Medtronic PLC (NYSE:MDT)

The analysis of the financial leverage and debt-related ratios over the periods from April 2020 through April 2025 reveals evolving trends in the company's capital structure and ability to cover financing costs.

Debt to Equity Ratio

The debt to equity ratio generally exhibits a moderate increase over the examined periods. Starting at 0.49 in April 2020, it slightly rises to 0.51 in April 2021, declines to 0.46 in April 2022, and then gradually increases again to reach 0.59 by April 2025. When including operating lease liabilities, this ratio follows a similar pattern but registers marginally higher values, culminating at 0.62 in April 2025. This trend suggests a growing reliance on debt relative to equity in the later years.

Debt to Capital Ratio

This ratio mirrors the trend of the debt to equity ratio, remaining relatively stable around the low 0.30s initially, with a slight uptick observed towards the end of the period. The ratio increases from 0.33 in April 2020 to 0.37 in April 2025, indicating a slight rise in the proportion of debt within total capital. Including operating lease liabilities, the figures are slightly higher but follow the same gradual increase pattern.

Debt to Assets Ratio

The debt to assets ratio shows minimal variation during the early years, remaining close to 0.27–0.28. However, it edges upward in the later years, reaching 0.31 in April 2025 and 0.32 when incorporating operating lease liabilities. This upward movement suggests a modest increase in leverage relative to total assets over time.

Financial Leverage Ratio

Financial leverage ratios show slight fluctuations but indicate a trend towards increased leverage by April 2025. Beginning at 1.79 in April 2020, there is a small decrease to 1.73 in April 2022 followed by a rise to 1.91 in April 2025. This reflects a progressive increase in the usage of debt financing relative to equity.

Interest Coverage Ratio

The interest coverage ratio demonstrates significant improvement from April 2020 to April 2022, moving from 4.71 to a high point of 10.98. Following this peak, the ratio declines somewhat but remains robust, settling at 8.72 by April 2025. This indicates that the company’s earnings before interest and taxes are sufficient to cover interest expenses comfortably, despite some volatility.

Fixed Charge Coverage Ratio

Fixed charge coverage also shows an improvement trend, rising from 3.98 in April 2020 to 7.79 in April 2022 and subsequently decreasing to 6.86 in April 2025. The overall upward movement demonstrates enhanced capacity to cover fixed financial obligations, paralleling the interest coverage trends, albeit with some decline after the peak period.

Overall, the company exhibits a modest increase in leverage ratios across multiple metrics over the five-year span, suggesting an incremental rise in debt relative to equity, capital, and assets. This is coupled with strong, albeit somewhat fluctuating, interest and fixed charge coverage ratios, indicating the company maintains healthy earnings relative to its debt servicing requirements. The trends point to a balanced approach towards leveraging, with cautious growth in debt levels supported by adequate coverage ratios.

Total Debt

The total debt exhibits a generally stable pattern from 2020 through 2024, with minor fluctuations around the 24,000 to 25,000 million US dollar range. A slight decline is noted in 2022 and 2023. However, in 2025, there is a notable increase in total debt, rising to 28,516 million US dollars, which represents a significant jump compared to prior years.

Shareholders’ Equity

Shareholders’ equity shows a modest upward trend from 2020 until 2022, peaking at 52,551 million US dollars. Post-2022, there is a declining trend through 2025, with equity decreasing annually to reach 48,024 million US dollars in 2025. This decline indicates a reduction in net assets or retained earnings over the recent years.

Debt to Equity Ratio

The debt to equity ratio remains relatively stable around the 0.46 to 0.51 range from 2020 to 2024, reflecting consistent leverage levels. However, in 2025, the ratio increases markedly to 0.59, driven by the simultaneous rise in total debt and decline in shareholders’ equity. This indicates an increased reliance on debt financing relative to equity.

Total debt (including operating lease liability)

The total debt showed a generally fluctuating trend over the years. Starting at 25,742 million US dollars in 2020, it increased to 27,404 million in 2021, then declined to 24,984 million in 2022. There was a slight rise to 25,413 million in 2023, followed by an increase to 26,047 million in 2024, and a more significant rise to 29,626 million in 2025. Overall, total debt experienced a net increase over the six-year period, with the highest level recorded in 2025.

Shareholders’ equity

Shareholders' equity showed a downward trend over the period under review. It started at 50,737 million US dollars in 2020 and increased slightly to 51,428 million in 2021, followed by a further increase to 52,551 million in 2022. However, from 2022 onwards, equity decreased consistently, falling to 51,483 million in 2023, 50,214 million in 2024, and finally to 48,024 million in 2025. This indicates a gradual erosion of equity in the later years.

Debt to equity (including operating lease liability)

The debt-to-equity ratio showed minor fluctuations but an overall rising trend. It was 0.51 in 2020, increased slightly to 0.53 in 2021, then decreased to 0.48 in 2022. The ratio rose again to 0.49 in 2023 and 0.52 in 2024, followed by a more pronounced increase to 0.62 in 2025. This indicates a moderate increase in financial leverage, suggesting a growing reliance on debt relative to equity in recent years.

Summary

The analysis reveals a pattern of increasing leverage over the six-year period, marked by a rise in total debt and a simultaneous decrease in shareholders’ equity in later years. The debt-to-equity ratio's increase reflects higher financial risk, potentially stemming from increased borrowing relative to equity. This trend suggests a strategic shift towards more debt financing or challenges in retaining equity, which may have implications for the company's financial stability and cost of capital going forward.

Total Debt

The total debt has exhibited fluctuations over the analyzed period. Starting at 24,797 million US dollars in April 2020, there was a rise to 26,389 million US dollars in April 2021. This was followed by a decline to 24,114 million US dollars in April 2022. Subsequently, the debt level increased again, reaching 24,364 million US dollars in April 2023, and 25,024 million US dollars in April 2024. The most recent data point in April 2025 shows a notable increase to 28,516 million US dollars. Overall, the trend indicates variability with an upward movement in the latter years.

Total Capital

Total capital has remained relatively stable throughout the period, fluctuating within a narrow range between approximately 75,000 and 78,000 million US dollars. Starting at 75,534 million US dollars in April 2020, it experienced a slight increase to 77,817 million US dollars in April 2021, then declined gradually to 75,238 million US dollars by April 2024. The latest figure in April 2025 shows a marginal increase to 76,540 million US dollars. These changes suggest maintenance of a consistent capital base over time, with minimal significant expansion or contraction.

Debt to Capital Ratio

The debt to capital ratio exhibits minor fluctuations in the range of 0.31 to 0.37 throughout the period. Beginning at 0.33 in April 2020, the ratio increased slightly to 0.34 in April 2021 before dropping to its lowest point at 0.31 in April 2022. It then rose to 0.32 in April 2023, back to 0.33 in April 2024, and further increased to 0.37 in April 2025. This pattern aligns with the previously noted increase in total debt in the latest year, suggesting a moderately higher leverage position relative to the capital base in the most recent period compared to earlier years.

Total Debt (including operating lease liability)

The total debt level demonstrated a moderate fluctuation over the observed periods. Initially, there was an increase from 25,742 million USD in April 2020 to 27,404 million USD in April 2021, followed by a decline to 24,984 million USD in April 2022. Subsequently, the debt levels showed a gradual rise again, reaching 29,626 million USD by April 2025. This indicates a mixed pattern of debt management with a notable increase in the latest period.

Total Capital (including operating lease liability)

Total capital has remained relatively stable across the years, displaying only slight declines and recoveries. From an initial value of 76,479 million USD in April 2020, it rose marginally to 78,832 million USD in April 2021, then gently trended downward to 76,261 million USD by April 2024. A minor increase followed, reaching 77,650 million USD in April 2025. The stability in total capital suggests consistent capitalization with modest variations.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio fluctuated within a narrow range, reflecting relatively stable leverage levels. Starting from 0.34 in April 2020, the ratio increased slightly to 0.35 in April 2021, dipped to 0.32 in April 2022, and then gradually increased again to 0.38 by April 2025. The upward trend in leverage towards the final period may indicate increased reliance on debt financing relative to total capital.

Total Debt

The total debt shows an overall increasing trend over the examined period. Starting at $24,797 million in 2020, it rose to $28,516 million by 2025. Despite a slight decline observed from 2021 to 2022, total debt levels generally increased, with notable increments between 2024 and 2025.

Total Assets

Total assets remained relatively stable throughout the period, fluctuating modestly between approximately $89,981 million and $93,083 million. The highest value was recorded in 2021 with $93,083 million, followed by a gradual decrease nearing $89,981 million in 2024, and a modest recovery to $91,680 million in 2025.

Debt to Assets Ratio

The debt to assets ratio demonstrated a fairly consistent pattern, persisting near the 0.27 to 0.28 range from 2020 through 2024. However, a noticeable increase occurred in 2025, reaching 0.31. This suggests a slight intensification in leverage during the most recent year, reflecting the proportionally higher rise in debt compared to assets.

In summary, while total assets remained stable over the six-year span, total debt exhibited a rising trajectory, particularly evident in the last year. Consequently, the debt to assets ratio increased moderately, indicating a gradual increase in financial leverage. This pattern may imply a strategic decision to utilize more debt financing or a response to changing capital needs.

Total Debt (including operating lease liability)

The total debt has shown some fluctuations over the years. Starting at 25,742 million USD in April 2020, it increased to 27,404 million USD in April 2021. This was followed by a decrease to 24,984 million USD in April 2022. The debt then marginally increased over the subsequent years, reaching 25,413 million USD in April 2023 and 26,047 million USD in April 2024. A notable rise is observed in April 2025, with total debt increasing to 29,626 million USD. Overall, the trend indicates a fluctuating but generally increasing debt level by the end of the period.

Total Assets

Total assets exhibited minor variations within the observed timeframe. From 90,689 million USD in April 2020, assets increased slightly to 93,083 million USD in April 2021. This was followed by a decrease to 90,981 million USD in April 2022, with values remaining relatively stable around 90,948 million USD in April 2023 and decreasing marginally to 89,981 million USD in April 2024. The value increased again slightly to 91,680 million USD in April 2025. This indicates a generally stable asset base with small fluctuations but no significant upward or downward trend.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio has remained relatively stable, oscillating between 0.27 and 0.29 for most of the years. It was 0.28 in April 2020, increased slightly to 0.29 in April 2021, decreased to 0.27 in April 2022, and then reverted to 0.28 in April 2023 and 0.29 in April 2024. A noticeable increase occurred in April 2025, when the ratio rose to 0.32. This suggests that while leverage remained fairly consistent over the first five years, there was a marked increase in leverage in the latest period, likely reflecting the rise in total debt relative to assets.

Summary

The financial data indicate a company maintaining a relatively stable asset base with minor fluctuations in total assets. Total debt fluctuated throughout the period but showed a significant increase in the most recent year, contributing to an elevated debt to assets ratio in April 2025. This suggests increased leverage, which may warrant closer monitoring to assess its potential impact on financial risk and capital structure going forward.

Total assets

The total assets of the company show a relatively stable pattern over the analyzed years. Starting at $90,689 million in April 2020, the figure rose slightly to $93,083 million by April 2021 but then experienced a mild decline to around $90,681 million in subsequent periods. By April 2024, total assets decreased to $89,981 million and showed a minor recovery to $91,680 million in April 2025. Overall, total assets fluctuated within a narrow range without significant growth or contraction.

Shareholders’ equity

Shareholders’ equity displayed a declining trend during the period examined. It began at $50,737 million in April 2020, gradually increasing to a peak of $52,551 million in April 2022. However, from this peak, equity values started to decrease, reaching $50,214 million in April 2024 and further declining to $48,024 million by April 2025. This pattern indicates a reduction in equity after 2022, which could reflect changes in retained earnings, dividend payments, or other equity adjustments.

Financial leverage

Financial leverage ratios remained within a limited scope but showed a slight upward trend overall. The ratio began at 1.79 in April 2020, increased marginally to 1.81 in April 2021, then decreased to 1.73 in April 2022, indicating a brief reduction in leverage. Following this, the ratio rose again, reaching 1.79 in April 2024 and further increasing to 1.91 by April 2025. This suggests a gradual increase in the proportion of debt relative to equity, indicating that the company may be relying more on borrowed funds over time.

Summary

The overall financial structure appears stable in terms of asset base, with minor fluctuations observed. However, the decline in shareholders’ equity from 2022 onward coupled with a gradual increase in financial leverage indicates a shifting balance toward higher indebtedness. These trends could suggest strategic decisions affecting capital structure, potentially involving increased borrowing or adjustments in equity management. Monitoring future developments in equity and leverage will be crucial to assess financial risk and stability.

Earnings before Interest and Tax (EBIT)

The EBIT figures indicate a fluctuating yet generally positive trend over the analyzed period. Starting at 5147 million USD in April 2020, there is a slight decline to 4820 million USD in April 2021. Subsequently, EBIT increases significantly to 6070 million USD in April 2022, followed by a minor reduction to 6000 million USD in April 2023. The value then decreases to 5556 million USD in April 2024, before rising again to 6357 million USD in April 2025. This pattern reflects some volatility but an overall upward trajectory in operating profitability toward the end of the period.

Interest Expense, Net

The net interest expense shows a steady decline from 1092 million USD in April 2020 to a low of 553 million USD in April 2022. Afterward, interest expense begins to increase moderately, rising to 636 million USD in April 2023, 719 million USD in April 2024, and 729 million USD in April 2025. This initial reduction followed by a gradual increase may suggest changes in debt levels or interest rates over time.

Interest Coverage Ratio

The interest coverage ratio exhibits a general improvement during the period, beginning at 4.71 in April 2020 and improving to 5.21 in April 2021. A marked increase occurs in April 2022, reaching 10.98, which indicates significantly stronger EBIT relative to interest expenses. The ratio then decreases slightly to 9.43 in April 2023 and further to 7.73 in April 2024 but improves again to 8.72 in April 2025. Despite some fluctuations, the ratio remains at comparatively high levels, suggesting good capacity to cover interest obligations.

Earnings before fixed charges and tax

The earnings before fixed charges and tax exhibit fluctuations over the analyzed periods. Starting at 5,416 million US dollars in April 2020, there is a decline to 5,071 million in April 2021, followed by a notable increase to 6,330 million in April 2022. The value remains relatively stable in April 2023 at 6,273 million, then decreases to 5,829 million in April 2024, before rising again to 6,589 million in April 2025. Overall, the earnings demonstrate periods of both contraction and expansion, with a general trend of recovery and growth after the initial dip.

Fixed charges

Fixed charges show a decreasing trend from 1,361 million US dollars in April 2020 to a low of 813 million in April 2022. Subsequently, fixed charges increase moderately to 909 million in April 2023 and continue to rise to 992 million in April 2024. There is a slight decrease to 961 million in April 2025. This pattern indicates an initial effort to reduce fixed financial obligations, followed by a gradual increase in such charges in the later years, albeit remaining below the initial 2020 level.

Fixed charge coverage ratio

The fixed charge coverage ratio increases significantly from 3.98 in April 2020 to a peak of 7.79 in April 2022, reflecting improved ability to cover fixed charges with earnings before fixed charges and tax. After peaking, the ratio declines to 6.90 in April 2023 and continues to moderate at 5.88 in April 2024, before rebounding to 6.86 in April 2025. The ratio remains at a higher level than in 2020, suggesting overall enhanced financial capacity to meet fixed charges despite some volatility.