Analysis of Debt
Total Debt (Carrying Amount)
Lowe’s Cos. Inc., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
The debt data over the reported periods indicates several noteworthy trends. Total debt, including finance lease obligations, shows a consistent upward trajectory from 19,306 million USD in January 2020 to a peak of 35,921 million USD in February 2024, followed by a slight decrease to 35,487 million USD in January 2025.
- Short-term Borrowings
- Short-term borrowings were recorded at 1,941 million USD in January 2020, absent or unreported in the 2021 and 2022 periods, then resurfaced at 499 million USD in February 2023, with no data for subsequent years. This fluctuation may suggest variability in the use of short-term credit facilities or changes in reporting practices.
- Current Maturities of Long-term Debt
- Current maturities of long-term debt showed significant variation. There was an increase from 597 million USD in January 2020 to 1,112 million USD in January 2021, followed by a decline to 868 million USD in January 2022 and further to 585 million USD in February 2023. A minor decrease to 537 million USD was observed in February 2024, before a substantial increase to 2,586 million USD in January 2025. This pattern indicates a shifting schedule of debt repayments becoming due within one year, with a marked rise in the latest period that could impact liquidity requirements.
- Long-term Debt, Excluding Current Maturities
- Long-term debt, exclusive of current maturities, exhibited a steady climb from 16,768 million USD in January 2020 to 35,384 million USD in February 2024, before declining to 32,901 million USD in January 2025. The rise indicates increased or sustained borrowing over the years, while the latest decrease might represent repayments, refinancing, or reclassification of debt.
- Total Debt, Including Finance Lease Obligations
- Total debt values consistently increased over the period, mirroring the trend in long-term debt. The peak in February 2024 aligns with the highest recorded long-term debt and a reduction in short-term borrowings. The slight reduction in total debt by January 2025 is consistent with decreases in long-term debt and fluctuations in current maturities.
Overall, the data reveals an overall increasing debt profile with some volatility in short-term borrowings and current maturities. The large increase in current maturities by the latest period warrants attention as it potentially signals elevated near-term debt obligations that could affect the company’s liquidity and debt management strategies.
Total Debt (Fair Value)
| Jan 31, 2025 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term borrowings | —) |
| Long-term debt, excluding finance lease obligations | 31,558) |
| Finance lease obligations | 475) |
| Total debt, including finance lease obligations (fair value) | 32,033) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.90 |
Based on: 10-K (reporting date: 2025-01-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 3.97%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 6.24% | 1) | —) | |
| 3.40% | 11,215) | 381) | |
| 3.70% | 7,709) | 285) | |
| 5.93% | 858) | 51) | |
| 4.09% | 2,578) | 105) | |
| 4.04% | 3,820) | 154) | |
| 4.35% | 6,118) | 266) | |
| 5.19% | 2,713) | 141) | |
| 4.89% | 475) | 23) | |
| Total | 35,487) | 1,407) | |
| 3.97% | |||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × 1,407 ÷ 35,487 = 3.97%
Interest Costs Incurred
Lowe’s Cos. Inc., interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
- Interest Expense Trend
- Interest expense demonstrates a consistent upward trajectory from January 31, 2020, to February 2, 2024, starting at 718 million US dollars and peaking at 1,483 million US dollars. This represents more than a doubled increase over four years. However, a slight decline is observed in the period ending January 31, 2025, where interest expense modestly decreases to 1,472 million US dollars.
- Interest Capitalized Pattern
- Interest capitalized remains relatively low throughout the observed period, fluctuating between 1 and 6 million US dollars. While some years have missing data (such as January 29, 2021), the recorded values show a modest increase over time, particularly from 3 million in January 28, 2022, to 6 million in January 31, 2025, indicating a slight rise in capitalized interest costs.
- Interest Costs Incurred Analysis
- Interest costs incurred, comprising both interest expense and interest capitalized, mirror the pattern of interest expense closely given the small magnitude of capitalized interest. The figure grows consistently from 719 million US dollars in January 2020 to 1,487 million US dollars in February 2024. A minor decrease to 1,478 million US dollars is noted in January 2025, indicating a stabilization after several years of growth.
- Overall Insights
- Over the six-year span, total interest-related costs have shown a steady increase, reflecting possibly rising debt levels, higher interest rates, or both. The slight dip in the most recent year suggests either improved interest rate conditions or effective debt management strategies. Capitalized interest remains negligible in comparison to interest expense, indicating that most interest costs are expensed rather than capitalized under the current accounting treatments.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of amount capitalized
= 10,625 ÷ 1,472 = 7.22
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 10,625 ÷ 1,478 = 7.19
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio initially increased from 8.83 in early 2020 to a peak of 13.49 in 2022, indicating a strengthening ability to cover interest expenses during this period. Following this peak, the ratio declined steadily over the subsequent years, reaching 7.22 by early 2025. This downward trend suggests a gradual weakening in the company's capacity to cover its interest obligations.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- This ratio exhibited a pattern nearly identical to the unadjusted interest coverage ratio. It rose from 8.82 in 2020 to 13.45 in 2022, followed by a continuous decline to 7.19 in 2025. The close alignment between the adjusted and unadjusted ratios indicates minimal impact from capitalized interest on the overall interest coverage assessment.
- Overall Analysis
- The data reveals a period of improving financial strength concerning interest coverage up to 2022, followed by a notable decline through to 2025. The ratios suggest that while the company had a robust buffer to cover interest expenses at its peak, recent years show reduced coverage, potentially indicating increased interest expense relative to earnings or a decline in earnings before interest and taxes. The consistency between the adjusted and unadjusted figures implies that capitalized interest does not materially alter the interpretation of the company's interest coverage trend.