Sherwin-Williams Co. (NYSE:SHW)

The analysis of the quarterly financial ratios reveals distinct patterns and shifts in the company’s leverage and coverage metrics over the examined periods.

Debt to Equity Ratio

The debt to equity ratio exhibited initial fluctuations, decreasing from 2.97 at March 31, 2020, to a low of 1.97 at September 30, 2020, before rising steadily to a peak of 4.77 at June 30, 2022. Following this peak, the ratio declined through 2023 and into early 2024, reaching 2.44 at September 30, 2024, with a slight uptick to 2.61 by March 31, 2025. This pattern indicates periods of deleveraging followed by increased debt usage, and recent efforts to reduce leverage.

Debt to Equity (Including Operating Lease Liability)

Inclusion of operating lease liabilities presented similar trends but consistently higher ratios compared to the standard debt to equity. The ratio peaked at 5.62 in June 2022, slightly above the analogous measure, and then declined gradually to 3.10 by March 2025. This suggests that leasing obligations meaningfully affect the leverage profile and are being managed in tandem with traditional debt.

Debt to Capital Ratio

The debt to capital ratio remained relatively stable, fluctuating between 0.66 and 0.83 across the observed quarters. The metric peaked near the middle of the timeframe (0.83 in March and June 2022), then gradually tapered off, settling around 0.72 by March 2025. This signals a consistent capital structure, with moderate leverage levels and some improvement in capital composition over time.

Debt to Capital (Including Operating Lease Liability)

The incorporation of lease liabilities increased the debt to capital ratio by a margin of approximately 0.02 to 0.05 throughout the periods. It peaked at 0.85 during the mid-2022 quarters and trended downwards thereafter, stabilizing near 0.76 towards early 2025, indicating attention to lease obligations alongside other debts in capital structure management.

Debt to Assets Ratio

This ratio showed a generally rising trend from 0.40 in September 2020 to 0.49 in March 2022, illustrating increasing liabilities relative to assets. Afterwards, it exhibited a moderate decline stabilizing around 0.42 by late 2024. Including operating lease liabilities increased the ratio across all periods by approximately 0.08 to 0.10, peaking at 0.57 in mid-2022 and decreasing steadily to 0.52 by March 2025.

Financial Leverage

The financial leverage ratio followed a trend consistent with the debt to equity measures. Beginning at 6.25 in early 2020, it rose significantly to a maximum near 9.91 in June 2022. After this peak, a steady decline occurred, reaching approximately 5.97 in the first quarter of 2025, denoting reduced reliance on debt financing and a strengthening equity base in recent years.

Interest Coverage Ratio

The interest coverage ratio was not reported for early 2020 quarters but showed strong and improving performance from December 2020 onwards. The ratio increased from 8.4 to 9.32 by March 2025, indicating enhanced ability to service interest expenses out of operating earnings. This upward trend reflects improved operational profitability or reduced interest expenses over time.

Overall, the data reveals a company that underwent fluctuations in leverage, peaking around mid-2022 with relatively high debt levels across multiple metrics. Subsequent periods show a trend toward deleveraging and improved financial stability, supported by gradually increasing interest coverage. The inclusion of operating lease liabilities consistently elevates leverage ratios but follows the same general trends. The observations suggest active management of capital structure and financial risk, with recent improvements in both leverage and coverage capabilities.

Total Debt

The total debt exhibits fluctuations over the analyzed periods, starting at approximately 9.77 billion USD in the first quarter of 2020. It decreased significantly by the third quarter of 2020, reaching a low of about 8.29 billion USD, and then showed a general upward trend peaking near 11.07 billion USD in the first quarter of 2023. After this peak, total debt slightly declined but remained generally elevated, ending at about 10.78 billion USD in the first quarter of 2025. This pattern suggests periods of debt reduction followed by steady increases, indicating active debt management aligned with the company's financing needs or external conditions.

Shareholders’ Equity

Shareholders' equity demonstrated variability with an initial upward movement from roughly 3.29 billion USD in the first quarter of 2020 to a peak of around 4.21 billion USD in the third quarter of 2020. Subsequently, it experienced a decline through the first quarter of 2022, reaching a low near 2.23 billion USD. Thereafter, equity increased again, reaching a local peak of approximately 3.78 billion USD at the end of 2023. From 2024 onward, shareholders' equity shows an improving trend, rising to about 4.13 billion USD by the first quarter of 2025. The fluctuations reflect changes in retained earnings, capital injections, or market valuation factors impacting equity.

Debt to Equity Ratio

The debt-to-equity ratio started at a high 2.97 in the first quarter of 2020 and dropped to a lower level of 1.97 by the third quarter of 2020, coinciding with the period when total debt decreased and equity rose. However, this ratio increased substantially, reaching 3.95 by the end of 2021, then peaked at 4.77 in the mid-2022 period, indicating an increase in leverage primarily driven by a rising debt load relative to shareholders' equity. After this peak, the ratio declined steadily through 2023 and early 2024, reaching values around 2.44, reflecting improvements in equity or relative reductions in debt. Toward the end of the observed period, the ratio experienced a slight increase to approximately 2.61. Overall, the leverage ratio displays cyclical tendencies with shifts likely related to strategic capital structure decisions and market conditions, with a tendency to reduce leverage after mid-2022.

Total Debt (including operating lease liability)

The total debt experienced a general upward trajectory over the analyzed period. Starting at approximately 11.5 billion US dollars in March 2020, it showed a dip during mid-2020, reaching a low near 10.1 billion in September 2020. From that point, the debt level increased significantly, peaking around 13 billion in March 2023 before demonstrating some volatility. The debt decreased slightly towards late 2023 but rose again in early 2025, ultimately reaching about 12.8 billion. This pattern indicates periods of increased borrowing or lease liabilities, with notable expansions followed by moderate paydowns.

Shareholders’ Equity

Shareholders' equity exhibited considerable fluctuations throughout the timeframe. Initially, it increased from approximately 3.3 billion in March 2020 to a peak exceeding 4.2 billion by September 2020, implying an improvement in the company’s net asset position during this period. Following this, a downward trend was observed through late 2021, bottoming out below 2.4 billion in December 2021. Subsequently, equity recovered, climbing steadily from early 2022 to late 2024, reaching beyond 4.1 billion by March 2025. This recovery suggests regained profitability or capital injection offsetting prior declines.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio depicted a dynamic pattern aligned with the movements of debt and equity. Initially, the ratio declined from 3.5 in March 2020 to a low of 2.4 by September 2020, reflecting relatively stronger equity or reduced debt levels. However, this was followed by a sharp increase, reaching a peak of 5.62 in June 2022, which correlates with soaring debt and declining equity during the preceding quarters. After this high point, the ratio substantially dropped to near 3.1 by September 2023, driven by equity recovery and marginal debt decreases. Towards the end of the period, the ratio fluctuated moderately around the 3.0 to 3.6 range, indicating a more balanced but still leveraged capital structure.

Overall Insights

The company’s financial leverage demonstrated volatility, influenced chiefly by large swings in both debt levels and shareholders’ equity. The initial period saw a reduction in leverage due to equity growth and debt reduction, but the middle period was characterized by increased borrowing coinciding with equity declines, significantly elevating leverage risk. The latter period exhibited improvements in equity and more disciplined debt management, resulting in a moderated debt to equity ratio. This suggests a cycle of strategic financial adjustments possibly responding to external market conditions or internal capital requirements.

Total Debt

Over the examined period, total debt exhibited fluctuations with some notable trends. Starting at approximately $9.77 billion in the first quarter of 2020, a declining trajectory was observed through the end of 2020, reaching a low around $8.29 billion by the third quarter of that year. This decline was followed by a general upward trend peaking at about $11.08 billion in the first quarter of 2023. From this peak, total debt declined again, fluctuating around the $9.9 billion to $10.7 billion range in subsequent quarters up to the first quarter of 2025. The data indicates alternating periods of debt reduction and accumulation, with relatively higher levels maintained in the 2022 to 2025 timeframe compared to the earlier years.

Total Capital

Total capital demonstrated a more consistent increasing trend throughout the period. Beginning around $13.06 billion in the first quarter of 2020, it experienced a slight decrease initially but then increased steadily from 2021 onwards. The growth of total capital was particularly pronounced from mid-2021 to the end of 2024, culminating near $14.91 billion by the first quarter of 2025. This indicates ongoing capital expansion, suggesting either reinvestment or increased financing activities contributing to the company's capital base.

Debt to Capital Ratio

The debt to capital ratio showed dynamic changes reflecting the interplay between total debt and total capital over time. Starting at 0.75 in the first quarter of 2020, it declined to a low near 0.66 in the third quarter of 2020, consistent with the decreasing debt and relatively stable capital. Subsequently, the ratio increased sharply to peak at 0.83 during the first half of 2022, paralleling the rise in debt. After 2022, the ratio trended downward and stabilized around the 0.71 to 0.75 range, with a slight decrease through 2024 and early 2025. This pattern suggests moderate leverage with periods of higher debt relative to capital that appear to be managed towards stabilization in recent quarters.

Overall Insights

The data reveals a company managing substantial levels of debt while simultaneously growing its capital base. The initial debt reduction in 2020 may indicate efforts to deleverage during uncertain times, followed by debt increases possibly linked to expansion or other capital needs. Total capital growth outpaces that of debt in the latter periods, contributing to a modest reduction and stabilization in the debt to capital ratio. This reflects a balanced approach to leveraging, maintaining capital structure within a moderate range. The volatility in debt levels paired with steady capital growth implies active financial management aiming to support operational or strategic objectives without excessive risk accumulation.

Total Debt (including operating lease liability)

The total debt experienced a fluctuating trend over the periods analyzed. Starting from approximately 11.5 billion USD in March 2020, it decreased steadily to around 10.1 billion USD by September 2020. Subsequently, the debt rose again, reaching a peak near 13 billion USD by March 2023, followed by a decline and stabilization close to 12 billion USD through 2023 and into early 2024. By March 2025, the debt level increased again, approaching 12.8 billion USD.

Total Capital (including operating lease liability)

Total capital also showed variability, beginning at approximately 14.8 billion USD in March 2020 and declining mildly to about 13.4 billion USD by September 2021. After this period, the capital increased steadily, peaking at around 17 billion USD by March 2025. This indicates growth in the company's capital base over the later periods despite earlier declines.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio mirrored the movements in debt and capital. Initially at 0.78 in March 2020, it decreased consistently to around 0.71 by September 2020, suggesting a reduction in leverage. Afterward, the ratio increased to a high of 0.85 in early 2022, indicating heightened leverage. Following this peak, the ratio declined consistently, settling in the mid-0.70s range through late 2023 and early 2024. However, a slight upward trend is visible towards March 2025, with the ratio at 0.76, signaling a modest increase in leverage relative to capital.

Summary of Trends

Overall, the data demonstrate an initial reduction in both debt and leverage during 2020, followed by increased debt and leverage levels during 2021 through early 2022. Subsequently, there is a general trend toward deleveraging and capital growth from mid-2022 to early 2024. The final period shows a slight rebound in both debt and leverage, although the total capital base remains higher than earlier years. These patterns reflect oscillating financial strategies, possibly influenced by external economic factors, aiming to balance growth with financial stability.

Total Debt

The total debt exhibited a declining trend from the start of the period at approximately 9,770,200 thousand US dollars in March 2020 to about 8,291,000 thousand US dollars by December 2020. Subsequently, there was a gradual increase with some fluctuations, reaching a peak of approximately 11,075,000 thousand US dollars in March 2023. After this peak, the total debt declined again to around 9,856,900 thousand US dollars by December 2023. The trend from March 2024 to March 2025 shows renewed variability, with values oscillating between approximately 9,888,400 and 10,776,400 thousand US dollars, ending on a higher note. Overall, the total debt shows cycles of decreases followed by increases, ending with a moderately higher level than at the beginning of the timeframe.

Total Assets

Total assets remained relatively stable around 20,570,300 thousand US dollars in March 2020 and exhibited a modest increase over the observed periods. There were minor fluctuations in the earlier quarters, but the general pattern indicates growth, reaching approximately 23,129,900 thousand US dollars by March 2023. Following this peak, total assets showed stability with some incremental rises, culminating in the highest observed value of around 24,636,100 thousand US dollars in March 2025. The trend suggests sustained asset growth over the five-year span, indicating potential expansion or accumulation of assets.

Debt to Assets Ratio

The debt to assets ratio declined from 0.47 in March 2020 to 0.40 by September 2020, indicating a reduction in leverage during the early pandemic period. The ratio then increased to 0.47 by December 2021, followed by a brief decrease to 0.42 by September 2023. Notably, the ratio fluctuated within the range of approximately 0.40 to 0.49 over the entire period. In the final quarters, the ratio slightly increased again, closing at 0.44 in March 2025. These movements suggest varying leverage strategies, with periods of both deleveraging and increased indebtedness, but overall maintaining a moderate leverage position relative to total assets.

Summary

The overall financial structure reflects a dynamic balance between debt and asset growth. While total assets gradually increased over time, total debt showed more volatility, rising and falling in cycles. The debt to assets ratio followed this volatility, illustrating changes in the company's capital structure and financing policy. Despite fluctuations, leverage remained within a moderate range, implying controlled risk exposure with respect to asset base expansion. The data suggests ongoing adjustments in financing possibly aligned with strategic initiatives, market conditions, or operational demands.

The analysis of the quarterly financial data reveals several key trends in the company's leverage and asset base over the observed periods.

Total Debt (Including Operating Lease Liability)

The total debt figures exhibit fluctuations over time, starting at approximately $11.52 billion in March 2020, then declining steadily to around $10.09 billion by September 2020. Following this decrease, the debt level increased again, peaking near $13 billion in March 2023. There is a noticeable decline after this peak, with values moving downward to roughly $11.81 billion by December 2023, before rising once more to about $12.82 billion by March 2025. This pattern indicates periodic adjustments in the company’s borrowing or lease obligations, reflecting strategic financial management or varying capital requirements across quarters.

Total Assets

Total assets show an overall upward trend throughout the period. Starting at approximately $20.57 billion in March 2020, assets increased with some minor fluctuations, reaching about $23.13 billion by March 2023. Further growth is observed towards the end of the dataset, culminating at roughly $24.64 billion in March 2025. This progressive asset growth suggests ongoing investment or asset acquisition contributing to the company's balance sheet expansion over time.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt to assets ratio demonstrates moderate variability while remaining within a range roughly between 0.48 and 0.57 during the observed quarters. Initially recorded at 0.56 in March 2020, the ratio declined to a low near 0.48 in September 2020, indicating a reduction in leverage relative to assets. Subsequently, the ratio rose again, stabilizing around the mid-0.50s, peaking at 0.57 in mid-2022, before showing a gradual decrease to approximately 0.50 by the end of 2024. In the final quarter, a slight rebound to 0.52 is noted. This pattern reflects fluctuating leverage levels but generally suggests a balanced approach to debt relative to the asset base.

Overall, the data indicates that the company has managed its debt levels with periodic increases and decreases, aligned with a consistent and gradual growth in total assets. The debt to assets ratio reflects this dynamic, maintaining a moderate leverage position throughout the timeline without extreme volatility.

Total assets

Total assets exhibited relative stability from March 2020 through December 2020, fluctuating slightly around the 20.4 billion US$ mark. Beginning in the first quarter of 2021, assets demonstrated a gradual upward trend, increasing steadily until reaching approximately 23.1 billion US$ by the first quarter of 2023. From that point, total assets plateaued, hovering near the 23 to 23.5 billion US$ range throughout 2023 and early 2024. A notable rise occurred again in the final quarter of 2024 and first quarter of 2025, with assets peaking close to 24.6 billion US$. Overall, the data indicates a general growth trajectory in total assets over the five-year span, with periods of stability interspersed with more pronounced increases.

Shareholders’ equity

Shareholders’ equity showed fluctuations and a downward trend from March 2020 to December 2021. Initially, equity increased from 3.29 billion US$ in the first quarter of 2020 to a peak near 4.21 billion US$ in September 2020, followed by a gradual decline to approximately 2.44 billion US$ by December 2021. This represents a significant reduction in equity during the 2020-2021 period. However, from early 2022 onward, equity began a recovery trend, climbing steadily to around 3.78 billion US$ by December 2023. The equity continued to rise and maintain elevated levels through 2024, reaching just above 4.13 billion US$ by March 2025. This suggests rejuvenation in the company’s net asset position after the earlier contraction.

Financial leverage

The financial leverage ratio exhibited considerable variation throughout the period. Initially, the ratio decreased from 6.25 in March 2020 to a low of about 4.95 in September 2020, indicating a reduction in the debt to equity ratio or an improved capital structure. However, from late 2020 through late 2021, leverage increased sharply, reaching a peak near 9.91 in June 2022. This peak corresponds with the period when shareholder equity had declined notably, reflecting higher reliance on liabilities relative to equity. Following this, financial leverage trended downward, decreasing steadily to approximately 5.77 by September 2024, with a slight uptick to about 5.97 by March 2025. The overall pattern indicates fluctuating leverage with peak risk levels mid-cycle and subsequent deleveraging in the later stages.

Earnings before interest and tax (EBIT)

The EBIT exhibited notable fluctuations across the quarters analyzed. Starting at 478,500 thousand US dollars in March 2020, it increased significantly to a peak of 958,900 thousand US dollars by September 2020 before declining to 393,800 thousand US dollars in December 2021. Subsequently, a recovery trend emerged with values rising to 1,123,800 thousand US dollars in June 2023, maintaining high levels around 1,126,200 thousand US dollars in September 2024. A decline was observed again towards the end of the period, with EBIT decreasing to 714,100 thousand US dollars by September 2024 and 756,800 thousand US dollars in December 2024. Overall, the pattern shows a series of rises and falls, with peaks generally occurring in the latter half of the calendar years, followed by weaker quarters and then recoveries.

Interest expense

Interest expense remained relatively stable throughout the periods, ranging roughly between 83,000 and 111,700 thousand US dollars. A gradual upward trend in interest expense was seen from March 2020 through December 2022, peaking at 111,700 thousand US dollars. After this peak, the expense showed moderate fluctuations but largely maintained levels around 98,000 to 110,000 thousand US dollars in subsequent quarters. This consistency suggests imposed costs on borrowing remained under control without significant volatility despite changes in EBIT.

Interest coverage ratio

The interest coverage ratio, available from the September 2020 quarter onwards, generally improved over the observed period. It started at 8.4 times in September 2020 and showed a steady upward trajectory, reaching above 9.3 times by December 2024. This increase indicates an enhanced ability to cover interest obligations from earnings before interest and taxes, reflecting improved operational profitability relative to interest costs. The ratio's gradual enhancement corresponds with the overall growth in EBIT and relatively stable interest expenses, demonstrating stronger financial health and reduced risk of interest payment difficulties.