Schlumberger Ltd. (NYSE:SLB)

Debt Ratios Trend Analysis

Over the examined period, all measures of debt relative to equity, capital, and assets demonstrate a consistent declining trend. The standard debt to equity ratio decreased markedly from 1.4 in 2020 to 0.57 in 2024, reflecting a significant reduction in reliance on debt financing versus shareholders’ equity. Similarly, when including operating lease liabilities, this ratio also declined from 1.48 to 0.61 over the same period, indicating improved financial structure even when lease obligations are considered.

The debt to capital ratio showed a comparable downtrend, dropping from 0.58 in 2020 to 0.36 in 2024, with the adjusted figure including operating lease liabilities decreasing from 0.6 to 0.38. This suggests a stronger capital base and less leveraged capital structure over time.

The debt to assets ratio also declined steadily from 0.4 in 2020 to 0.25 in 2024, with the inclusion of lease liabilities reflecting a decrease from 0.42 to 0.26. The consistency of the decline across all debt-to-asset measures highlights an overall reduction in total indebtedness relative to the company’s asset base.

Financial Leverage

Financial leverage ratios have decreased from 3.52 in 2020 to 2.32 in 2024, showing a consistent trend towards a more conservative capital structure. This reduction suggests that the company relies less on borrowed funds relative to equity to finance its assets, which could provide greater financial flexibility.

Interest and Fixed Charge Coverage

There has been a notable improvement in the company’s ability to cover interest expenses. The interest coverage ratio improved dramatically from a negative value of -19.07 in 2020 to a positive 12.08 in 2024, indicating enhanced earnings relative to interest obligations and improved operational profitability or reduced interest costs.

Fixed charge coverage followed a similar positive trend, increasing from -4.76 in 2020 to 3.97 in 2024. This improvement reflects a better capacity to meet fixed financial obligations, which may include rent, interest, and lease payments, confirming strengthening operational cash flows.

Summary

The company has consistently reduced its leverage across all examined ratios from 2020 to 2024, creating a stronger financial position with less dependency on debt. Enhanced interest and fixed charge coverage ratios point to improved earnings and cash flow generation, enabling the company to service its financial commitments more comfortably. Overall, the trends suggest a move towards greater financial stability and reduced risk from debt obligations.

The analysis of the provided financial data over the five-year period reveals distinct trends in the company’s capital structure, particularly in debt levels, equity, and the debt-to-equity ratio.

Total Debt

Total debt decreased consistently from US$16,886 million in 2020 to US$12,074 million in 2024. The most substantial decline occurred between 2020 and 2021, followed by more moderate reductions over subsequent years, with a slight increase noted between 2023 and 2024.

Total Stockholders’ Equity

Stockholders’ equity showed a steady and significant increase each year, rising from US$12,071 million in 2020 to US$21,130 million in 2024. The growth was continuous over the entire period with no interruptions, indicating strengthening equity capital.

Debt to Equity Ratio

The debt to equity ratio declined markedly from 1.4 in 2020 to 0.57 in 2024. This progressive decline reflects the combined effect of decreasing debt levels and increasing equity, suggesting an improvement in the company's financial leverage and potentially lower financial risk.

Overall, the data indicates a strategic move towards a stronger equity position paired with a reduction in reliance on debt financing. The lowering debt to equity ratio suggests enhanced financial stability and possibly a more conservative capital structure over the observed period.

The financial data reveals several notable trends over the five-year period. First, the total debt, inclusive of operating lease liabilities, shows a consistent downward trend from 17,897 million US dollars in 2020 to 12,816 million US dollars in 2024. The most significant reductions occur between 2020 and 2022, after which the debt levels stabilize somewhat around the 12,700 to 12,800 million range.

Concurrently, total stockholders' equity experiences steady growth. Starting at 12,071 million US dollars in 2020, equity increases each year to reach 21,130 million US dollars by the end of 2024. This consistent rise indicates a strengthening equity base and possibly retained earnings accumulation or new equity issuance.

The debt-to-equity ratio, which measures leverage by comparing total debt to shareholders' equity, correspondingly decreases from 1.48 in 2020 to 0.61 in 2024. This decline reinforces the observation of reduced leverage, reflecting lower reliance on debt financing relative to equity. The sharpest drop is observed between 2020 and 2022, aligned with the substantial decreases in debt and the growth in equity during that period. From 2022 onwards, the ratio continues to improve but at a slower pace.

Overall, the trends indicate a strategic focus on debt reduction and capital structure strengthening. The company's leverage profile improves considerably, which may enhance financial stability and reduce risk exposure.

The financial data reveals several notable trends over the analyzed period.

Total Debt

The total debt shows a consistent decrease from US$16,886 million in 2020 to US$12,074 million in 2024. This represents a reduction of approximately 28.5%, indicating a strategic effort to lower the company’s debt obligations over the five-year span.

Total Capital

Total capital demonstrates a steady increase throughout the period, rising from US$28,957 million in 2020 to US$33,204 million in 2024. This reflects a growth of around 14.7%, suggesting the company has been successful in augmenting its capital base, possibly through retained earnings, equity issuance, or other means of financing.

Debt to Capital Ratio

The debt to capital ratio exhibits a clear downward trend, beginning at 0.58 in 2020 and decreasing to 0.36 by 2024. This decline aligns with the reduction in total debt and the increase in total capital, indicating an improvement in the company’s financial leverage and potentially lower financial risk.

Overall, the company appears to have enhanced its financial position by reducing its leverage and strengthening its capital structure over the examined period. The trends suggest improved creditworthiness and a focus on balancing growth with prudent debt management.

The financial data presents clear trends in the company's capital structure over the observed five-year period ending December 31, 2024.

Total debt (including operating lease liability)

The total debt has demonstrated a consistent downward trend from 17,897 million USD in 2020 to a low of 12,775 million USD in 2023, followed by a slight increase to 12,816 million USD in 2024. This reduction over the initial years suggests an ongoing effort to deleverage the company's balance sheet during this period, with a stabilization evident in the last two years.

Total capital (including operating lease liability)

Total capital has exhibited a steady increase, rising from 29,968 million USD in 2020 to 33,946 million USD in 2024. This upward movement indicates growth in the company's overall capital base, potentially reflecting retained earnings, equity issuances, or appreciation in asset values.

Debt to capital (including operating lease liability)

The ratio of debt to total capital has consistently decreased from 0.60 in 2020 to 0.38 in 2024. This trend aligns with the reduction in total debt and growth in total capital, indicating a progressive strengthening of the company's financial leverage position and an improvement in solvency metrics.

Overall, the data reveals a strategic focus on reducing financial leverage while expanding the capital base, contributing to a lower dependency on debt financing and enhancing financial stability over the analyzed period.

Total Debt

The total debt demonstrates a consistent downward trend from 2020 to 2023, declining from 16,886 million US dollars to 11,965 million US dollars. However, in 2024, there is a slight uptick to 12,074 million US dollars, indicating a minor increase after several years of reduction.

Total Assets

Total assets reveal a generally increasing trend over the five-year period. The asset base decreased slightly from 42,434 million US dollars in 2020 to 41,511 million in 2021 but subsequently rose each year, reaching 48,935 million US dollars by the end of 2024. This steady growth suggests expansion or accumulation of resources.

Debt to Assets Ratio

The debt to assets ratio consistently decreases from 0.40 in 2020 to 0.25 in 2023, showing improved leverage and a stronger balance sheet over time. The ratio remains stable at 0.25 in 2024 despite the small increase in total debt, indicating that asset growth has matched or offset the marginal rise in debt.

Total debt (including operating lease liability)

The total debt decreased consistently from 17,897 million US dollars in 2020 to 12,816 million US dollars by 2024. This reflects a steady reduction in debt levels over the five-year period, with the most notable decline occurring between 2020 and 2022. After 2022, the debt level stabilized, showing only slight fluctuations between 2023 and 2024.

Total assets

Total assets showed an overall upward trend, increasing from 42,434 million US dollars in 2020 to 48,935 million US dollars in 2024. Although there was a minor dip from 2020 to 2021, asset levels rebounded and grew significantly thereafter, particularly between 2022 and 2023. The continued growth in assets indicates expansion or accumulation of resources over the observed period.

Debt to assets (including operating lease liability)

The debt-to-assets ratio exhibited a steady decline from 0.42 in 2020 to 0.26 in 2024. This decreasing ratio suggests an improving financial leverage position and reduced reliance on debt relative to the company’s asset base. The improvements align with the observed reduction in total debt and the increase in total assets, signaling enhanced balance sheet strength.

Total assets

The total assets demonstrate a generally upward trend over the five-year period, increasing from US$42,434 million at the end of 2020 to US$48,935 million by the end of 2024. There was a slight dip in 2021 to US$41,511 million, but subsequent years saw steady growth. This indicates ongoing asset expansion and investment.

Total SLB stockholders’ equity

The stockholders’ equity shows consistent and substantial growth throughout the period. Starting at US$12,071 million in 2020, it rose significantly each year, reaching US$21,130 million by the end of 2024. This reflects increasing retained earnings or additional equity contributions, enhancing the company's net worth.

Financial leverage

Financial leverage, expressed as a ratio, declined steadily from 3.52 in 2020 to 2.32 in 2024. This reduction indicates a decreasing reliance on debt relative to equity financing, suggesting a strengthening capital structure and potentially lower financial risk.

Earnings before interest and tax (EBIT)

The EBIT showed a significant negative value in 2020 at -10,735 million US dollars, indicating a substantial loss for that year. However, there was a notable turnaround in 2021, with EBIT increasing to 2,913 million US dollars. This positive trend continued in the subsequent years, reaching 4,761 million in 2022, 5,785 million in 2023, and 6,184 million in 2024. This pattern reflects a strong recovery and progressive improvement in operational profitability over the observed period.

Interest expense

Interest expense exhibited a slight decreasing trend from 563 million US dollars in 2020 to 490 million in 2022, followed by a modest increase to 503 million in 2023 and 512 million in 2024. Overall, the interest expense remained relatively stable with minor fluctuations, suggesting consistent borrowing costs or interest obligations during these years.

Interest coverage ratio

The interest coverage ratio improved dramatically, starting from a deeply negative ratio of -19.07 in 2020, reflecting the company's inability to cover interest expenses from EBIT that year. From 2021 onwards, the ratio rose substantially to 5.4, then further increased to 9.72 in 2022, 11.5 in 2023, and 12.08 in 2024. This upward trend indicates a significant strengthening in the company's ability to meet interest obligations through operational earnings, with growing financial stability and reduced risk of default on interest payments.

The financial data reveals significant developments in the earnings before fixed charges and tax over the five-year period. Starting with a substantial negative figure in 2020, the company demonstrated a robust recovery in subsequent years, progressing to positive values consistently from 2021 onward. This upward trend signifies improved operational performance and profitability before accounting for fixed financial obligations.

Fixed charges exhibited a moderate decline between 2020 and 2022, reaching their lowest point in 2022, followed by a slight increase in the two most recent years. This pattern suggests that while the company's financial obligations related to fixed charges were somewhat reduced during the early recovery phase, there was a modest rise in these costs in the latter years, which may reflect either increased debt service or other fixed financial commitments.

Fixed charge coverage ratio

The fixed charge coverage ratio, a measure of the company's ability to meet fixed financial obligations from earnings, showed a remarkable improvement. Initially, the ratio was significantly negative in 2020, indicating an inability to cover fixed charges from earnings. However, from 2021 onwards, the ratio improved markedly each year, reaching nearly 4 by the end of 2024. This trend indicates enhanced financial stability and a stronger capacity to service fixed charges through operational earnings.

Overall, the financial indicators collectively depict a transition from a financially distressed situation in 2020 to a healthier and more stable financial position by 2024. The consistent improvement in earnings before fixed charges and tax, along with a stable to slightly increasing level of fixed charges and a strengthening coverage ratio, reflects positively on the company's operational and financial management.