Sherwin-Williams Co. (NYSE:SHW)

Debt to equity

The debt to equity ratio increased significantly from 2.3 in 2020 to a peak of 3.95 in 2021, indicating a substantial rise in leverage relative to equity. Following this peak, the ratio steadily decreased to 2.49 by 2024, suggesting a gradual reduction in reliance on debt financing over this period.

Debt to equity (including operating lease liability)

This ratio follows a similar pattern to the standard debt to equity ratio, peaking at 4.72 in 2021 and then declining each year to reach 2.99 by 2024. The inclusion of operating lease liabilities consistently results in higher leverage ratios throughout the period, but the downward trend indicates improving financial structure.

Debt to capital

The debt to capital ratio rose from 0.7 in 2020 to 0.8 in 2021, reflecting increased debt in the capital structure. After 2021, it decreased to 0.71 by 2024. This reduction points to a relatively stronger capital base or a reduction in debt load over time.

Debt to capital (including operating lease liability)

Including operating lease liabilities, the ratio increased from 0.74 in 2020 to 0.83 in 2021, then gradually declined to 0.75 by 2024. The improvement in later years indicates a modest enhancement in capital structure despite lease obligations.

Debt to assets

The debt to assets ratio rose from 0.41 in 2020 to 0.47 in 2021 and remained steady at 0.47 in 2022. It then decreased to 0.43 by 2024, implying a slight reduction in leverage compared to total assets, potentially reflecting asset growth or debt repayment.

Debt to assets (including operating lease liability)

This ratio showed a similar pattern, increasing from 0.5 in 2020 to 0.56 in 2021 before declining to 0.51 by 2024. The presence of operating lease obligations increases the ratio, but the overall downward trend signals improving asset coverage of liabilities.

Financial leverage

Financial leverage rose markedly from 5.65 in 2020 to 8.48 in 2021, indicating intensified use of debt relative to equity. The ratio then steadily declined to 5.83 in 2024, which may reflect deleveraging efforts or equity growth enhancing financial stability.

Interest coverage

The interest coverage ratio declined slightly from 8.4 in 2020 to 7.72 in 2021 and 7.58 in 2022, indicating reduced ability to cover interest expenses in the earlier years. However, the ratio improved in subsequent years, reaching 9.3 in 2024, which suggests stronger earnings relative to interest costs and better financial health.

Fixed charge coverage

The fixed charge coverage ratio decreased from 4.13 in 2020 to 3.77 in 2021, then rebounded to 4.53 by 2024. This trend indicates an initial tightening in the ability to cover fixed charges, followed by a recovery and stronger coverage in later years.

Total debt

The total debt demonstrated an overall upward trend from 2020 to 2024. It increased from approximately 8.29 billion USD in 2020 to a peak of around 10.57 billion USD in 2022. Following that peak, the debt slightly decreased in 2023 to approximately 9.85 billion USD but rose again in 2024 to nearly 10.08 billion USD. This indicates fluctuating borrowing levels with a general increase over the period examined.

Shareholders' equity

Shareholders' equity showed considerable variability over the five-year span. It started at 3.61 billion USD in 2020 but dropped significantly to 2.44 billion USD in 2021. After this decline, equity recovered steadily, increasing to 3.10 billion USD in 2022, 3.72 billion USD in 2023, and further to 4.05 billion USD in 2024. The trend suggests an initial reduction in equity followed by a consistent restoration and growth in shareholder value.

Debt to equity ratio

The debt-to-equity ratio increased sharply from 2.3 in 2020 to 3.95 in 2021, reflecting a rise in leverage, likely due to the decrease in equity combined with increased debt. Subsequently, the ratio decreased over the next three years, falling to 3.41 in 2022, 2.65 in 2023, and 2.49 in 2024. This reduction aligns with the recovery in equity and relative stability of debt, indicating a shift towards a less leveraged capital structure by the end of the period.

Overall insights

The company experienced increased leverage in 2021 driven primarily by a significant drop in shareholders’ equity alongside rising debt. However, from 2022 onwards, shareholders’ equity progressively increased, helping to reduce the debt-to-equity ratio despite sustained high levels of debt. The fluctuations in total debt and equity suggest periods of financial restructuring and balance sheet improvements. By 2024, the company appears to have strengthened its equity position while maintaining debt levels close to their peak, resulting in a more balanced capital structure compared to the elevated leverage observed in 2021.

Total Debt (including operating lease liability)

The total debt exhibits an overall increasing trend from 10,113,500 thousand US dollars in 2020 to a peak of 12,507,900 thousand in 2022. Subsequently, there is a reduction to 11,809,700 thousand in 2023, followed by a slight increase to 12,102,600 thousand in 2024. This pattern indicates a general increase in debt levels over the five-year period, with some fluctuations in the most recent years.

Shareholders' Equity

Shareholders' equity demonstrates variability over the analyzed years. It declines notably from 3,610,800 thousand US dollars in 2020 to 2,437,200 thousand in 2021, reflecting a substantial decrease. Thereafter, equity increases consistently to 3,102,100 thousand in 2022, 3,715,800 thousand in 2023, and reaches 4,051,200 thousand in 2024, surpassing the initial 2020 level. This recovery and growth suggest improved retained earnings or capital injections during this period.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio follows a rising trend from 2.8 in 2020 to a peak of 4.72 in 2021, indicating increased leverage and higher risk exposure relative to equity. Subsequently, the ratio declines to 4.03 in 2022, 3.18 in 2023, and further to 2.99 in 2024. This trend corresponds with the reduction in debt relative to the larger increase in equity observed after 2021, suggesting a strengthening financial position and reduced leverage risk in the later years.

Total Debt

The total debt shows an upward trend from 2020 to 2022, increasing from 8,292,100 thousand US dollars in 2020 to 10,569,700 thousand US dollars in 2022. However, there is a decline in 2023 to 9,850,900 thousand US dollars, followed by a slight increase in 2024 to 10,077,700 thousand US dollars. Overall, total debt remains elevated relative to the 2020 level.

Total Capital

Total capital exhibits consistent growth over the analyzed periods, rising from 11,902,900 thousand US dollars in 2020 to 14,128,900 thousand US dollars in 2024. The increase is steady each year, although the growth rate moderates slightly after 2022.

Debt to Capital Ratio

The debt to capital ratio peaks in 2021 at 0.8, reflecting a higher proportion of debt relative to total capital. Following 2021, the ratio declines each year, from 0.77 in 2022 to 0.71 in 2024. This indicates a gradual reduction in leverage, suggesting an improvement in the company's capital structure stability despite fluctuations in absolute debt levels.

The analysis of the financial data reveals several notable patterns regarding the company's debt and capital structure over the five-year period.

Total Debt (including operating lease liability)

There is a consistent increase in total debt from 10,113,500 thousand US dollars in 2020 to 12,102,600 thousand US dollars in 2024. The debt rose steadily from 2020 through 2022, reaching its peak at 12,507,900 thousand US dollars in 2022. A dip is observed in 2023 to 11,809,700 thousand US dollars, followed by a subsequent rise again in 2024.

Total Capital (including operating lease liability)

Total capital also shows an upward trend from 13,724,300 thousand US dollars in 2020 to 16,153,800 thousand US dollars in 2024. The capital base increased moderately from 2020 to 2021, then experienced a more significant rise through 2022. After a slight decline in 2023, total capital again increased in 2024, reflecting an overall strengthening capital position.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio exhibits a rising trend from 0.74 in 2020 to a peak of 0.83 in 2021, suggesting an increase in financial leverage during this period. Following 2021, the ratio decreased gradually to 0.80 in 2022, then further to 0.76 in 2023, and 0.75 in 2024. This decline indicates a gradual reduction in leverage relative to total capital after the 2021 peak.

Overall, the data indicate that while total debt levels have generally increased over the period, the total capital growth has outpaced or maintained relative balance, resulting in a stabilization and slight reduction of the debt to capital ratio after 2021. This suggests improved capital structure management and potentially a lower risk profile moving forward, following a period of heightened leverage in 2021.

The financial analysis over the five-year period reveals several key trends related to the company's total debt, total assets, and debt-to-assets ratio.

Total Debt

Total debt exhibited an increasing trend from the end of 2020 through 2022, rising from approximately $8.29 billion to about $10.57 billion. In 2023, there was a decline to roughly $9.85 billion, followed by a moderate increase again in 2024 to nearly $10.08 billion. This pattern suggests that while debt levels escalated significantly during the initial years, there was some deleveraging in 2023 before debt levels stabilized and marginally increased.

Total Assets

Total assets showed steady growth throughout the period, increasing year over year from approximately $20.4 billion at the end of 2020 to about $23.63 billion by the close of 2024. This steady increase indicates ongoing asset accumulation or appreciation, reflecting potentially expanding operations or asset base.

Debt to Assets Ratio

The debt-to-assets ratio experienced an upward movement from 0.41 in 2020 to 0.47 in 2021 and remained at that elevated level through 2022. Subsequently, there was a decline in this ratio to 0.43 in both 2023 and 2024. This pattern indicates that although the company increased leverage relative to its assets initially, it managed to reduce its relative leverage in the later years, possibly through asset growth outpacing debt increases or through debt reduction measures.

Overall, the data point to a period of expansion with increased debt usage up to 2022, followed by some deleveraging or stabilization efforts. Asset growth has been consistent and robust, contributing to a more balanced leverage ratio in the latter years. The company's financial position suggests a focus on managing debt prudently relative to asset growth after the peak leverage seen in 2021 and 2022.

Total Debt (Including Operating Lease Liability)

The total debt amount exhibited a general upward trend from 2020 through 2024. Starting at approximately 10.1 billion US dollars in 2020, the debt increased to about 11.5 billion in 2021, further rising to approximately 12.5 billion in 2022. A slight reduction was observed in 2023, with debt declining to around 11.8 billion, followed by a modest rise again in 2024 to roughly 12.1 billion. This pattern suggests a fluctuating but overall increasing debt level over the five-year period.

Total Assets

Total assets demonstrated steady growth throughout the time frame. The asset base expanded from approximately 20.4 billion US dollars in 2020 to 20.7 billion in 2021. This growth accelerated from 2021 to 2022, reaching about 22.6 billion, and continued to rise steadily to 22.9 billion in 2023 and 23.6 billion in 2024. The consistent increase in total assets indicates ongoing expansion or accumulation of resources.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio showed some fluctuation but generally reflected a stable level of leverage. Beginning at 0.50 in 2020, the ratio increased to 0.56 in 2021, indicating a higher proportion of debt relative to assets. It then slightly decreased to 0.55 in 2022 and showed a more significant decline to 0.51 in 2023, maintaining that level in 2024. This trend suggests that while debt levels increased, asset growth outpaced or balanced debt increases in the later years, resulting in a reduction of leverage ratio to near the 2020 level by 2024.

Total Assets

The total assets show a consistent upward trend over the five-year period. Starting at approximately 20.4 billion USD in 2020, total assets gradually increased each year, reaching around 23.6 billion USD by 2024. This steady growth indicates ongoing asset accumulation or appreciation, suggesting potential expansion or reinvestment activities.

Shareholders’ Equity

Shareholders’ equity experienced fluctuations during the period. It declined notably from 3.61 billion USD in 2020 to roughly 2.44 billion USD in 2021, representing a significant decrease. However, equity rebounded in subsequent years, rising to approximately 3.10 billion USD in 2022, then increasing further to about 4.05 billion USD by 2024. This recovery indicates improved retained earnings or capital injections after the dip observed in 2021.

Financial Leverage

The financial leverage ratio demonstrated considerable variability. It increased sharply from 5.65 in 2020 to 8.48 in 2021, reflecting a higher proportion of total assets financed through debt or liabilities relative to equity. Thereafter, leverage decreased steadily each year, falling to 5.83 by 2024. This downward trend suggests a strategic reduction in debt reliance or strengthening of equity capital after peaking in 2021.

Earnings Before Interest and Tax (EBIT)

The EBIT demonstrates an overall upward trend over the observed five-year period. Starting at approximately 2.86 billion US dollars in 2020, it experienced a decline in 2021 to about 2.58 billion. Subsequently, EBIT increased consecutively each year, reaching roughly 3.87 billion US dollars by 2024, indicating improved operating profitability after the 2021 dip.

Interest Expense

Interest expense showed some fluctuations within the period. It remained relatively stable from 2020 to 2021, around 340 million US dollars, but increased to approximately 391 million in 2022. The figure continued to rise slightly in 2023, peaking near 418 million, before experiencing a marginal decrease to about 416 million US dollars in 2024. This pattern suggests variable borrowing costs or debt levels throughout the years.

Interest Coverage Ratio

The interest coverage ratio, which measures the company's ability to meet interest obligations, generally improved over the timeframe. Starting at 8.4 times in 2020, it decreased modestly during 2021 and 2022 to 7.72 and 7.58 respectively, before rebounding significantly in 2023 and 2024 to 8.45 and reaching a high of 9.3 times. This indicates enhanced capacity to service interest expenses, aligning with the increase in EBIT despite rising interest costs.

Earnings before fixed charges and tax

The earnings before fixed charges and tax show a general upward trend over the observed five-year period. Starting from 3,324,100 thousand US dollars in 2020, the figure decreased slightly in 2021 to 3,061,300 thousand US dollars. However, from 2021 onwards, there was consistent growth each year, reaching 3,461,900 thousand in 2022, then a notable increase to 4,055,900 thousand in 2023, and further growth to 4,429,900 thousand in 2024. This indicates an overall strengthening in earnings capacity before accounting for fixed charges and taxes.

Fixed charges

Fixed charges have steadily increased throughout the period. Beginning at 804,900 thousand US dollars in 2020, these charges rose modestly to 812,700 thousand in 2021, continuing to increase year over year to 888,800 thousand in 2022, 946,000 thousand in 2023, and reaching 978,100 thousand in 2024. This consistent rise suggests increasing financial obligations related to fixed costs over time.

Fixed charge coverage ratio

The fixed charge coverage ratio demonstrates some fluctuation but an overall improving trend over the period. In 2020, the ratio was 4.13, which declined to 3.77 in 2021, reflecting a relative weakening in coverage capacity during that year. Nevertheless, from 2021 onwards, the ratio improved steadily to 3.9 in 2022, then significantly to 4.29 in 2023, and further to 4.53 in 2024. This indicates a growing ability to cover fixed charges from earnings before fixed charges and tax in recent years, implying enhanced financial stability.