Thermo Fisher Scientific Inc. (NYSE:TMO)

The analysis of the financial ratios over the indicated quarterly periods reveals several key trends regarding the company's capital structure and financial stability.

Debt to Equity Ratio

This ratio generally declined from 0.7 in March 2020 to a low of 0.51 by mid-2021, indicating a reduction in reliance on debt relative to equity during that period. However, a notable increase occurred towards the end of 2021, peaking at 0.85 in December 2021. Following this peak, the ratio exhibited some fluctuations but maintained a downward trend overall, ending at 0.69 by March 2025. This pattern suggests partial deleveraging after the 2021 peak, though the ratio remains somewhat elevated compared to early 2020 levels.

Debt to Capital Ratio

Similar to the Debt to Equity ratio, the Debt to Capital ratio decreased from 0.41 in March 2020 to a trough of 0.34 in mid-2021, reflecting a lower proportion of debt in the overall capital structure. Subsequently, the ratio increased sharply to 0.46 by December 2021, mirroring the spike seen in the Debt to Equity ratio. Thereafter, the ratio exhibited modest fluctuations within the 0.39 to 0.45 range, ending close to 0.41 in March 2025. This indicates moderate variability but relative stability in the company's capital composition post-2021.

Debt to Assets Ratio

The Debt to Assets ratio follows a comparable trajectory, declining from 0.34 in early 2020 to 0.28 in mid-2021, signifying reduced debt burden against total assets. A sharp increase to 0.37 in late 2021 was followed by minor oscillations around 0.35 through early 2025. The ratio’s pattern confirms the transient nature of increased leverage in late 2021, with partial normalization thereafter.

Financial Leverage

Financial leverage remained relatively stable from March 2020 through mid-2021, hovering near 2.0 or slightly below. There was a pronounced rise to 2.33 by December 2021, indicating increased use of debt financing relative to equity. After this peak, leverage gradually abated, trending downward to about 2.01 by March 2025. This pattern corresponds closely with the dynamics observed in the debt ratios, reinforcing the conclusion of elevated leverage in late 2021 with a subsequent contraction.

Interest Coverage Ratio

The interest coverage ratio, available from December 2020 onward, displayed a strong upward trend initially, increasing from 14.07 to a peak of 19.94 in December 2021. This suggests improved ability to meet interest expenses during this period. However, from 2022 through early 2025, the ratio declined steadily to around 6.25 by March 2025. While it remains above critical concern levels, this decline could indicate rising interest expenses or reduced operating earnings relative to interest obligations over the latter periods.

In summary, the company experienced a period of deleveraging through mid-2021, followed by a marked increase in leverage and debt ratios in late 2021. After this peak, there was a moderate reduction and stabilization in leverage metrics. The initial improvement in interest coverage up to late 2021 contrasts with a subsequent weakening trend, highlighting a potentially growing strain on earnings relative to interest expenses despite the more moderate leverage levels.

Total Debt

The total debt experienced fluctuations throughout the observed period. Starting at approximately $19.97 billion in early 2020, the debt level showed a gradual increase with some variability, reaching a peak of about $34.87 billion by the end of 2021. Following this peak, total debt declined somewhat but remained elevated near $34 billion through most of 2022 and into early 2023. Subsequently, the total debt figures oscillated, ending around $34.19 billion in the quarter ending March 2025, indicating sustained high leverage compared to the starting point.

Total Shareholders’ Equity

The shareholders' equity displayed a consistent upward trend over the analyzed quarters. Beginning at roughly $28.56 billion in March 2020, equity steadily increased throughout the entire timeframe. By the end of 2021, equity had risen to approximately $40.79 billion, and continued to advance, peaking near $49.58 billion in late 2024 before a slight decrease to $49.39 billion in the first quarter of 2025. This pattern signifies solid growth in the company's net asset base over time.

Debt to Equity Ratio

The debt to equity ratio showed notable variability during the period. Initially, the ratio was around 0.7 in early 2020 and slightly decreased to a low of 0.51 by mid-2021, indicating a relatively lower debt load compared to equity. However, in late 2021, the ratio sharply increased to approximately 0.85, corresponding with the significant rise in total debt. The ratio then gradually declined, fluctuating between 0.63 and 0.83 in subsequent quarters, ending at about 0.69 in early 2025. This indicates that despite fluctuations, leverage remained moderately high but well managed relative to equity.

Total Debt

The total debt exhibits fluctuations over the reported periods. Starting at $19,969 million in March 2020, debt increased during the middle of 2020, peaking at $21,735 million by December 2020. A notable decline occurred in early 2021, reaching a low of $18,645 million in April 2021. However, from late 2021 onward, total debt rose substantially, hitting a peak of $35,313 million by March 2025. Some volatility is present within this upward trend, as debt slightly decreased in a few quarters but generally maintained levels above $30,000 million in the later periods.

Total Capital

Total capital generally increased over the timeframe with some variance. Beginning at $48,528 million in March 2020, capital rose steadily through 2020 and 2021, reaching $75,663 million by December 2021. In 2022, total capital showed slight volatility, with amounts fluctuating between approximately $72,500 million and $78,466 million. The upward movement continued into 2023 and early 2024, peaking at $84,305 million in September 2024, before a moderate decline occurred near the end of the period, ending at $83,579 million in March 2025. The trend indicates continued growth in the company’s capital base with some short-term fluctuations.

Debt to Capital Ratio

This leverage ratio varied throughout the periods but remained generally within a range of 0.34 to 0.46. Initially, the ratio was around 0.41 in early 2020, briefly increasing to a peak of 0.46 in December 2021, reflecting the rise in total debt relative to capital during that time. During the first half of 2021, the ratio dipped to its lowest point of 0.34, indicating a relatively lower proportion of debt in the capital structure. Following the late 2021 peak, the ratio stabilized between approximately 0.39 and 0.45, trending slightly downward towards the end of the period, ending at 0.41 in March 2025. This suggests a balanced approach to financing, with manageable leverage levels sustained over multiple years.

Overall Analysis

The data indicate a company experiencing growth in its capital base alongside increased borrowing. The increasing total capital reflects ongoing investments or asset growth, while the elevated and somewhat volatile debt levels in recent years suggest borrowing to finance such growth or other strategic initiatives. The debt to capital ratio’s steadiness near 0.4 over the longer term indicates a maintained level of financial leverage that balances risk and capital structure flexibility. There are no extreme spikes or drops that would signal substantial financial distress or radical changes in funding strategy. The slight decrease in the leverage ratio towards the latest period may imply enhanced equity financing or repayments reducing relative debt burden.

The financial data reveals several significant trends in the company's debt and asset position over the observed quarters.

Total Debt

Total debt displayed fluctuations but generally remained within a broad range of approximately 18,600 million to 35,300 million US dollars across the timeline. Initially, debt showed a rising trend from around 19,969 million US dollars to 21,735 million by the end of 2020. The first quarter of 2021 witnessed a reduction to 18,645 million, followed by moderate increases and decreases during 2021 and 2022, peaking markedly at 34,488 million by the end of 2022. In 2023 and early 2024, total debt maintained relatively high levels, fluctuating around 34,000 to 35,600 million US dollars, before a reduction to 31,275 million in the first quarter of 2025, then a rise again toward 34,189 million by the end of March 2025.

Total Assets

Total assets demonstrated an upward trend overall, increasing from about 58,688 million US dollars at the beginning of 2020 to peak values exceeding 100,000 million US dollars in the mid to late 2024 period. Several quarters showed incremental growth with a few minor contractions, yet the general direction indicated expansion in asset base throughout the period. The highest recorded total assets occurred around September 2024 at approximately 100,364 million, stabilizing somewhat thereafter but remaining near this elevated level.

Debt to Assets Ratio

The debt to assets ratio exhibited variability but stayed mostly within a range of 0.28 to 0.37, reflecting changes in both debt and asset totals. Initially, the ratio decreased from 0.34 to a low of 0.28 in early 2021, indicating improved leverage relative to asset growth. However, by the end of 2021, the ratio increased sharply to 0.37, coinciding with the rise in total debt and high asset levels. Throughout 2022 and 2023, the ratio oscillated near the mid-0.30s, suggesting moderate leverage changes. Early 2025 data shows a decrease to 0.32, followed by a slight increase to 0.35, indicative of adjustments in debt and asset management during this interval.

Overall, the company maintained a substantial asset base with periodic fluctuations in debt levels resulting in a moderately stable leverage ratio over multiple quarters. Increased total assets imply growing operational capacity or investments. Meanwhile, debt variations suggest strategic funding adjustments possibly aligned with business cycles or capital requirements, with leverage kept within a consistent band to balance financial risk and growth opportunities.

Total assets

The total assets of the company exhibit an overall upward trend from March 28, 2020, through December 31, 2024, with some fluctuations. Starting at $58,688 million in the first quarter of 2020, assets increased steadily and reached a peak of $95,123 million by the end of 2021. Following this peak, the asset base experienced slight declines and some volatility, hovering between approximately $90,000 million and $97,000 million from 2022 through mid-2024. The final quarter of 2024 showed a slight decrease to $97,041 million, indicating a stabilization rather than continued growth.

Total Thermo Fisher Scientific Inc. shareholders’ equity

Shareholders’ equity demonstrated consistent growth from $28,559 million in early 2020 to $49,584 million by the first quarter of 2025. The trend is characterized by smooth, incremental increases each quarter without significant reversals. There is a notable acceleration in equity growth beginning in late 2020 through 2021. Although some minor fluctuations are visible in 2023 and 2024, the overall trajectory remains upward, reflecting strengthening equity positions over the analyzed period.

Financial leverage

The financial leverage ratio fluctuated modestly throughout the period. Initially slightly above 2.0 in early 2020, the ratio experienced a decline to a low of 1.84 in the third quarter of 2021, coinciding with equity growth and stable asset levels. A notable spike to 2.33 occurred by the end of 2021, likely driven by a relatively higher increase in assets or changes in liabilities. Subsequently, leverage ratios gradually trended downward again, stabilizing near values between 2.05 and 2.13 during 2022 through mid-2024. Toward the end of the period, the leverage ratio decreased to 1.96 before rising slightly back to 2.01 by the first quarter of 2025, indicating modest adjustments in the balance between debt and equity financing.

Earnings before interest and tax (EBIT)

The EBIT values display considerable fluctuations over the observed periods. Initially, there is a significant increase from 954 million US$ in March 2020 to a peak of 3,038 million US$ by December 2020. Following this peak, EBIT declines to around 2,023 million US$ by December 2021, indicating some volatility. Starting from April 2022, EBIT again declines, reaching a low of 1,638 million US$ in April 2023. Thereafter, it shows a general upward trend, peaking again at 2,291 million US$ in December 2024 before decreasing somewhat in the first quarter of 2025 to 1,909 million US$. The variation throughout the timeline suggests periods of strong profitability interspersed with phases of reduced earnings.

Interest expense

Interest expense demonstrates a gradual upward trend over the period. Beginning at 126 million US$ in March 2020, interest expense increases steadily, with minor fluctuations, reaching a peak of 390 million US$ in December 2023. Afterward, it slightly decreases but remains elevated relative to earlier years, with values around 317-303 million US$ towards the end of the data. This steady increase in interest expense could indicate rising debt levels or higher borrowing costs.

Interest coverage ratio

The interest coverage ratio starts at 14.07 in September 2020 and improves to a peak of 19.94 by December 2020, reflecting strong capability to cover interest expenses with EBIT at that time. However, there is a notable decline moving forward, falling to as low as 5.54 by December 2023. This indicates diminished ability to meet interest obligations comfortably. In the subsequent periods, the ratio stabilizes somewhat around the 5.5 - 6.3 range, suggesting weaker, yet relatively consistent interest coverage capacity compared to earlier years.

Overall analysis

The data reflect an initial phase of strong EBIT growth accompanied by relatively moderate interest expenses, resulting in high interest coverage ratios indicative of a robust financial position. Over time, EBIT shows significant volatility and an overall downward adjustment from its peak, while interest expenses steadily rise, likely due to increased financing costs or debt levels. These factors combine to reduce the interest coverage ratio substantially, signaling increased financial risk and tighter margins for interest payment capacity. The latter periods suggest stabilization but at a lower coverage level than the early years, which warrants close monitoring going forward.