Analysis of Debt
Total Debt (Carrying Amount)
Sherwin-Williams Co., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 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).
Total debt and finance lease liabilities, measured at carrying amount, exhibited a generally increasing trend over the five-year period. While fluctuations occurred, the ending balance in 2025 significantly surpassed the beginning balance in 2021. A closer examination of the components reveals shifts in the composition of this debt.
- Short-Term Borrowings
- Short-term borrowings demonstrated considerable volatility. An increase from US$763.5 million in 2021 to US$978.1 million in 2022 was followed by a substantial decrease to US$374.2 million in 2023. This was then partially offset by increases in 2024 and 2025, reaching US$1.2005 billion. This suggests a reliance on short-term financing that is actively managed, potentially to take advantage of interest rate conditions or to fund short-term operational needs.
- Current Portion of Long-Term Debt
- The current portion of long-term debt also showed significant variation. It decreased dramatically from US$260.6 million in 2021 to US$0.6 million in 2022, then increased substantially to US$1.0988 billion in 2023. This was followed by a decrease to US$1.0492 billion in 2024 and a further decrease to US$350.1 million in 2025. These fluctuations likely reflect debt maturity schedules and refinancing activities.
- Long-Term Debt
- Long-term debt, excluding the current portion, remained relatively stable between 2021 and 2023, fluctuating between US$8.3779 billion and US$9.591 billion. A slight decrease was observed in 2024, followed by a notable increase to US$9.3207 billion in 2025. This indicates a consistent, though not necessarily growing, reliance on long-term financing.
- Finance Lease Liabilities
- Finance lease liabilities, both current and long-term portions, were not reported for 2021 and 2022. They began to appear in 2024, with a combined value of US$200,000, and increased to US$369,800 in 2025. While still a relatively small component of total debt, the introduction and subsequent growth of these liabilities suggest an increasing utilization of lease financing.
Overall, the company’s total debt increased from US$9.615 billion in 2021 to US$11.0667 billion in 2025. The composition of this debt shifted, with notable changes in short-term borrowings and the current portion of long-term debt. Long-term debt remained a significant and relatively stable component, while finance lease liabilities represent a growing, though currently smaller, portion of the overall debt structure.
Total Debt (Fair Value)
| Dec 31, 2025 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Short-term borrowings | 1,200,500) |
| Publicly traded debt | 8,813,700) |
| Non-traded debt | 100) |
| Total long-term debt, including current portion (fair value) | 8,813,800) |
| Finance lease liabilities | 195,400) |
| Total debt and finance lease liabilities (fair value) | 10,209,700) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.92 |
Based on: 10-K (reporting date: 2025-12-31).
Weighted-average Interest Rate on Debt
Weighted average interest rate on debt and finance lease liabilities: 3.86%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 3.45% | 1,497,500) | 51,664) | |
| 4.50% | 1,234,500) | 55,553) | |
| 2.95% | 796,500) | 23,497) | |
| 3.80% | 544,000) | 20,672) | |
| 2.30% | 498,000) | 11,454) | |
| 4.30% | 497,100) | 21,375) | |
| 2.20% | 496,100) | 10,914) | |
| 4.50% | 495,500) | 22,298) | |
| 5.15% | 495,400) | 25,513) | |
| 3.30% | 494,800) | 16,328) | |
| 2.90% | 492,400) | 14,280) | |
| 4.80% | 445,700) | 21,394) | |
| 4.55% | 398,400) | 18,127) | |
| 4.55% | 395,600) | 18,000) | |
| 3.95% | 350,100) | 13,829) | |
| 4.00% | 297,300) | 11,892) | |
| 4.40% | 241,800) | 10,639) | |
| 8.00% | 100) | 8) | |
| 4.40% | 281,400) | 12,382) | |
| 4.40% | 625,000) | 27,500) | |
| 2.80% | 293,600) | 8,221) | |
| 2.80% | 500) | 14) | |
| 5.70% | 195,400) | 11,138) | |
| Total | 11,066,700) | 426,690) | |
| 3.86% | |||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × 426,690 ÷ 11,066,700 = 3.86%
Interest Costs Incurred
Sherwin-Williams Co., interest costs incurred
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 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).
Interest expense exhibited an increasing trend over the five-year period. From 2021 to 2023, interest expense rose consistently, followed by a slight decrease in 2024, and then a further increase in 2025. Capitalized interest, representing interest costs deferred as part of asset acquisition, was first reported in 2023 and increased significantly through 2024 before decreasing in 2025. Interest costs incurred, calculated by summing interest expense and capitalized interest, mirrored the overall trend of increasing costs, with fluctuations consistent with the capitalized interest component.
- Interest Expense Trend
- Interest expense increased from US$334.7 million in 2021 to US$390.8 million in 2022, representing a 16.8% increase. This growth continued into 2023, reaching US$417.5 million, a 6.8% increase from the prior year. A minor decrease was observed in 2024, with interest expense falling to US$415.7 million. However, 2025 saw a further increase to US$465.0 million, representing a 11.9% increase from 2024.
- Capitalized Interest Trend
- Capitalized interest was not reported in 2021 or 2022. In 2023, it was reported at US$30.7 million. This figure increased substantially in 2024 to US$59.6 million, a 94.1% increase. In 2025, capitalized interest decreased to US$46.1 million, a 22.8% decrease from 2024.
- Interest Costs Incurred Trend
- Interest costs incurred followed the trend of the underlying components. The figure rose from US$334.7 million in 2021 to US$390.8 million in 2022, then to US$448.2 million in 2023. A slight increase was observed in 2024, reaching US$475.3 million, and continued into 2025, reaching US$511.1 million. The increases in 2023, 2024, and 2025 were influenced by the inclusion of capitalized interest.
The increasing trend in interest costs incurred suggests a growing financial burden related to debt financing. The fluctuations introduced by capitalized interest indicate potential changes in the level of qualifying asset construction or acquisition activity. Further investigation into the underlying debt structure and capital expenditure projects would be necessary to fully understand these trends.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2025-12-31), 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).
2025 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= 3,803,200 ÷ 465,000 = 8.18
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 3,803,200 ÷ 511,100 = 7.44
The interest coverage ratios demonstrate a generally stable ability to meet interest obligations over the five-year period. However, a closer examination reveals nuanced trends when considering the impact of capitalized interest.
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio, excluding capitalized interest, exhibits a slight fluctuation. It begins at 7.72 in 2021, decreases to 7.58 in 2022, then increases to a peak of 9.30 in 2024. A subsequent decline to 8.18 is observed in 2025. Overall, the ratio suggests a consistently healthy capacity to cover interest expenses from earnings before interest and taxes.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio, which incorporates the effect of capitalized interest, presents a more subdued pattern. Starting at 7.72 in 2021, it dips to 7.58 in 2022, and then rises modestly to 7.87 in 2023 and 8.14 in 2024. A more noticeable decrease to 7.44 is recorded in 2025. The inclusion of capitalized interest appears to dampen the overall coverage, and the 2025 value represents the lowest point within the observed timeframe.
- Comparative Analysis
- The difference between the two ratios remains constant at 0.00 for 2021 and 2022. The gap widens slightly in 2023 and 2024, indicating a growing impact from capitalized interest. The largest divergence occurs in 2025, where the adjusted ratio falls significantly below the unadjusted ratio. This suggests that capitalized interest is becoming a more substantial factor in assessing the company’s true interest-bearing capacity, and its impact is most pronounced in the final year of the period.
In summary, while both ratios indicate adequate interest coverage, the adjusted ratio provides a more conservative and potentially realistic view of the company’s ability to service its debt, particularly as the effect of capitalized interest becomes more prominent.