Analysis of Debt
Total Debt (Carrying Amount)
Parker-Hannifin Corp., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
The total carrying amount of notes payable and long-term debt exhibited significant volatility between 2017 and 2022, characterized by a general upward trajectory punctuated by periodic reductions.
- Total Debt Trajectory
- Total debt experienced a decline from US$ 5.87 billion in 2017 to US$ 4.96 billion in 2018. This was followed by a steady increase over the subsequent two years, reaching US$ 8.46 billion by June 30, 2020. After a reduction in 2021, total debt surged to a period peak of US$ 11.48 billion by June 30, 2022, representing a substantial increase in total liabilities.
- Long-Term Debt Composition
- Long-term debt, excluding the portion due within one year, remained the primary component of the total debt profile throughout the analyzed period. This figure rose from US$ 4.86 billion in 2017 to US$ 9.76 billion in 2022. The most pronounced growth occurred between 2018 and 2020, and again between 2021 and 2022, indicating an increased reliance on long-term financing instruments.
- Short-Term Obligation Fluctuations
- Notes payable and long-term debt due within one year displayed erratic movements. After fluctuating between US$ 587 million and US$ 1.01 billion from 2017 to 2020, these obligations dropped precipitously to US$ 2.82 million in 2021. This was followed by a sharp reversal in 2022, with short-term debt increasing to US$ 1.72 billion, contributing significantly to the overall peak in total debt for that fiscal year.
- Debt Structural Analysis
- The composition of the debt structure shifted markedly. In 2021, the debt load was almost exclusively long-term. However, by June 30, 2022, the concurrent increase in both short-term and long-term obligations suggests an aggressive expansion of total borrowing and a shift in the maturity profile of the company's debt.
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Total Debt (Fair Value)
| Jun 30, 2022 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Short-term commercial paper notes | 1,422,030) |
| Borrowings from foreign banks | —) |
| Long-term debt | 9,709,407) |
| Total notes payable and long-term debt (fair value) | 11,131,437) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.97 |
Based on: 10-K (reporting date: 2022-06-30).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 4.14%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 0.70% | 1,422,030) | 9,954) | |
| 6.25% | 2,125,000) | 132,813) | |
| 4.50% | 7,275,000) | 327,375) | |
| 1.13% | 733,950) | 8,257) | |
| Total | 11,555,980) | 478,399) | |
| 4.14% | |||
Based on: 10-K (reporting date: 2022-06-30).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 478,399 ÷ 11,555,980 = 4.14%