Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Solvency Ratios (Summary)
Norfolk Southern Corp., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
- Debt Ratios
-
The debt to equity ratio shows a general upward trend over the analyzed periods, increasing from 0.81 in March 2017 to 1.1 in March 2022. This indicates a gradual increase in reliance on debt relative to equity financing.
The debt to capital ratio remains relatively stable with minor fluctuations, rising modestly from 0.45 in March 2017 to 0.52 in March 2022. This suggests a slight growth in the proportion of debt within the company’s capital structure over time.
The debt to assets ratio exhibits a slow but steady increase as well, moving from 0.29 in March 2017 to 0.38 by March 2022. This reflects an incremental rise in debt relative to total assets, implying growing leverage in the asset base.
- Financial Leverage
-
The financial leverage ratio decreased notably from 2.81 in March 2017 to a low of 2.18 in December 2017, before embarking on a consistent upward trend that culminates at 2.92 in March 2022. The overall increasing trajectory following the early dip suggests an expansion in the company’s asset base funded by debt.
- Interest Coverage
-
Interest coverage data is available from December 2017 onward, showing strong coverage ratios starting at 6.69 and peaking at around 7.36 in June 2019. However, a decline follows, with the ratio dropping to a low of 5.04 by September 2020, indicative of reduced earnings relative to interest expense during this period.
Post-September 2020, there is a recovery trend, with interest coverage improving steadily and reaching approximately 6.96 by March 2022, signaling an enhanced ability to meet interest obligations in the later periods examined.
- Overall Insights
-
The data reveals a general increase in leverage and debt utilization within the company over the five-year span. While debt-related ratios have incrementally risen, the company maintains a reasonable interest coverage ratio, though it experienced some volatility, notably during the 2020 period which likely reflects a challenging operating environment.
The gradual rise in financial leverage in conjunction with stable to improving interest coverage toward the end suggests that although the company has increased its debt levels, it retains sufficient earnings capacity to service its debt efficiently. Continuous monitoring of these trends is important to ensure that increasing leverage does not impair financial flexibility.
Debt Ratios
Coverage Ratios
Debt to Equity
Norfolk Southern Corp., debt to equity calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||||||||||
| Current maturities of long-term debt | ||||||||||||||||||||||||||||
| Long-term debt, excluding current maturities | ||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||||||
| FedEx Corp. | ||||||||||||||||||||||||||||
| Uber Technologies Inc. | ||||||||||||||||||||||||||||
| Union Pacific Corp. | ||||||||||||||||||||||||||||
| United Airlines Holdings Inc. | ||||||||||||||||||||||||||||
| United Parcel Service Inc. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q1 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a generally increasing trend over the observed periods. Starting at approximately $10.1 billion in the first quarter of 2017, the debt level fluctuated slightly but showed an overall upward trajectory, reaching roughly $14.8 billion by the first quarter of 2022. The period between late 2019 and early 2022 saw more pronounced increases, particularly from mid-2021 onwards, indicating a rising leverage position.
- Stockholders’ Equity
- Stockholders’ equity showed some variability but followed a predominantly declining trend over the full period. Initially, equity was around $12.5 billion in the first quarter of 2017, with an increase noted in late 2017 peaking near $16.4 billion. Afterward, equity steadily declined, decreasing to approximately $13.5 billion by the first quarter of 2022. The period from 2019 onwards is marked by a consistent reduction in equity, reflecting potential impacts on net worth or retained earnings.
- Debt to Equity Ratio
- The debt to equity ratio reveals a notable upward trend across the analyzed quarters. Starting at 0.81 in early 2017, it initially decreased to around 0.6 by the end of 2017, corresponding with the peak in equity during that period. Following this, the ratio increased steadily, surpassing 1.0 in the late 2021 quarters and ultimately reaching 1.1 by the first quarter of 2022. This increasing ratio signifies a rising proportion of debt relative to equity, indicating higher financial leverage and potentially increased financial risk.
Debt to Capital
Norfolk Southern Corp., debt to capital calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||||||||||
| Current maturities of long-term debt | ||||||||||||||||||||||||||||
| Long-term debt, excluding current maturities | ||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||||||
| FedEx Corp. | ||||||||||||||||||||||||||||
| Uber Technologies Inc. | ||||||||||||||||||||||||||||
| Union Pacific Corp. | ||||||||||||||||||||||||||||
| United Airlines Holdings Inc. | ||||||||||||||||||||||||||||
| United Parcel Service Inc. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data for the specified period reveals distinct trends in the company's capital structure, particularly in its total debt, total capital, and the debt to capital ratio.
- Total Debt
-
Total debt exhibited moderate fluctuations across the observed quarters. Initially, values hovered around the 10,000 million US$ mark, with a slight decline from 10,119 million US$ at the start of the period (March 31, 2017) to a low of 9,646 million US$ in June 30, 2018. From this point, a general upward trajectory is noted, with debt increasing steadily from approximately 11,135 million US$ in September 2018 to peak at 14,844 million US$ by March 31, 2022. This suggests a significant increase in leverage or financing through debt in the latter years.
- Total Capital
-
Total capital values demonstrated a relatively stable trend with some variations over time. Starting at 22,646 million US$ as of March 31, 2017, total capital increased notably to 26,195 million US$ by December 31, 2017, then oscillated within a narrow range between approximately 26,000 million US$ to 28,000 million US$ through to March 31, 2022. The peak value was recorded near the end of the period at 28,305 million US$. This indicates that while the firm's overall capital base has grown, the increase is more moderate compared to the increase in total debt.
- Debt to Capital Ratio
-
The debt to capital ratio presents a clear upward trend over the period, reflecting the changes in the company's financial leverage. Initially, this ratio was at 0.45 in March 2017, with a slight decrease observed by late 2017 to a trough near 0.37 in June 2018, corresponding with the noted decrease in total debt. Subsequently, the ratio shows a consistent increase, reaching 0.52 by March 31, 2022. This progression indicates an increasing proportion of debt in the company's capital structure, suggesting a more leveraged financial position over time.
In summary, the company has been progressively increasing its debt load at a faster rate than its total capital, resulting in a growing debt to capital ratio. This reflects a strategic shift towards higher leverage, which might be aimed at financing expansion or other capital-intensive initiatives, but also implies increased financial risk that requires monitoring in future periods.
Debt to Assets
Norfolk Southern Corp., debt to assets calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Short-term debt | ||||||||||||||||||||||||||||
| Current maturities of long-term debt | ||||||||||||||||||||||||||||
| Long-term debt, excluding current maturities | ||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||||||
| FedEx Corp. | ||||||||||||||||||||||||||||
| Uber Technologies Inc. | ||||||||||||||||||||||||||||
| Union Pacific Corp. | ||||||||||||||||||||||||||||
| United Airlines Holdings Inc. | ||||||||||||||||||||||||||||
| United Parcel Service Inc. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt displayed a generally increasing trend over the analyzed quarters. Beginning at approximately $10.1 billion in the first quarter of 2017, the debt level fluctuated modestly around that value until early 2018. From that point, it experienced a gradual upward movement, reaching nearly $12.2 billion by the end of 2019. The increase continued into 2020 and subsequent years, culminating in the highest debt level observed at around $14.8 billion by the first quarter of 2022. The rise in debt appears steady, with no significant decreases or abrupt changes.
- Total Assets
- Total assets showed a steady upward trend throughout the period. Starting at approximately $35.1 billion in the first quarter of 2017, assets grew moderately over the years, reaching around $37.9 billion by the end of 2019. Following a slight dip in early 2020, asset values resumed growth and peaked close to $39.4 billion at the beginning of 2022. The increase in assets is consistent, reflecting steady expansion or capital investment across the time frame.
- Debt to Assets Ratio
- The debt to assets ratio remained relatively stable in the early periods, fluctuating between 0.27 and 0.31 through 2017 and 2018. Starting in 2019, this ratio demonstrated a gradual increase from 0.31 to 0.38 by the first quarter of 2022. This rising trend indicates that total debt grew at a faster pace than total assets, suggesting an increasing leverage position over time. The incremental nature of the ratio's increase implies that the company steadily elevated its use of debt relative to its asset base without abrupt leverage jumps.
Financial Leverage
Norfolk Southern Corp., financial leverage calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||||||
| FedEx Corp. | ||||||||||||||||||||||||||||
| Uber Technologies Inc. | ||||||||||||||||||||||||||||
| Union Pacific Corp. | ||||||||||||||||||||||||||||
| United Airlines Holdings Inc. | ||||||||||||||||||||||||||||
| United Parcel Service Inc. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q1 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
-
Total assets demonstrated a general upward trend over the analyzed periods. Starting at approximately 35.1 billion USD in the first quarter of 2017, assets showed modest fluctuations through 2017 and 2018, with slight increases and occasional minor decreases. From 2019 onward, total assets consistently increased, reaching approximately 39.4 billion USD by the first quarter of 2022. This indicates an overall growth in the company’s asset base despite some short-term variability.
- Stockholders’ Equity
-
Stockholders’ equity exhibited a distinct pattern, initially increasing from about 12.5 billion USD in early 2017 to a peak near 16.4 billion USD by the end of 2017. This peak was followed by a gradual but steady decline over the subsequent years. By the first quarter of 2022, equity had decreased to approximately 13.5 billion USD. The decline from 2018 forward suggests either increased distributions, share repurchases, accumulated losses, or other factors reducing retained earnings or paid-in capital.
- Financial Leverage
-
The financial leverage ratio, calculated as total assets divided by stockholders’ equity, displayed a downward movement in 2017, decreasing from 2.81 to 2.18, coinciding with the period of increasing equity. However, starting in 2018, the ratio reversed course and showed a steady rising trend, moving from approximately 2.2 to 2.92 by early 2022. This increasing leverage indicates growing reliance on debt or liabilities relative to equity, reflecting a change in the capital structure towards higher leverage over the assessed period.
- Summary
-
The data reveal an expansion of total assets over the five-year period with a peak and subsequent decline in stockholders’ equity after 2017. The resulting increase in the financial leverage ratio highlights a shift toward greater use of debt financing relative to equity. These patterns collectively suggest that the company has been increasing its asset base but financing this growth more through liabilities rather than equity, leading to heightened financial leverage and potentially increased financial risk.
Interest Coverage
Norfolk Southern Corp., interest coverage calculation (quarterly data)
| Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||||||
| Add: Interest expense on debt | ||||||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||||||
| Uber Technologies Inc. | ||||||||||||||||||||||||||||
| Union Pacific Corp. | ||||||||||||||||||||||||||||
| United Airlines Holdings Inc. | ||||||||||||||||||||||||||||
| United Parcel Service Inc. | ||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q1 2022 Calculation
Interest coverage
= (EBITQ1 2022
+ EBITQ4 2021
+ EBITQ3 2021
+ EBITQ2 2021)
÷ (Interest expenseQ1 2022
+ Interest expenseQ4 2021
+ Interest expenseQ3 2021
+ Interest expenseQ2 2021)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The earnings before interest and tax (EBIT) exhibit a notable fluctuation over the observed quarters. Starting at 797 million USD in the first quarter of 2017, EBIT generally shows an upward trend throughout 2017 and 2018, peaking at 1,078 million USD in the last quarter of 2018. Following this peak, EBIT levels slightly decline and stabilize around the 1,000 million USD mark through the first quarter of 2019 to the end of 2019.
The year 2020 marks a significant decrease in EBIT, reaching a low of 590 million USD in the first quarter, reflecting a sharp drop compared to previous quarters. However, EBIT recovers gradually in the subsequent quarters, regaining strength to reach 1,027 million USD in the last quarter of 2020 and continuing to maintain levels close to or above 1,000 million USD throughout 2021. A slight decline to 1,080 million USD is observed in the first quarter of 2022.
Interest expense on debt remains relatively stable throughout the entire period. It starts at 142 million USD in the first quarter of 2017 and gradually increases to 168 million USD by the first quarter of 2022. The increase is gradual and steady, indicating consistent interest obligations without abrupt changes.
The interest coverage ratio, which reflects the ability to cover interest expenses with EBIT, shows a clear improvement from early 2018 onwards. Starting at 6.69 in the first quarter of 2018, the ratio rises, reaching a peak of 7.36 in the third quarter of 2018. A gradual decline is observed over 2019 and into mid-2020, correlating with the drop in EBIT during that period, before improving again towards the end of 2020 and into 2021.
In 2021, the interest coverage ratio strengthens significantly, moving from 5.72 at the end of 2020 to a high of 7.00 in the third quarter and maintaining close to this level through the first quarter of 2022. This indicates that the company's capacity to meet its interest obligations has improved notably post-2020 downturns.
- Summary of Trends
- - EBIT demonstrates overall growth with volatility, including a significant drop in early 2020 followed by recovery.
- - Interest expense on debt increases steadily but moderately, showing consistent debt servicing costs.
- - Interest coverage ratio improves significantly from 2018 to 2022, despite mid-period challenges, reflecting strengthening financial resilience.