SLB N.V. (NYSE:SLB)

Solvency ratios demonstrate a generally improving financial position over the analyzed period, spanning from March 31, 2022, to December 31, 2025. A consistent theme across the metrics is a reduction in leverage, coupled with a strengthening ability to meet interest obligations. The initial period shows a decline in debt-related ratios, followed by some stabilization and then a renewed downward trend towards the end of the period.

Debt to Equity

The debt to equity ratio exhibited a decreasing trend from 0.92 in March 2022 to 0.45 in December 2025. The most significant reduction occurred between March 2022 and December 2022, falling from 0.92 to 0.69. A slight increase is observed in March 2025 to 0.72, but this is followed by further decline. This indicates a decreasing reliance on equity financing relative to debt.

Debt to Capital

The debt to capital ratio followed a similar pattern, decreasing from 0.48 in March 2022 to 0.31 in December 2025. The decline was relatively steady throughout the period, with minor fluctuations. This suggests a decreasing proportion of the company’s capital structure is financed by debt.

Debt to Assets

The debt to assets ratio also showed a consistent downward trend, moving from 0.34 in March 2022 to 0.21 in December 2025. This indicates a decreasing proportion of the company’s assets are financed by debt, suggesting reduced financial risk. The rate of decline appears consistent across the observed period.

Financial Leverage

Financial leverage, measured as total assets to equity, decreased from 2.73 in March 2022 to 2.10 in December 2025. While there were minor increases in some quarters, the overall trend is downward, indicating a reduced level of financial leverage. A slight increase is observed in March 2025 to 2.51, but this is followed by a decline.

Interest Coverage

The interest coverage ratio consistently increased from 5.99 in March 2022 to 8.69 in December 2025. This demonstrates a strengthening ability to meet interest obligations from operating income. The most substantial gains were observed between March 2022 and September 2022, and then again between March 2023 and December 2023. A slight decrease is observed in the final quarter, but the ratio remains robust.

In summary, the analyzed solvency ratios collectively suggest a strengthening financial position. The company has reduced its reliance on debt financing, lowered its overall leverage, and significantly improved its ability to cover interest expenses. These trends indicate decreasing financial risk and improved long-term financial stability.

The debt to equity ratio for the analyzed period demonstrates a generally decreasing trend, indicating a strengthening financial position with respect to leverage. Initial values suggest a relatively high level of debt compared to equity, but this relationship shifts over time.

Overall Trend

From March 31, 2022, through December 31, 2025, the debt to equity ratio exhibits a noticeable decline. The ratio begins at 0.92 and generally decreases, reaching 0.45 by the end of the observed period. This suggests a reduction in financial risk associated with debt financing.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

The period from March 31, 2022, to December 31, 2022, shows a consistent reduction in the debt to equity ratio, moving from 0.92 to 0.69. This decrease is likely attributable to a combination of debt reduction and increasing stockholders’ equity. Total debt decreased from US$14,086 million to US$12,226 million, while stockholders’ equity increased from US$15,347 million to US$17,685 million.

Stabilization and Fluctuation (Mar 31, 2023 – Dec 31, 2024)

Following the initial decline, the ratio stabilizes somewhat, fluctuating between 0.57 and 0.72. While there are quarterly variations, the ratio remains below the initial value of 0.92. Stockholders’ equity continues to grow, reaching US$21,071 million by December 31, 2024, while debt levels experience moderate changes.

Continued Decline (Mar 31, 2025 – Dec 31, 2025)

The final period analyzed demonstrates a renewed and more pronounced decrease in the debt to equity ratio, falling to 0.45 by December 31, 2025. This is driven by a more substantial reduction in total debt, which decreases to US$11,636 million, coupled with continued growth in stockholders’ equity, reaching US$26,109 million. This indicates a significant improvement in the company’s capital structure.

In summary, the observed trend in the debt to equity ratio suggests a deliberate or opportunistic strategy to reduce reliance on debt financing and strengthen the equity base. The decreasing ratio generally indicates improved financial health and reduced risk.

The debt to capital ratio for the analyzed period demonstrates a generally decreasing trend, with some fluctuations. Initially, the ratio exhibited a decline from 0.48 in March 2022 to 0.41 in December 2022. This suggests a strengthening of the company’s capital structure relative to its debt obligations during that timeframe. The ratio stabilized in the first half of 2023, hovering around 0.42. A further decrease was observed in the latter half of 2023, reaching 0.37 by December. This trend continued into 2024, with the ratio reaching a low of 0.36 in December. However, the ratio experienced an increase in the first half of 2025, rising to 0.40 in June, before decreasing again to 0.31 by December 2025.

Overall Trend

The overall trend indicates a reduction in financial leverage over the analyzed period. The ratio decreased from 0.48 to 0.31, suggesting the company has become less reliant on debt financing compared to equity financing. However, the recent increase in the first half of 2025 warrants monitoring.

Short-Term Fluctuations

While the long-term trend is downward, there are short-term fluctuations. The ratio remained relatively stable between March and June 2023. A slight increase occurred in the first half of 2024, followed by a decrease in the second half. The increase in the first half of 2025 is the most notable fluctuation, potentially indicating increased borrowing or a decrease in total capital.

Debt and Capital Movements

Total debt decreased from US$14,086 million in March 2022 to US$11,636 million in December 2025, contributing to the declining ratio. Total capital generally increased from US$29,433 million to US$37,745 million over the same period, further supporting the reduction in the debt to capital ratio. The increase in debt observed in the first half of 2025, coupled with a slower growth in capital, explains the ratio’s increase during that period.

Ratio Range

The debt to capital ratio fluctuated between a high of 0.48 and a low of 0.31. This suggests the company operates within a relatively controlled range of financial leverage. The recent movement towards the lower end of this range may indicate a more conservative financial strategy.

The debt-to-assets ratio for the analyzed period demonstrates a generally decreasing trend, with some fluctuations. Initially, the ratio exhibited a decline from 0.34 in March 2022 to 0.28 by December 2022. This suggests a strengthening of the company’s financial position through a reduction in relative debt levels or an increase in asset base during that timeframe.

Initial Decline (Mar 31, 2022 – Dec 31, 2022)

The ratio decreased consistently over this period, indicating a positive shift in the company’s solvency. Total debt decreased from US$14,086 million to US$12,226 million, while total assets remained relatively stable, contributing to the decline in the ratio.

Following the initial decline, the ratio experienced some volatility. It increased slightly to 0.29 in March 2023 and 0.30 in June 2023, before decreasing again to 0.25 in December 2023. This fluctuation suggests potential short-term changes in financing strategies or asset valuations.

Stabilization and Subsequent Decrease (Mar 31, 2023 – Dec 31, 2023)

The ratio remained relatively stable between 0.25 and 0.30 during this period, indicating a period of consolidation. While debt levels saw minor increases, asset growth largely offset these changes.

A more pronounced downward trend is observed from December 2023 through December 2025. The ratio decreased from 0.25 to 0.21, reaching its lowest point in the analyzed period. This decline is attributable to a combination of decreasing debt and increasing assets, particularly evident in the significant asset growth observed between September 2025 and December 2025.

Recent Trend (Dec 31, 2023 – Dec 31, 2025)

The most recent period shows a clear reduction in the debt-to-assets ratio. Total debt decreased from US$11,965 million to US$11,636 million, while total assets increased from US$47,957 million to US$54,868 million. This indicates improved financial leverage and a stronger capacity to meet long-term obligations.

Overall, the analyzed period demonstrates a general trend towards improved solvency, as indicated by the decreasing debt-to-assets ratio. While some short-term fluctuations occurred, the long-term trajectory suggests a strengthening financial position.

The financial leverage ratio for the analyzed period demonstrates a generally decreasing trend, with some fluctuations. Initially, the ratio exhibited a decline from 2.73 in March 2022 to 2.44 in December 2022. This trend continued, albeit at a slower pace, through September 2023, reaching a low of 2.36. A slight increase was observed in December 2023, moving to 2.38, before resuming a downward trajectory. The most significant decrease occurred between September 2025 and December 2025, falling from 2.15 to 2.10.

Overall Trend

The overall trend indicates a reduction in financial leverage over the observed period. This suggests a decreasing reliance on debt financing relative to equity. The ratio decreased from 2.73 to 2.10 over the entire period, representing a substantial shift in the company’s capital structure.

Short-Term Fluctuations

While the overall trend is downward, there are short-term fluctuations. For example, the ratio increased slightly from March 2023 (2.43) to June 2023 (2.41). Similarly, a minor increase is noted from September 2024 (2.31) to December 2024 (2.32). These fluctuations may be attributable to specific financing activities or changes in asset levels during those quarters.

Recent Period Analysis

The most recent quarters show a continued decrease in financial leverage. From March 2024 (2.31) to December 2025 (2.10), the ratio consistently declined. This suggests a deliberate strategy to reduce debt or increase equity, or a combination of both. The decrease from 2.51 in March 2025 to 2.10 in December 2025 is particularly noteworthy.

The observed trend in financial leverage suggests improving solvency and a potentially lower risk profile. However, a comprehensive assessment would require further analysis of the underlying components of the ratio, including debt levels and equity financing activities, alongside industry benchmarks.

The interest coverage ratio demonstrates a generally positive trend over the observed period, with some moderation in the most recent quarters. The ratio, calculated as Earnings Before Interest and Tax (EBIT) divided by Interest Expense, indicates the company’s ability to meet its interest obligations from operating earnings. An increasing ratio suggests improving solvency and a reduced risk of default.

Overall Trend

From March 31, 2022, through December 31, 2023, the interest coverage ratio exhibited a consistent upward trajectory, increasing from 5.99 to 11.50. This indicates a strengthening capacity to cover interest expenses with operating profit. However, the ratio has since shown signs of stabilization and a slight decline.

Growth Phase (March 31, 2022 – December 31, 2023)

The most significant gains in the ratio occurred between March 31, 2022, and December 31, 2023. This period saw the ratio nearly double, driven by increases in EBIT that outpaced increases in interest expense. The highest point was reached in December 2023 at 11.50.

Stabilization and Moderation (March 31, 2024 – December 31, 2025)

Beginning in March 31, 2024, the ratio stabilized, fluctuating between 11.98 and 12.19 for the subsequent three quarters. A downward trend is then observed in the final four quarters, with the ratio decreasing from 12.08 to 8.69 by December 31, 2025. This decline is attributable to a combination of decreasing EBIT and relatively stable interest expense.

EBIT and Interest Expense Relationship

Throughout the period, EBIT consistently exceeded interest expense by a substantial margin. While EBIT generally increased from 2022 to 2023, it has shown more volatility and a slight overall decrease from its peak in September 2023. Interest expense remained relatively stable, fluctuating within a narrow range between US$117 million and US$147 million, contributing to the observed changes in the interest coverage ratio.

In conclusion, while the company maintains a strong ability to cover its interest obligations, the recent moderation in the interest coverage ratio warrants monitoring. The decline from the peak in late 2023 suggests a potential weakening in this capacity, although the ratio remains at a healthy level.