Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
United Rentals Inc., solvency ratios
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
A sustained trend of deleveraging is evident between 2018 and 2022, characterized by a systematic reduction in the reliance on borrowed funds relative to equity, assets, and total capital.
- Debt Leverage Ratios
- The debt-to-equity ratio decreased significantly from 3.45 in 2018 to 1.61 in 2022. When accounting for operating lease liabilities, the ratio remained slightly higher but still trended downward from 3.45 to 1.73 over the same period. Similarly, the debt-to-assets ratio declined from 0.65 to 0.47, indicating that a smaller proportion of the asset base is financed through debt.
- Capital Structure Ratios
- Debt to capital showed a gradual decline, moving from 0.78 in 2018 to 0.62 in 2022. The inclusion of operating lease liabilities resulted in a slightly higher ratio, ending at 0.63 in 2022, further confirming the trend toward a more conservative capital structure.
- Coverage and Solvency Capability
- Both interest coverage and fixed charge coverage ratios exhibited a U-shaped trajectory. After declining to troughs in 2020—2.70 and 2.10, respectively—these ratios rebounded sharply. By December 31, 2022, interest coverage reached 7.30 and fixed charge coverage reached 3.98, reflecting a substantial increase in the margin of safety for servicing debt obligations.
- Overall Financial Leverage
- Financial leverage experienced a notable contraction, falling from 5.33 in 2018 to 3.42 in 2022. This decline aligns with the overall reduction in debt ratios, suggesting a deliberate shift toward a less leveraged financial position.
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Debt to Equity
United Rentals Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt and current maturities of long-term debt | 161) | 906) | 704) | 997) | 903) | |
| Long-term debt, excluding current maturities | 11,209) | 8,779) | 8,978) | 10,431) | 10,844) | |
| Total debt | 11,370) | 9,685) | 9,682) | 11,428) | 11,747) | |
| Stockholders’ equity | 7,062) | 5,991) | 4,545) | 3,830) | 3,403) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.61 | 1.62 | 2.13 | 2.98 | 3.45 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.33 | 2.29 | — | — | — | |
| Eaton Corp. plc | 0.51 | 0.52 | — | — | — | |
| GE Aerospace | 0.89 | 0.87 | — | — | — | |
| Honeywell International Inc. | 1.17 | 1.06 | — | — | — | |
| Lockheed Martin Corp. | 1.68 | 1.07 | — | — | — | |
| RTX Corp. | 0.44 | 0.43 | — | — | — | |
| Debt to Equity, Sector | ||||||
| Capital Goods | 1.33 | 1.26 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Industrials | 1.42 | 1.37 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 11,370 ÷ 7,062 = 1.61
2 Click competitor name to see calculations.
The solvency profile between December 31, 2018, and December 31, 2022, demonstrates a consistent strengthening of the capital structure. A significant reduction in financial leverage is evident, driven primarily by a substantial and uninterrupted increase in stockholders' equity.
- Total Debt Dynamics
- Total debt experienced a general decline from December 31, 2018, to December 31, 2020, falling from US$ 11,747 million to US$ 9,682 million. After remaining nearly flat through 2021, debt levels increased to US$ 11,370 million by the end of 2022. Despite this recent uptick, the total debt at the end of the period remained lower than the initial 2018 levels.
- Stockholders' Equity Expansion
- A strong and consistent upward trend is observed in stockholders' equity, which grew from US$ 3,403 million in 2018 to US$ 7,062 million in 2022. This steady growth indicates a significant accumulation of retained earnings or additional capital contributions, effectively doubling the equity base over the five-year duration.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio decreased markedly from 3.45 in 2018 to 1.61 in 2022. The most pronounced improvements occurred between 2018 and 2021, where the ratio fell from 3.45 to 1.62. The stabilization of the ratio between 2021 and 2022 suggests that the increase in total debt was proportionally balanced by the continued growth in equity, maintaining a significantly lower leverage position than that observed at the start of the analysis period.
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Debt to Equity (including Operating Lease Liability)
United Rentals Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt and current maturities of long-term debt | 161) | 906) | 704) | 997) | 903) | |
| Long-term debt, excluding current maturities | 11,209) | 8,779) | 8,978) | 10,431) | 10,844) | |
| Total debt | 11,370) | 9,685) | 9,682) | 11,428) | 11,747) | |
| Current operating lease liability | 211) | 202) | 178) | 178) | —) | |
| Long-term operating lease liabilities | 642) | 621) | 549) | 533) | —) | |
| Total debt (including operating lease liability) | 12,223) | 10,508) | 10,409) | 12,139) | 11,747) | |
| Stockholders’ equity | 7,062) | 5,991) | 4,545) | 3,830) | 3,403) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 1.73 | 1.75 | 2.29 | 3.17 | 3.45 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 2.37 | 2.33 | — | — | — | |
| Eaton Corp. plc | 0.54 | 0.55 | — | — | — | |
| GE Aerospace | 0.96 | 0.94 | — | — | — | |
| Honeywell International Inc. | 1.23 | 1.11 | — | — | — | |
| Lockheed Martin Corp. | 1.81 | 1.19 | — | — | — | |
| RTX Corp. | 0.47 | 0.46 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 1.39 | 1.32 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Industrials | 1.59 | 1.54 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 12,223 ÷ 7,062 = 1.73
2 Click competitor name to see calculations.
A consistent improvement in the solvency profile is observed between 2018 and 2022, characterized by a substantial reduction in financial leverage relative to shareholders' equity.
- Stockholders' Equity Growth
- A strong and continuous upward trend is evident in stockholders' equity, which increased from US$ 3,403 million in 2018 to US$ 7,062 million by 2022. This represents more than a doubling of the equity base over the five-year period, indicating significant retained earnings or capital infusions that have strengthened the company's financial foundation.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, exhibited a non-linear trajectory. After a slight increase in 2019, debt levels declined to a low of US$ 10,409 million in 2020. While debt increased again to US$ 12,223 million by 2022, the growth in debt remained modest compared to the aggressive expansion of equity.
- Debt to Equity Ratio Analysis
- The debt to equity ratio demonstrates a significant and steady decline, moving from 3.45 in 2018 to 1.73 in 2022. The most pronounced reduction occurred between 2019 and 2021. This downward trend reflects a strategic shift toward a more conservative capital structure, reducing the reliance on borrowed funds and improving the overall solvency position of the organization.
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Debt to Capital
United Rentals Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt and current maturities of long-term debt | 161) | 906) | 704) | 997) | 903) | |
| Long-term debt, excluding current maturities | 11,209) | 8,779) | 8,978) | 10,431) | 10,844) | |
| Total debt | 11,370) | 9,685) | 9,682) | 11,428) | 11,747) | |
| Stockholders’ equity | 7,062) | 5,991) | 4,545) | 3,830) | 3,403) | |
| Total capital | 18,432) | 15,676) | 14,227) | 15,258) | 15,150) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.62 | 0.62 | 0.68 | 0.75 | 0.78 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Boeing Co. | 1.39 | 1.35 | — | — | — | |
| Caterpillar Inc. | 0.70 | 0.70 | — | — | — | |
| Eaton Corp. plc | 0.34 | 0.34 | — | — | — | |
| GE Aerospace | 0.47 | 0.47 | — | — | — | |
| Honeywell International Inc. | 0.54 | 0.51 | — | — | — | |
| Lockheed Martin Corp. | 0.63 | 0.52 | — | — | — | |
| RTX Corp. | 0.31 | 0.30 | — | — | — | |
| Debt to Capital, Sector | ||||||
| Capital Goods | 0.57 | 0.56 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Industrials | 0.59 | 0.58 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= 11,370 ÷ 18,432 = 0.62
2 Click competitor name to see calculations.
The analysis of the solvency metrics reveals a consistent improvement in the capital structure over the five-year period from 2018 to 2022. The primary trend is a steady reduction in the reliance on debt to finance total capital, indicating a strengthening of the company's long-term financial stability.
- Debt to Capital Ratio Trend
- A sustained downward trajectory is observed in the debt to capital ratio, which decreased from 0.78 in 2018 to 0.62 by 2022. This reduction represents a significant shift in the financing mix, suggesting a strategic move toward a less leveraged capital base. The most pronounced decline occurred between 2019 and 2021, after which the ratio stabilized at 0.62.
- Total Debt Fluctuations
- Total debt exhibited a non-linear pattern, starting at 11,747 million US$ in 2018 and declining to a low of 9,682 million US$ in 2020. While debt levels remained relatively flat in 2021, there was a notable increase to 11,370 million US$ by the end of 2022. Despite this recent increase in nominal debt, the overall solvency position remained stable relative to total capital.
- Total Capital Expansion
- Total capital showed overall growth, increasing from 15,150 million US$ in 2018 to 18,432 million US$ in 2022. Although a brief contraction occurred in 2020, the subsequent expansion in 2021 and 2022 was aggressive. The growth in total capital in 2022 outpaced the increase in total debt, which prevented the debt to capital ratio from rising and maintained it at the 0.62 level.
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Debt to Capital (including Operating Lease Liability)
United Rentals Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt and current maturities of long-term debt | 161) | 906) | 704) | 997) | 903) | |
| Long-term debt, excluding current maturities | 11,209) | 8,779) | 8,978) | 10,431) | 10,844) | |
| Total debt | 11,370) | 9,685) | 9,682) | 11,428) | 11,747) | |
| Current operating lease liability | 211) | 202) | 178) | 178) | —) | |
| Long-term operating lease liabilities | 642) | 621) | 549) | 533) | —) | |
| Total debt (including operating lease liability) | 12,223) | 10,508) | 10,409) | 12,139) | 11,747) | |
| Stockholders’ equity | 7,062) | 5,991) | 4,545) | 3,830) | 3,403) | |
| Total capital (including operating lease liability) | 19,285) | 16,499) | 14,954) | 15,969) | 15,150) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.63 | 0.64 | 0.70 | 0.76 | 0.78 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 1.37 | 1.34 | — | — | — | |
| Caterpillar Inc. | 0.70 | 0.70 | — | — | — | |
| Eaton Corp. plc | 0.35 | 0.36 | — | — | — | |
| GE Aerospace | 0.49 | 0.49 | — | — | — | |
| Honeywell International Inc. | 0.55 | 0.53 | — | — | — | |
| Lockheed Martin Corp. | 0.64 | 0.54 | — | — | — | |
| RTX Corp. | 0.32 | 0.31 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.58 | 0.57 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.61 | 0.61 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 12,223 ÷ 19,285 = 0.63
2 Click competitor name to see calculations.
An evaluation of the solvency metrics reveals a consistent improvement in the capital structure from 2018 through 2022. While absolute debt levels experienced fluctuations, there is a clear trend toward reduced financial leverage relative to the total capital base.
- Debt to Capital Ratio Trend
- A continuous downward trajectory is observed in the debt to capital ratio, which decreased from 0.78 in 2018 to 0.63 by the end of 2022. This decline signifies a strengthening of the solvency position and a reduced reliance on debt to fund operations and assets over the five-year period.
- Total Debt Analysis
- Total debt, inclusive of operating lease liabilities, exhibited volatility, starting at 11,747 million USD in 2018 and reaching a period high of 12,223 million USD in 2022. A significant contraction occurred in 2020, where liabilities fell to 10,409 million USD, before trending upward again in 2021 and 2022.
- Total Capital Expansion
- Total capital grew from 15,150 million USD in 2018 to 19,285 million USD in 2022. The acceleration of capital growth, particularly between 2020 and 2022, outpaced the increase in total debt, which served as the primary driver for the improvement in the debt to capital ratio.
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Debt to Assets
United Rentals Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt and current maturities of long-term debt | 161) | 906) | 704) | 997) | 903) | |
| Long-term debt, excluding current maturities | 11,209) | 8,779) | 8,978) | 10,431) | 10,844) | |
| Total debt | 11,370) | 9,685) | 9,682) | 11,428) | 11,747) | |
| Total assets | 24,183) | 20,292) | 17,868) | 18,970) | 18,133) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.47 | 0.48 | 0.54 | 0.60 | 0.65 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Boeing Co. | 0.42 | 0.42 | — | — | — | |
| Caterpillar Inc. | 0.45 | 0.46 | — | — | — | |
| Eaton Corp. plc | 0.25 | 0.25 | — | — | — | |
| GE Aerospace | 0.17 | 0.18 | — | — | — | |
| Honeywell International Inc. | 0.31 | 0.30 | — | — | — | |
| Lockheed Martin Corp. | 0.29 | 0.23 | — | — | — | |
| RTX Corp. | 0.20 | 0.20 | — | — | — | |
| Debt to Assets, Sector | ||||||
| Capital Goods | 0.28 | 0.28 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Industrials | 0.31 | 0.30 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= 11,370 ÷ 24,183 = 0.47
2 Click competitor name to see calculations.
A consistent improvement in the solvency position is observed over the five-year period from 2018 to 2022. The overall trajectory indicates a strategic shift toward a more conservative capital structure, characterized by a reduction in the proportion of total assets financed through debt.
- Debt to Assets Ratio Trend
- The debt to assets ratio demonstrates a steady decline, moving from 0.65 in 2018 to 0.47 by the end of 2022. This represents a continuous reduction in financial leverage, suggesting an increased capacity to cover obligations with existing assets and a lower reliance on external borrowing relative to the size of the balance sheet.
- Total Debt Fluctuations
- Total debt experienced an initial decrease from 11,747 million US dollars in 2018 to a low of 9,682 million US dollars in 2020. After remaining relatively flat in 2021, debt levels rose to 11,370 million US dollars in 2022. Despite this recent increase, the total debt remains below the 2018 peak.
- Asset Base Expansion
- Total assets grew from 18,133 million US dollars in 2018 to 24,183 million US dollars in 2022. Although a slight contraction occurred in 2020, the subsequent growth was substantial, particularly between 2020 and 2022. This expansion of the asset base has served as a primary driver in lowering the debt to assets ratio, effectively diluting the impact of the debt increase observed in the final year of the period.
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Debt to Assets (including Operating Lease Liability)
United Rentals Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt and current maturities of long-term debt | 161) | 906) | 704) | 997) | 903) | |
| Long-term debt, excluding current maturities | 11,209) | 8,779) | 8,978) | 10,431) | 10,844) | |
| Total debt | 11,370) | 9,685) | 9,682) | 11,428) | 11,747) | |
| Current operating lease liability | 211) | 202) | 178) | 178) | —) | |
| Long-term operating lease liabilities | 642) | 621) | 549) | 533) | —) | |
| Total debt (including operating lease liability) | 12,223) | 10,508) | 10,409) | 12,139) | 11,747) | |
| Total assets | 24,183) | 20,292) | 17,868) | 18,970) | 18,133) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.51 | 0.52 | 0.58 | 0.64 | 0.65 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Boeing Co. | 0.43 | 0.43 | — | — | — | |
| Caterpillar Inc. | 0.46 | 0.46 | — | — | — | |
| Eaton Corp. plc | 0.26 | 0.27 | — | — | — | |
| GE Aerospace | 0.19 | 0.19 | — | — | — | |
| Honeywell International Inc. | 0.33 | 0.32 | — | — | — | |
| Lockheed Martin Corp. | 0.32 | 0.26 | — | — | — | |
| RTX Corp. | 0.21 | 0.21 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Capital Goods | 0.30 | 0.29 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Industrials | 0.34 | 0.34 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 12,223 ÷ 24,183 = 0.51
2 Click competitor name to see calculations.
Between 2018 and 2022, a consistent improvement in the solvency position is evident, characterized by a steady decline in the proportion of assets financed through debt. This downward trend in the debt-to-assets ratio indicates a reduction in financial leverage and an increase in the equity-funded portion of the balance sheet over the five-year period.
- Debt-to-Assets Ratio Trend
- The ratio decreased monotonically from 0.65 in 2018 to 0.51 by the end of 2022. The most pronounced decline occurred between 2019 and 2021, during which the ratio fell from 0.64 to 0.52, signaling a strengthening of the company's solvency profile.
- Asset Base Expansion
- Total assets exhibited significant growth, rising from 18,133 million US dollars in 2018 to 24,183 million US dollars in 2022. A period of accelerated expansion is observable after 2020, with total assets increasing by approximately 35% between December 31, 2020, and December 31, 2022.
- Debt Obligation Dynamics
- Total debt, inclusive of operating lease liabilities, fluctuated during the period. Following a peak of 12,139 million US dollars in 2019, debt levels declined to 10,409 million US dollars in 2020 before rising again to 12,223 million US dollars in 2022. Because the growth in total assets significantly outpaced the increase in total debt in the final two years, the overall solvency ratio continued to improve despite the absolute increase in liabilities.
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Financial Leverage
United Rentals Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 24,183) | 20,292) | 17,868) | 18,970) | 18,133) | |
| Stockholders’ equity | 7,062) | 5,991) | 4,545) | 3,830) | 3,403) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 3.42 | 3.39 | 3.93 | 4.95 | 5.33 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 5.16 | 5.02 | — | — | — | |
| Eaton Corp. plc | 2.06 | 2.07 | — | — | — | |
| GE Aerospace | 5.16 | 4.93 | — | — | — | |
| Honeywell International Inc. | 3.73 | 3.47 | — | — | — | |
| Lockheed Martin Corp. | 5.71 | 4.64 | — | — | — | |
| RTX Corp. | 2.19 | 2.21 | — | — | — | |
| Financial Leverage, Sector | ||||||
| Capital Goods | 4.71 | 4.55 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Industrials | 4.65 | 4.52 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 24,183 ÷ 7,062 = 3.42
2 Click competitor name to see calculations.
Between 2018 and 2022, a consistent trend toward deleveraging is observed, characterized by a significant reduction in financial leverage and a steady expansion of the equity base. This progression indicates a strategic movement toward a more conservative capital structure and a reduction in long-term financial risk.
- Financial Leverage Ratio
- The financial leverage ratio exhibited a sustained decline from 5.33 in 2018 to 3.39 in 2021, before marginally stabilizing at 3.42 in 2022. This downward trajectory reflects a decreased reliance on borrowed funds to finance the asset base, enhancing the overall solvency profile of the entity.
- Stockholders' Equity Growth
- Stockholders' equity demonstrated uninterrupted annual growth, rising from 3,403 million US dollars in 2018 to 7,062 million US dollars in 2022. This consistent increase in equity served as the primary catalyst for the reduction in financial leverage, suggesting strong internal capital generation or capital contributions.
- Total Asset Evolution
- Total assets grew from 18,133 million US dollars in 2018 to 24,183 million US dollars in 2022. Despite a temporary contraction in 2020, the subsequent expansion—most notably the significant increase between 2021 and 2022—was managed in a manner that did not lead to a proportional increase in leverage, further evidencing a strengthened balance sheet.
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Interest Coverage
United Rentals Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 2,105) | 1,386) | 890) | 1,174) | 1,096) | |
| Add: Income tax expense | 697) | 460) | 249) | 340) | 380) | |
| Add: Interest expense, net | 445) | 424) | 669) | 648) | 481) | |
| Earnings before interest and tax (EBIT) | 3,247) | 2,270) | 1,808) | 2,162) | 1,957) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 7.30 | 5.35 | 2.70 | 3.34 | 4.07 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Boeing Co. | -0.98 | -0.88 | — | — | — | |
| Caterpillar Inc. | 20.80 | 17.88 | — | — | — | |
| Eaton Corp. plc | 21.22 | 21.11 | — | — | — | |
| GE Aerospace | 1.88 | -0.96 | — | — | — | |
| Honeywell International Inc. | 16.41 | 22.09 | — | — | — | |
| Lockheed Martin Corp. | 11.72 | 14.27 | — | — | — | |
| RTX Corp. | 5.64 | 4.71 | — | — | — | |
| Interest Coverage, Sector | ||||||
| Capital Goods | 4.84 | 3.98 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Industrials | 4.98 | 5.14 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,247 ÷ 445 = 7.30
2 Click competitor name to see calculations.
The analysis of interest coverage indicates a period of initial decline followed by a substantial recovery and strengthening of solvency capacity between 2018 and 2022. The interest coverage ratio reached a minimum of 2.70 in 2020 before expanding significantly to 7.30 by the end of 2022, suggesting a marked improvement in the ability to service debt obligations from operating profits.
- Earnings Before Interest and Tax (EBIT)
- Operating performance exhibited a volatile but overall upward trajectory. After an initial increase in 2019, EBIT declined to 1,808 million US dollars in 2020. This was followed by a period of robust growth, with earnings rising to 2,270 million US dollars in 2021 and peaking at 3,247 million US dollars in 2022.
- Net Interest Expense
- Interest obligations trended upward from 2018 to 2020, peaking at 669 million US dollars. A sharp correction occurred in 2021, where net interest expense decreased to 424 million US dollars, remaining relatively stable at 445 million US dollars through the end of 2022.
- Interest Coverage Ratio
- The ratio experienced a contraction from 4.07 in 2018 to 2.70 in 2020, driven by the simultaneous increase in interest expenses and the dip in operating income. A strong recovery followed, with the ratio increasing to 5.35 in 2021 and further ascending to 7.30 in 2022, reflecting a significant enhancement in the margin of safety for interest payments.
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Fixed Charge Coverage
United Rentals Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | 2,105) | 1,386) | 890) | 1,174) | 1,096) | |
| Add: Income tax expense | 697) | 460) | 249) | 340) | 380) | |
| Add: Interest expense, net | 445) | 424) | 669) | 648) | 481) | |
| Earnings before interest and tax (EBIT) | 3,247) | 2,270) | 1,808) | 2,162) | 1,957) | |
| Add: Operating lease cost | 494) | 432) | 366) | 370) | 179) | |
| Earnings before fixed charges and tax | 3,741) | 2,702) | 2,174) | 2,532) | 2,136) | |
| Interest expense, net | 445) | 424) | 669) | 648) | 481) | |
| Operating lease cost | 494) | 432) | 366) | 370) | 179) | |
| Fixed charges | 939) | 856) | 1,035) | 1,018) | 660) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 3.98 | 3.16 | 2.10 | 2.49 | 3.24 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Boeing Co. | -0.70 | -0.64 | — | — | — | |
| Caterpillar Inc. | 14.92 | 12.73 | — | — | — | |
| Eaton Corp. plc | 10.01 | 10.40 | — | — | — | |
| GE Aerospace | 1.35 | -0.22 | — | — | — | |
| Honeywell International Inc. | 11.00 | 13.67 | — | — | — | |
| Lockheed Martin Corp. | 8.44 | 9.95 | — | — | — | |
| RTX Corp. | 4.40 | 3.66 | — | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Capital Goods | 3.61 | 3.06 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Industrials | 3.30 | 3.44 | — | — | — | |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,741 ÷ 939 = 3.98
2 Click competitor name to see calculations.
The company's solvency position, as measured by the fixed charge coverage ratio, experienced a period of contraction between 2018 and 2020, followed by a robust recovery and expansion through 2022. This trajectory reflects a fluctuating balance between operational earnings and fixed financial obligations, ultimately resulting in a strengthened ability to service fixed charges by the end of the analyzed period.
- Earnings before fixed charges and tax
- A general upward trend in earnings is observed, rising from US$ 2,136 million in 2018 to US$ 3,741 million in 2022. Although a temporary decline occurred in 2020, where earnings dropped to US$ 2,174 million, the subsequent growth was substantial, with a significant surge in 2022 representing the peak for the period.
- Fixed charges
- Fixed obligations saw a sharp increase between 2018 and 2019, rising from US$ 660 million to US$ 1,018 million. These charges remained relatively stable at high levels through 2020, followed by a decrease to US$ 856 million in 2021 and a slight uptick to US$ 939 million in 2022.
- Fixed charge coverage ratio
- The coverage ratio exhibited a U-shaped pattern. It declined from 3.24 in 2018 to a low of 2.10 in 2020, indicating a reduced margin of safety during those years. However, the ratio recovered strongly in 2021 to 3.16 and reached a period high of 3.98 in 2022. This improvement is primarily attributed to the rapid growth in earnings outpacing the growth in fixed charges.
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