Twitter Inc. (NYSE:TWTR)

The financial data reveals several notable trends in the company's leverage and coverage ratios over the five-year period analyzed.

Debt to Equity Ratios

The standard debt to equity ratio experienced fluctuations but demonstrated an overall increasing trend, starting at 0.36 in 2017 and rising to 0.58 in 2021. When including operating lease liabilities, the ratio similarly increased from 0.36 to 0.76 over the same period, indicating a greater reliance on debt financing when lease obligations are considered.

Debt to Capital Ratios

Both the standard and lease-inclusive debt to capital ratios show a gradual rise. The debt to capital ratio climbed from 0.26 in 2017 to 0.37 in 2021, while the ratio including operating lease liabilities grew from 0.26 to 0.43. This trend suggests an increasing proportion of debt within the company's capital structure.

Debt to Assets Ratios

Debt to assets ratios also indicate a growing leverage trend. The standard ratio rose from 0.24 in 2017 to 0.30 in 2021. Including operating lease liabilities, the ratio showed a more pronounced increase from 0.24 to 0.39, reinforcing the impact of lease obligations on the overall debt profile.

Financial Leverage

The financial leverage ratio remained relatively stable in the early years (1.47 to 1.49 from 2017 to 2018), dipped slightly in 2019 to 1.46, and then increased to 1.92 by 2021. This reflects a higher degree of asset financing through debt as opposed to equity, especially in the most recent years.

Interest Coverage Ratios

Interest coverage exhibits significant volatility. There was a sharp increase from 0.09 in 2017 to 4.19 in 2018 and a slight decline to 3.82 in 2019, indicating improved earnings relative to interest expenses during those years. However, the ratio deteriorated markedly thereafter, declining to 0.67 in 2020 and turning negative to -7.03 by 2021, implying substantial earnings insufficiency to cover interest obligations in the last year analyzed.

Fixed Charge Coverage Ratios

Fixed charge coverage followed a similar pattern to interest coverage. It increased from 0.57 in 2017 to 2.56 in 2018, then gradually declined to 2.25 in 2019. A steep downturn occurred afterward, falling to 0.86 in 2020 and negative to -0.34 in 2021, signaling difficulties in covering fixed financial charges including lease payments.

Overall, the data illustrates a progressive increase in leverage ratios across various measures, with the inclusion of operating lease liabilities amplifying this trend. Concurrently, coverage ratios reveal deteriorating ability to meet interest and fixed financial charges, especially in the most recent year, suggesting potential stresses on financial stability linked to rising debt levels and possibly reduced earnings capacity.

Total Debt

Total debt exhibited a generally increasing trend over the five-year period. It rose from approximately $1.79 billion at the end of 2017 to about $4.25 billion by the end of 2021. Notably, the debt level increased sharply between 2019 and 2021, reflecting a substantial rise in financial leverage during this period.

Stockholders’ Equity

Stockholders’ equity showed an upward trend from 2017 through 2019, growing from approximately $5.05 billion to nearly $8.7 billion. However, after reaching this peak, equity declined in the subsequent years, dropping to around $7.3 billion by the end of 2021. This indicates a reduction in net assets attributable to shareholders in the latter part of the period.

Debt to Equity Ratio

The debt to equity ratio fluctuated over the period, starting at 0.36 in 2017 and peaking at 0.58 by 2021. The ratio decreased to 0.29 in 2019 but then rose significantly in 2020 and 2021. This pattern reflects increasing leverage relative to equity, suggesting that the company relied more on debt financing in the latter years compared to equity.

Overall Financial Leverage Trends

The increasing total debt combined with the declining equity after 2019 suggests a shift towards greater financial leverage. The rising debt to equity ratio supports this conclusion. Such a trend may imply increased financial risk, warranting close monitoring of debt servicing capacity and capital structure balance.

Total Debt (including operating lease liability)

The total debt has shown a consistent upward trend over the five-year period. Starting at approximately 1.79 billion US dollars at the end of 2017, it increased steadily each year, reaching around 5.55 billion US dollars by the end of 2021. This represents a significant rise, with more than a threefold increase in the total debt level over the time span.

Stockholders’ Equity

Stockholders’ equity grew notably from 2017 to 2019, rising from about 5.05 billion US dollars to nearly 8.7 billion US dollars. However, it experienced a decline in 2020 and further decreased in 2021, falling back to approximately 7.31 billion US dollars by the end of 2021. Despite the initial growth, the equity level did not maintain its peak value, showing some signs of reduction in the latter years.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio exhibited relative stability from 2017 through 2019, fluctuating slightly around the 0.36 to 0.40 range. Starting in 2020, there was a noticeable increase in the ratio, climbing to 0.56 and reaching 0.76 by the end of 2021. This rising ratio indicates a growing reliance on debt financing relative to equity, suggesting changes in the company's capital structure and potentially increased financial leverage.

Total Debt

The total debt amount exhibits an overall upward trend from 2017 through 2021. Beginning at approximately 1.79 billion US dollars at the end of 2017, the debt increased significantly by the end of 2018 to around 2.72 billion US dollars. After a slight decline in 2019 to about 2.53 billion, total debt rose markedly in 2020 and 2021, reaching approximately 3.49 billion and 4.25 billion US dollars respectively. This indicates an increased reliance on borrowed funds over the period, especially notable in the last two years.

Total Capital

The total capital shows a consistent growth trajectory from 2017 through 2021. Starting at roughly 6.84 billion US dollars in 2017, total capital grew to about 9.53 billion by the close of 2018, then further increased to 11.24 billion in 2019. Growth continued but at a slower pace in the last two years, reaching approximately 11.46 billion in 2020 and modestly increasing to approximately 11.56 billion by the end of 2021. This steady increase reflects expanding financial resources over the time frame.

Debt to Capital Ratio

The debt to capital ratio fluctuated within a range but generally exhibited an increasing trend between 2017 and 2021. It started at 0.26 in 2017 and rose slightly to 0.29 in 2018. A decrease followed in 2019 to 0.23, indicating a lower proportion of debt relative to total capital that year. However, the ratio increased again to 0.30 in 2020 and further to 0.37 in 2021. These movements suggest that, although total capital was growing, the proportion financed through debt increased over the five-year period, especially in the last two years, potentially indicating higher financial leverage and risk exposure.

Total Debt (Including Operating Lease Liability)

The total debt exhibits a consistent upward trend over the five-year period. Starting at approximately 1.79 billion USD in 2017, it increased substantially each year, reaching about 5.55 billion USD by the end of 2021. This represents more than a threefold increase, indicating a significant rise in the company's leverage or obligations over time.

Total Capital (Including Operating Lease Liability)

The total capital also shows a rising trend from 6.84 billion USD in 2017 to 12.85 billion USD in 2021. The growth is steady but at a slower pace compared to the increase in total debt. The capital nearly doubled within the period, reflecting an expansion in the company’s overall financing structure and resources.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio fluctuated moderately but exhibits an overall increasing trajectory. It started at 0.26 in 2017, slightly rose to 0.29 in 2018, dipped back to 0.27 in 2019, and then consistently increased to 0.36 in 2020 and 0.43 in 2021. This suggests a growing reliance on debt financing relative to total capital, indicating a shift towards higher financial leverage.

Summary of Trends

The data reflects an ongoing increase in both total debt and total capital, with total debt growing at a comparatively faster rate. Consequently, the debt to capital ratio has increased, indicating that the company is progressively utilizing more debt within its capital structure. This trend points to an elevated financial risk profile, given the higher proportion of debt. It is essential to monitor future periods to assess whether earnings and cash flows are sufficient to service this increased debt load.

Total Debt

The total debt exhibited an overall increasing trend from 2017 to 2021. Beginning at approximately 1.79 billion US dollars in 2017, it rose notably to 2.72 billion in 2018. Although there was a slight decrease to about 2.53 billion in 2019, the debt resumed its upward trajectory thereafter, reaching approximately 3.49 billion in 2020 and further increasing to around 4.25 billion by the end of 2021.

Total Assets

Total assets showed a consistent and steady increase throughout the period under review. Starting at roughly 7.41 billion US dollars in 2017, assets grew to over 10.16 billion in 2018 and continued to rise each subsequent year, reaching approximately 12.70 billion in 2019, 13.38 billion in 2020, and culminating at nearly 14.06 billion by the close of 2021.

Debt to Assets Ratio

The debt to assets ratio demonstrated some variability but generally indicated a moderate increase in leverage over the five-year span. The ratio started at 0.24 in 2017, increased to 0.27 in 2018, then declined significantly to 0.20 in 2019. However, the ratio rebounded in 2020 to 0.26, and further increased to 0.30 in 2021, suggesting a proportionally higher use of debt relative to the asset base at the end of the period.

Summary

Overall, the financial data indicate that the company has been expanding its asset base steadily while simultaneously increasing its total debt over time. The fluctuations in the debt to assets ratio reflect changes in the company's capital structure, with a notable increase in leverage toward the end of the period. This may suggest a more aggressive financial strategy or increased borrowing to finance growth or operations. Careful monitoring of the debt levels relative to assets would be prudent to ensure sustainable financial health.

Debt Levels

The total debt, including operating lease liability, has exhibited a consistent upward trend from 2017 to 2021. Over this period, total debt increased significantly from approximately 1.79 billion US dollars in 2017 to about 5.55 billion US dollars by the end of 2021. This reflects a more than threefold increase in the company's debt burden within five years.

Asset Base

Total assets have also grown steadily throughout the same timeframe, rising from approximately 7.41 billion US dollars in 2017 to roughly 14.06 billion US dollars in 2021. The asset growth rate, however, appears more moderate compared to the increase in total debt.

Debt to Assets Ratio

The debt to assets ratio demonstrates a gradual increase from 0.24 in 2017 to 0.39 in 2021. Initially, the ratio remained relatively stable between 0.24 and 0.27 from 2017 to 2019, but it increased notably beginning in 2020, indicating a rising proportion of debt financing relative to total assets. This upward trend in leverage suggests increasing financial risk exposure over time.

Overall Insights

The data reveals a growing reliance on debt financing relative to the asset base, with total debt rising faster than total assets. The steady increase in the debt to assets ratio over the last two years implies a strategic shift or a necessity toward higher leverage. This may affect the company's financial stability and risk profile, which warrants monitoring for potential implications on solvency and liquidity.

Total assets

The total assets increased steadily over the five-year period, rising from approximately 7.41 billion US dollars at the end of 2017 to about 14.06 billion US dollars by the end of 2021. This represents an overall growth of nearly 90%, indicating significant asset accumulation and expansion of the company's asset base over time.

Stockholders’ equity

Stockholders’ equity showed a rising trend from 2017 through 2019, increasing from approximately 5.05 billion US dollars to about 8.70 billion US dollars. However, starting in 2020, equity decreased consecutively, falling to roughly 7.97 billion US dollars in 2020 and further to approximately 7.31 billion US dollars in 2021. This decline suggests that either losses were incurred or dividends or other equity reductions took place during the last two years in the data.

Financial leverage

The financial leverage ratio stayed relatively stable between 2017 and 2019, remaining close to 1.46 to 1.49. A notable increase occurred in 2020, pushing the ratio to 1.68, and it rose further to 1.92 by the end of 2021. This consistent increase in leverage indicates a growing reliance on debt or other liabilities relative to equity, signifying a more leveraged capital structure in the later years.

Summary

The company demonstrated significant growth in total assets over the five-year span. Simultaneously, after initial equity growth up to 2019, there was a downturn in equity levels during 2020 and 2021. This reduction in equity coupled with increasing financial leverage suggests the company might have increased borrowing or liabilities relative to equity, reflecting a shift to a higher risk capital structure in the most recent years reviewed.

The financial data exhibits significant fluctuations in key performance indicators over the five-year period ending December 31, 2021.

Earnings before interest and tax (EBIT)

The EBIT experienced a substantial rise from 9,819 thousand USD in 2017 to a peak of 556,150 thousand USD in 2018, followed by a slight decline to 528,319 thousand USD in 2019. Thereafter, EBIT sharply diminished to 101,939 thousand USD in 2020 and further dropped into negative territory, reaching -359,927 thousand USD by the end of 2021. This trajectory indicates a strong operational performance initially, followed by a marked deterioration culminating in operational losses in 2021.

Interest expense

Interest expenses increased steadily from 105,237 thousand USD in 2017 to 152,878 thousand USD in 2020, before a notable reduction to 51,186 thousand USD in 2021. The initial upward trend suggests growing debt-related costs or financing activities, while the decline in 2021 may reflect debt repayments, refinancing at lower rates, or reduced borrowing.

Interest coverage ratio

The interest coverage ratio, which measures the ability to meet interest obligations from EBIT, showed considerable volatility. It was very low at 0.09 times in 2017, increased significantly to above 4 times in 2018 and 2019, then drastically declined to 0.67 times in 2020 and became negative at -7.03 times in 2021. This negative value in the last year signals that EBIT was insufficient to cover interest expenses, reflecting potential liquidity and solvency concerns.

Overall, the financial indicators reveal an initial phase of strong earnings and manageable interest expenses, evolving into operational losses and reduced interest obligations by 2021, accompanied by deteriorating capacity to service debt. The negative EBIT combined with a negative interest coverage ratio in the final year denotes critical financial stress demanding close attention to operational and financial restructuring.

Earnings Before Fixed Charges and Tax

The earnings before fixed charges and tax exhibited significant fluctuations over the observed period. Starting at 127,719 thousand US dollars at the end of 2017, there was a substantial increase to 694,950 thousand in 2018, followed by a slight rise to 701,324 thousand in 2019. However, a marked decline occurred in 2020, with earnings dropping to 303,325 thousand, and a further decrease resulting in a negative figure of -103,539 thousand in 2021. This trend indicates a deterioration in operational profitability or earnings capacity before accounting for fixed financial obligations in the last two years.

Fixed Charges

Fixed charges demonstrated a steady upward trend from 2017 through 2020, increasing from 223,137 thousand US dollars to 354,264 thousand. In 2021, there was a reduction to 307,574 thousand, indicating a slight alleviation of fixed financial obligations after years of escalation. Despite this decrease, fixed charges in 2021 remained substantially higher than the levels observed in 2017 and 2018.

Fixed Charge Coverage Ratio

The fixed charge coverage ratio, which measures the ability to cover fixed charges from earnings before fixed charges and taxes, showed considerable volatility. The ratio improved significantly in 2018 to 2.56 from a low of 0.57 in 2017, suggesting enhanced capacity to cover fixed charges. It declined slightly to 2.25 in 2019, followed by a sharp decrease to 0.86 in 2020. In 2021, the ratio turned negative at -0.34, reflecting an inability to cover fixed charges from earnings at that time. The downward trajectory from 2019 to 2021 highlights increasing financial strain and reduced earnings adequacy relative to fixed financial obligations.