals | ||||||
| Financial Leverage, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Financial leverage = Total assets ÷ Total Linde plc shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total assets
- The total assets of the company show a decreasing trend over the five-year period. Starting from US$ 88,229 million in 2020, the assets declined to US$ 80,147 million by the end of 2024. The most significant drop occurred between 2020 and 2021, with a reduction of over US$ 6,600 million. Subsequently, the decline continued but at a slower pace, with slight fluctuations observed between 2022 and 2023 before another minor reduction in 2024.
- Total Linde plc shareholders’ equity
- Shareholders' equity exhibited a continuous downward trend throughout the period. Beginning at US$ 47,317 million in 2020, it consistently decreased each year, ending at US$ 38,092 million in 2024. The largest annual decrease occurred between 2021 and 2022, where equity dropped by approximately US$ 4,000 million. This steady decline suggests a possible reduction in retained earnings, increased dividends, share repurchases, or other equity changes affecting the company’s net worth.
- Financial leverage
- Financial leverage increased progressively from 1.86 in 2020 to 2.10 in 2024. This ratio's rise indicates that the company has been increasingly relying on debt relative to equity for financing its assets. A notable jump is seen from 1.85 in 2021 to 1.99 in 2022, continuing upward in subsequent years. The increasing leverage level confirms the context of shrinking equity and slightly declining total assets, reflecting a greater debt burden or reduced equity base.
Interest Coverage
Linde plc, interest coverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income, Linde plc | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Income from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Solvency Ratio | ||||||
| Interest coverage1 | ||||||
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Interest Coverage, Sector | ||||||
| Chemicals | ||||||
| Interest Coverage, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT demonstrated a consistent upward trend over the five-year period, increasing from 3,639 million US dollars in 2020 to 9,223 million US dollars in 2024. The growth was particularly significant between 2022 and 2023, where EBIT rose sharply by approximately 45%. This suggests improving operational performance or successful business expansion.
- Interest Expense
- Interest expense showed variability with a general upward trajectory. After decreasing from 170 million US dollars in 2020 to 117 million US dollars in 2021, it then increased to 484 million US dollars by 2024. The notable rise from 2022 onwards indicates increased borrowing costs or higher levels of debt.
- Interest Coverage Ratio
- The interest coverage ratio exhibited a declining trend throughout the period. Starting from a high of 45.6 in 2021, it steadily decreased to 19.06 in 2024. Despite the decline, the ratio remains above 19, indicating that EBIT still covers interest expenses by a significant margin. However, the decreasing trend may reflect growing financial leverage or rising interest expense relative to earnings.
Fixed Charge Coverage
Linde plc, fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income, Linde plc | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Income from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Add: Lease and rental expenses related to operating lease right of use assets | ||||||
| Earnings before fixed charges and tax | ||||||
| Interest expense | ||||||
| Lease and rental expenses related to operating lease right of use assets | ||||||
| Fixed charges | ||||||
| Solvency Ratio | ||||||
| Fixed charge coverage1 | ||||||
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Sherwin-Williams Co. | ||||||
| Fixed Charge Coverage, Sector | ||||||
| Chemicals | ||||||
| Fixed Charge Coverage, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax showed a consistent upward trend over the five-year period. Starting at $3,980 million in 2020, the figure increased significantly to $9,526 million by 2024. This represents more than a doubling of earnings, indicating strong growth in operational profitability before accounting for fixed financial obligations.
- Fixed charges
- Fixed charges have varied moderately over the years. The amount decreased from $511 million in 2020 to $434 million in 2021, followed by a slight increase to $464 million in 2022. Subsequently, fixed charges rose more sharply to $681 million in 2023 and $787 million in 2024. Although there is an upward trend in fixed charges in the latter years, the increases are relatively moderate compared to the growth in earnings.
- Fixed charge coverage ratio
- The fixed charge coverage ratio improved substantially from 7.79 in 2020 to a peak of 13.32 in 2022, demonstrating enhanced ability to meet fixed financial obligations from earnings. However, the ratio showed a slight decline in the last two years, dropping to 12.98 in 2023 and further to 12.1 in 2024. Despite this decrease, the ratio remains strong and well above the 2020 level, indicating continued robust coverage capacity.
- Overall analysis
- Over the analyzed period, earnings before fixed charges and tax substantially increased, reflecting strong growth in earnings generation. Fixed charges experienced fluctuation but generally increased in recent years, which may reflect higher interest or lease expenses correlated with expansion or financing activities. Although the fixed charge coverage ratio peaked in 2022, it sustained a strong level thereafter, signifying that despite rising fixed costs, the company maintains a sound ability to cover these charges comfortably with its earnings.