Analysis of Debt
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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Total Debt (Carrying Amount)
Pfizer Inc., balance sheet: debt
US$ in millions
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).
The analysis of the reported debt figures over the five-year period reveals several notable trends and fluctuations. Both short-term borrowings and long-term debt exhibit significant changes that impact the overall debt profile.
- Short-term Borrowings
- The short-term borrowings, including the current portion of long-term debt, show a moderate decline from 2,703 million USD in 2020 to 2,241 million USD in 2021. This is followed by an increase to 2,945 million USD in 2022. Notably, there is a sharp rise in 2023, where the short-term borrowings escalate dramatically to 10,350 million USD, before decreasing to 6,946 million USD in 2024. This pattern indicates a significant increase in short-term financing in 2023, which partially retracts in the subsequent year.
- Long-term Debt
- Long-term debt displays a generally downward trend from 37,133 million USD in 2020 to 32,884 million USD in 2022. However, 2023 marks a pronounced increase to 61,538 million USD, nearly doubling the previous year’s figure. In 2024, it decreases somewhat to 57,405 million USD but remains substantially elevated compared to the earlier years. This suggests major refinancing or new long-term borrowing undertaken in 2023, which sustains a relatively high level in the following year.
- Total Debt
- Total debt, reflecting the carrying amount, follows a similar pattern to the components described above. It decreases steadily from 39,836 million USD in 2020 to 35,829 million USD in 2022. Then, a sharp increase occurs in 2023, rising to 71,888 million USD, before declining to 64,351 million USD in 2024. The large jump in total debt during 2023 indicates a substantial increase in overall leverage, predominantly driven by increases in both short-term and long-term debt during that year.
Overall, the debt data indicates a period of relative stability and moderate reduction through 2022, followed by a pronounced increase in borrowing in 2023, with some reduction in 2024, yet maintaining substantially higher debt levels than at the start of the period. The patterns suggest strategic debt management activities, likely including refinancing or acquisition-related financing, impacting both short-term and long-term liabilities. This elevated debt level in the later years would bear implications for interest expenses, liquidity, and credit risk considerations.
Total Debt (Fair Value)
| Dec 31, 2024 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term borrowings, including current portion of long-term debt | |
| Long-term debt, excluding current portion | |
| Total debt (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2024-12-31).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Pfizer Inc., interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||
| Capitalized interest | |||||||||||
| Interest costs incurred |
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).
- Interest Expense
- Interest expense demonstrated a decreasing trend from 1,449 million USD in 2020 to 1,238 million USD in 2022. However, this trend reversed sharply, with the figure rising substantially to 2,209 million USD in 2023 and further to 3,091 million USD in 2024. This indicates a significant increase in the company's borrowing costs or interest rates in the most recent years.
- Capitalized Interest
- Capitalized interest showed a consistent upward trend throughout the period. It increased gradually from 96 million USD in 2020 to 182 million USD in 2024. This steady growth suggests ongoing investments in long-term assets or projects where interest costs are being capitalized rather than expensed immediately.
- Interest Costs Incurred
- Aggregate interest costs incurred, combining both interest expense and capitalized interest, initially declined from 1,545 million USD in 2020 to 1,362 million USD in 2022. Following that period, there was a marked increase to 2,369 million USD in 2023 and further to 3,273 million USD in 2024. The pattern closely mirrors the trend in interest expense, reflecting the overall rise in borrowing costs despite the steady capitalized interest growth.
- Summary of Trends
- The data reveals a notable shift around 2023, where both interest expense and total interest costs incurred increased significantly after a period of decline. This may reflect changes in debt levels, interest rates, or financing strategies. Capitalized interest consistently increased, highlighting ongoing capital investment activities. Overall, the financial burden of interest has risen sharply in recent years, which could impact profitability and cash flow considerations.
Adjusted Interest Coverage Ratio
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).
2024 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
The interest coverage ratio without capitalized interest demonstrates considerable fluctuation over the five-year period. It starts at 6.17 in 2020, climbs significantly to a peak of 29.05 in 2022, before experiencing a sharp decline to 1.48 in 2023. There is a partial recovery observed in 2024, where the ratio rises to 3.6. This pattern suggests a period of strengthening ability to cover interest expenses up to 2022, followed by a pronounced weakening in 2023, and a modest rebound in the subsequent year.
The adjusted interest coverage ratio, which accounts for capitalized interest, follows a similar trajectory to the unadjusted ratio. Beginning at 5.79 in 2020, it escalates to 26.41 by 2022, then declines sharply to 1.38 in 2023, and slightly improves to 3.4 in 2024. The parallel trends between the adjusted and unadjusted ratios imply that capitalized interest does not drastically alter the overall borrowing cost coverage pattern, though the adjusted ratio consistently remains marginally lower.
- Trend Analysis
- Both ratios display an overall increase in interest coverage ability through 2022, indicating improving earnings relative to interest expenses during this period.
- The steep decline in 2023 indicates a significant deterioration in the company’s capacity to meet interest obligations, potentially reflective of either declining earnings, increased interest costs, or a combination of both.
- The modest improvement in 2024 suggests some recovery, though coverage remains substantially below the peak levels observed in 2021 and 2022.
- Implications
- The sharp drop in coverage ratios post-2022 signals potential liquidity or profitability pressures.
- Persistent low ratios in 2023 and 2024 may necessitate closer examination of financial strategy, debt management, or earnings performance.