SLB N.V. (NYSE:SLB)

The analysis of the financial leverage and coverage ratios over the five-year period reveals several noteworthy trends indicating improving financial stability and creditworthiness.

Leverage Ratios

The debt-to-equity ratio shows a consistent decline from 1.4 in 2020 to 0.57 in 2024, reflecting a significant reduction in reliance on debt financing relative to shareholders' equity. Including operating lease liabilities, the ratio also follows a downward trajectory, decreasing from 1.48 to 0.61 over the same period.

The debt-to-capital and debt-to-capital (including operating lease liability) ratios further support this observation, each declining steadily from around 0.58-0.60 in 2020 to approximately 0.36-0.38 in 2024. This indicates a gradual shift towards a more balanced capital structure with a lower proportion of debt.

The debt-to-assets ratios, both excluding and including operating lease liabilities, similarly decrease from roughly 0.40-0.42 in 2020 to roughly 0.25-0.26 in 2024, suggesting that the company's total assets are increasingly funded by equity rather than debt.

Financial leverage also diminishes over time, moving from 3.52 in 2020 to 2.32 in 2024. The declining trend reflects a reduction in the reliance on debt to amplify returns, thereby indicating a more conservative financial stance.

Interest and Fixed Charge Coverage Ratios

Interest coverage ratio improves substantially from a negative value of -19.07 in 2020 to a positive 12.08 in 2024, highlighting a significant enhancement in the company’s ability to meet interest obligations from its operating earnings. The drastic improvement from negative to positive coverage signals the company overcame severe profitability or earnings difficulties experienced in 2020.

Similarly, fixed charge coverage ratio improves from -4.76 in 2020 to 3.97 in 2024, indicating growing capacity to cover fixed financial charges such as lease payments and interest. The progression from negative to positive coverage further reinforces the improved earnings performance and operational stability over the period.

Overall, the financial ratios denote a clear trend of strengthening financial health characterized by reduced leverage and enhanced ability to cover financial obligations. This pattern suggests prudent debt management, improved earnings, and a more robust balance sheet over the analyzed timeframe.

Total debt

The total debt shows a consistent downward trend from 2020 to 2023, decreasing from 16,886 million US dollars to 11,965 million US dollars. However, in 2024, there is a slight increase to 12,074 million US dollars, indicating a minor reversal of the prior decline.

Total SLB stockholders’ equity

The stockholders' equity steadily increases over the entire period, rising from 12,071 million US dollars in 2020 to 21,130 million US dollars in 2024. This growth suggests a strengthening equity base and improved financial stability over time.

Debt to equity ratio

The debt to equity ratio declines significantly from 1.4 in 2020 to 0.57 in 2024. This decline reflects a reduction in leverage, driven by the combined effects of decreasing debt and increasing equity. The ratio stabilizes at a lower level in 2023 and 2024, indicating a more conservative capital structure in recent years.

Overall insights

Over the analyzed period, there is a clear pattern of deleveraging accompanied by equity growth. The company has reduced its reliance on debt financing while strengthening its equity position, resulting in a healthier balance sheet. The slight uptick in total debt in 2024 warrants attention but does not significantly alter the overall trend toward lower leverage. These trends imply improved financial risk management and a more robust capital structure.

The financial data over the five-year period reveals several notable trends in the company's leverage and equity structure. The total debt, inclusive of operating lease liabilities, has shown a consistent decline from 17,897 million US dollars at the end of 2020 to 12,816 million US dollars by the end of 2024. This demonstrates a strategic reduction in debt levels over the observed timeframe.

Conversely, the total stockholders’ equity has exhibited robust growth throughout the same period. Starting at 12,071 million US dollars in 2020, equity increased steadily, reaching 21,130 million US dollars by the close of 2024. This indicates a strengthening of the company's capital base and improved net asset value.

In line with these changes, the debt-to-equity ratio has declined significantly. From a high of 1.48 in 2020, the ratio decreased each subsequent year, reaching 0.61 by 2024. This ratio trend reflects an improving financial leverage position, with the company moving towards a stronger equity financing structure and lower relative debt burden.

Total debt (including operating lease liability)

Decreased consistently from 17,897 million US dollars in 2020 to 12,816 million in 2024, demonstrating effective debt reduction strategies.

Total stockholders’ equity

Increased steadily from 12,071 million US dollars in 2020 to 21,130 million in 2024, indicating capital growth and enhanced financial stability.

Debt to equity ratio

Declined from 1.48 in 2020 to 0.61 in 2024, signaling an improved balance between debt and equity financing and reduced financial risk.

Total Debt

Over the five-year period, total debt exhibits a consistent decreasing trend from 16,886 million US dollars at the end of 2020 to 12,074 million US dollars by the end of 2024. The decline is particularly notable between 2020 and 2023, where debt decreases steadily, followed by a slight increase in 2024.

Total Capital

Total capital demonstrates a gradual increase throughout the observed period, growing from 28,957 million US dollars in 2020 to 33,204 million US dollars in 2024. The growth accelerates slightly from 2022 onward, indicating the company's expanding capital base.

Debt to Capital Ratio

The debt to capital ratio decreases progressively from 0.58 in 2020 to 0.36 by 2024. This reduction reflects a lowering reliance on debt financing relative to the total capital. The most significant decline occurs between 2020 and 2022, with a smaller rate of decrease in subsequent years, suggesting improved financial leverage and potentially lower financial risk over time.

Total Debt (including operating lease liability)

The total debt decreased consistently from 17,897 million US dollars at the end of 2020 to 12,816 million US dollars by the end of 2024. This indicates a steady reduction of liabilities over the five-year period, with the most significant drop occurring between 2020 and 2022. Between 2022 and 2024, the debt levels stabilized with minor fluctuations, suggesting improved control over debt management or repayment efforts.

Total Capital (including operating lease liability)

Total capital showed an overall upward trend throughout the period under review, starting at 29,968 million US dollars in 2020 and rising to 33,946 million US dollars in 2024. Growth was gradual from 2020 through 2022, followed by more pronounced increases in 2023 and 2024. This suggests that the company expanded its capital base, possibly through retained earnings or equity financing.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio consistently declined over the five years, moving from 0.6 in 2020 down to 0.38 in 2024. This decreasing ratio signifies an improving capital structure characterized by lower reliance on debt financing relative to total capital. The ratio decline was most notable between 2020 and 2022, paralleling the reduction in total debt, and indicates enhanced financial stability and potentially lower financial risk.

Summary of Financial Trends

Overall, the data reveals a positive trend in financial stability, marked by a reduction in debt levels even as total capital increased. The concurrent decline in the debt to capital ratio suggests that the company has placed emphasis on strengthening its balance sheet and reducing leverage. These developments likely reflect prudent financial management aimed at lowering risk exposure and supporting sustainable growth.

The financial data reveals several notable trends over the five-year period ending in 2024.

Total Debt

Total debt consistently decreased from 2020 to 2023, dropping from $16,886 million to $11,965 million. This downward trend indicates a strong effort to reduce leverage or refinance obligations at more favorable terms. However, in 2024, total debt slightly increased to $12,074 million, suggesting a possible change in financing strategy or additional borrowing.

Total Assets

Total assets experienced a slight decline from $42,434 million in 2020 to $41,511 million in 2021, followed by steady growth through 2024, reaching $48,935 million. The growth in assets, particularly from 2021 onwards, indicates ongoing investment or asset accumulation, contributing positively to the company’s balance sheet strength.

Debt to Assets Ratio

The debt to assets ratio showed a significant improvement, decreasing from 0.40 in 2020 to 0.25 by 2023, where it remained in 2024. This indicates a reduction in leverage and an improved capital structure, reflecting a more conservative financial position and increased asset base relative to debt.

Overall, the company has successfully reduced its debt burden while steadily expanding its asset base over the period. The notable improvement in the debt to assets ratio suggests enhanced financial stability and prudent management of leverage. The slight increase in total debt in 2024 warrants attention but does not overshadow the positive trends observed across the earlier years.

Total Debt (including operating lease liability)

The total debt exhibits a declining trend from 2020 through 2023, decreasing from 17,897 million US dollars to 12,775 million US dollars. There is a slight increase in 2024 to 12,816 million US dollars, indicating a stabilization in debt levels after several years of reduction.

Total Assets

Total assets show an overall growth trajectory across the five-year period. Starting at 42,434 million US dollars in 2020, assets slightly decreased in 2021 to 41,511 million US dollars but subsequently increased each year, reaching 48,935 million US dollars by the end of 2024. This indicates expansion and asset accumulation in recent years.

Debt to Assets Ratio (including operating lease liability)

The debt to assets ratio has steadily declined from 0.42 in 2020 to 0.26 in 2024. This continuous decrease suggests an improvement in financial leverage and a stronger balance sheet position, reflecting a strategy focused on reducing debt relative to asset growth.

Overall Financial Position

The data reveals a clear reduction in indebtedness combined with an expansion of asset base, leading to enhanced financial stability. The modest uptick in total debt in 2024 does not materially alter the positive trend of declining leverage. This pattern may reflect prudent debt management and investment in asset growth, resulting in improved solvency and potentially greater financial flexibility going forward.

The financial data over the five-year period shows several notable trends regarding the company's asset base, equity position, and leverage.

Total Assets

The total assets demonstrate an overall upward trajectory from 42,434 million US dollars at the end of 2020 to 48,935 million in 2024. There is a slight dip observed in 2021 compared to 2020, but from 2021 onwards, total assets grew steadily, with the most substantial increase occurring between 2022 and 2023.

Total Stockholders’ Equity

Stockholders’ equity consistently increased throughout the period, rising from 12,071 million US dollars in 2020 to 21,130 million in 2024. This reflects a strong gain in net worth and suggests continued profitability or capital infusions. The equity growth appears particularly strong from 2021 onward, showing a continuous strengthening of the company's capital base.

Financial Leverage

The financial leverage ratio shows a declining trend from 3.52 in 2020 to 2.32 in 2024. This indicates a reduction in reliance on borrowed funds relative to equity. The steady reduction in leverage suggests an improvement in the financial structure, potentially lowering financial risk and enhancing balance sheet stability.

In summary, the company has expanded its asset base moderately over the reviewed period while significantly bolstering its equity. Concurrently, the decrease in financial leverage points to a strategic emphasis on strengthening equity relative to debt, indicating a more conservative and potentially more resilient financial position.

The financial data reveals a significant turnaround in the earnings before interest and tax (EBIT) over the analyzed five-year period. Initially, the EBIT was substantially negative, indicating operational losses. However, from the following year onward, there is a consistent and pronounced improvement, culminating in a steady increase in EBIT from 2,913 million US dollars to 6,184 million US dollars by the last period.

The interest expense has demonstrated relative stability, fluctuating slightly but remaining within a narrow range around 500 million US dollars after an initial value of 563 million US dollars. This suggests a controlled cost of debt servicing throughout the years in question.

The interest coverage ratio, which measures the company's ability to meet its interest obligations from operating earnings, exhibits a dramatic positive shift. From a deeply negative figure below -19, associated with negative EBIT, the ratio improves steadily and substantially, reaching over 12 times coverage by the latest year. This implies the company's earnings have become more than sufficient to cover interest expenses comfortably, reflecting strong financial health and reduced risk from debt servicing.

EBIT Trends

Marked recovery from heavy losses to consistent operational profits, indicating improved profitability and likely operational efficiency.

Interest Expense Behavior

Relatively stable interest costs, suggesting consistent debt levels or successful refinancing at stable rates.

Interest Coverage Ratio

Significant enhancement, moving from a critical deficit state to robust earnings capacity relative to interest obligations, which signals improved financial stability and creditworthiness.

Earnings before Fixed Charges and Tax

The company experienced a significant turnaround between 2020 and 2021, shifting from a substantial negative earnings position of -9335 million US dollars to a positive 4113 million US dollars. This positive trend continued steadily over the following years, reaching 7584 million US dollars by the end of 2024. The consistent yearly increases indicate improving operational performance and profitability over the analyzed period.

Fixed Charges

Fixed charges showed a slight decline from 1963 million US dollars in 2020 to 1690 million in 2022, followed by a moderate increase in 2023 and 2024 to 1903 million and 1912 million, respectively. Overall, fixed charges have remained relatively stable with minor fluctuations, suggesting controlled interest and other fixed financial costs.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio mirrored the improvement in earnings, moving from a negative ratio of -4.76 in 2020 to a positive 2.37 in 2021, indicating that earnings became sufficient to cover fixed charges starting in 2021. The ratio improved further in subsequent years, reaching 3.97 by 2024, demonstrating increasing financial resilience and an enhanced ability to cover fixed financial obligations comfortably.