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 States Steel Corp., 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).
The solvency profile exhibits a distinct cyclical pattern, characterized by a period of increasing financial risk between 2018 and 2020, followed by a significant strengthening of the balance sheet and a reduction in leverage from 2021 through 2022.
- Leverage and Capital Structure
- A consistent upward trend in leverage was observed from 2018 to 2020. The debt-to-equity ratio rose from 0.57 to a peak of 1.29, while the debt-to-assets ratio increased from 0.22 to 0.41 over the same period. This trend was mirrored in the debt-to-capital ratio, which reached a maximum of 0.56 in 2020. Following this peak, a sharp reversal occurred in 2021, with the debt-to-equity ratio falling to 0.43 and further decreasing to 0.39 by the end of 2022, indicating a substantial deleveraging effort.
- Financial Leverage
- Financial leverage increased steadily from 2.61 in 2018 to 3.19 in 2020, suggesting an increased reliance on debt to finance assets. A significant contraction in this ratio was recorded in the following two years, with the value dropping to 1.98 in 2021 and 1.90 in 2022, reflecting a more conservative approach to capital structure and reduced financial risk.
- Debt Service Coverage
- The capacity to service financial obligations underwent a severe contraction between 2019 and 2020. The interest coverage ratio shifted from a positive 5.83 in 2018 to negative values of -2.18 in 2019 and -3.67 in 2020. Fixed charge coverage followed an identical trajectory, descending to -0.93 and -2.62 in those same years. However, a dramatic recovery was observed starting in 2021, with the interest coverage ratio surging to 14.88 and peaking at 21.50 in 2022, while fixed charge coverage reached 14.69.
- Operating Lease Impact
- The inclusion of operating lease liabilities resulted in a marginal increase across all related solvency ratios throughout the five-year period. While the difference between these and the standard debt ratios remained minimal, the trajectory of the lease-inclusive metrics remained consistent with the primary leverage trends, peaking in 2020 and declining through 2022.
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Debt to Equity
United States Steel Corp., 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 | 63) | 28) | 192) | 14) | 65) | |
| Long-term debt, less unamortized discount and debt issuance costs, excluding current maturities | 3,914) | 3,863) | 4,695) | 3,627) | 2,316) | |
| Total debt | 3,977) | 3,891) | 4,887) | 3,641) | 2,381) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.39 | 0.43 | 1.29 | 0.89 | 0.57 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.68 | 0.68 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Materials | 0.67 | 0.55 | — | — | — | |
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 ÷ Total United States Steel Corporation stockholders’ equity
= 3,977 ÷ 10,218 = 0.39
2 Click competitor name to see calculations.
The solvency profile of United States Steel Corporation underwent a significant transformation between 2018 and 2022, characterized by a period of increasing leverage followed by a substantial strengthening of the equity base.
- Debt Accumulation and Peak Leverage
- Total debt increased steadily from US$ 2,381 million in 2018 to a peak of US$ 4,887 million in 2020. During this same period, stockholders' equity experienced a gradual decline, falling from US$ 4,202 million to US$ 3,786 million. This convergence resulted in a marked increase in the debt-to-equity ratio, which rose from 0.57 in 2018 to a high of 1.29 in 2020, indicating a higher reliance on borrowed capital and increased financial risk.
- Capital Structure Realignment
- A reversal in the solvency trend occurred in 2021, characterized by a reduction in total debt to US$ 3,891 million and a dramatic expansion of stockholders' equity to US$ 9,010 million. This realignment significantly improved the solvency position, causing the debt-to-equity ratio to drop sharply to 0.43.
- Current Solvency Status
- As of December 31, 2022, the debt-to-equity ratio further declined to 0.39, the lowest level observed in the five-year period. This trend was supported by a continued increase in stockholders' equity to US$ 10,218 million, while total debt remained relatively stable at US$ 3,977 million. The overall trajectory reflects a transition toward a more conservative financial structure and enhanced long-term solvency.
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Debt to Equity (including Operating Lease Liability)
United States Steel Corp., 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 | 63) | 28) | 192) | 14) | 65) | |
| Long-term debt, less unamortized discount and debt issuance costs, excluding current maturities | 3,914) | 3,863) | 4,695) | 3,627) | 2,316) | |
| Total debt | 3,977) | 3,891) | 4,887) | 3,641) | 2,381) | |
| Current operating lease liabilities | 49) | 58) | 59) | 60) | —) | |
| Noncurrent operating lease liabilities | 105) | 136) | 163) | 177) | —) | |
| Total debt (including operating lease liability) | 4,131) | 4,085) | 5,109) | 3,878) | 2,381) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.40 | 0.45 | 1.35 | 0.95 | 0.57 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.70 | 0.70 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Materials | 0.72 | 0.60 | — | — | — | |
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) ÷ Total United States Steel Corporation stockholders’ equity
= 4,131 ÷ 10,218 = 0.40
2 Click competitor name to see calculations.
The financial solvency profile of United States Steel Corp. exhibited a distinct two-phase trend between 2018 and 2022, characterized by an initial increase in leverage followed by a substantial strengthening of the balance sheet.
- Debt Accumulation and Leverage Peak
- From 2018 to 2020, a significant upward trend in total debt, including operating lease liabilities, was observed. Obligations increased from 2,381 million US$ to a peak of 5,109 million US$. During this same period, stockholders' equity experienced a gradual decline from 4,202 million US$ to 3,786 million US$. This divergence resulted in a sharp increase in the debt-to-equity ratio, which rose from 0.57 in 2018 to 1.35 by the end of 2020, indicating a period of heightened financial leverage.
- Deleveraging and Equity Growth
- A reversal in the solvency trend occurred between 2021 and 2022. Total debt was reduced to 4,085 million US$ in 2021 and remained relatively stable at 4,131 million US$ through 2022. Concurrently, stockholders' equity grew exponentially, rising from 3,786 million US$ in 2020 to 10,218 million US$ by December 31, 2022. This rapid expansion of the equity base, coupled with the reduction in total debt, led to a marked improvement in solvency.
- Debt to Equity Ratio Interpretation
- The debt-to-equity ratio reflects a significant shift in the company's capital structure. After peaking at 1.35 in 2020, the ratio fell sharply to 0.45 in 2021 and further decreased to 0.40 in 2022. This indicates that by the end of the analyzed period, the company had transitioned to a more conservative financial position, with equity significantly outweighing total debt obligations.
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Debt to Capital
United States Steel Corp., 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 | 63) | 28) | 192) | 14) | 65) | |
| Long-term debt, less unamortized discount and debt issuance costs, excluding current maturities | 3,914) | 3,863) | 4,695) | 3,627) | 2,316) | |
| Total debt | 3,977) | 3,891) | 4,887) | 3,641) | 2,381) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Total capital | 14,195) | 12,901) | 8,673) | 7,733) | 6,583) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.28 | 0.30 | 0.56 | 0.47 | 0.36 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.41 | 0.40 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Materials | 0.40 | 0.36 | — | — | — | |
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
= 3,977 ÷ 14,195 = 0.28
2 Click competitor name to see calculations.
An analysis of the solvency position between 2018 and 2022 reveals a distinct cyclical pattern characterized by an initial increase in leverage followed by a significant deleveraging phase. The company experienced a steady rise in its reliance on debt through 2020, after which a strategic shift in capital structure led to a strengthened solvency profile by the end of 2022.
- Debt to Capital Ratio Trend
- The debt to capital ratio exhibited a sharp upward trajectory from 0.36 in 2018 to a peak of 0.56 in 2020, indicating a period of increasing financial risk and higher leverage. However, a significant reversal occurred in 2021, with the ratio dropping to 0.30, and further declining to 0.28 by December 31, 2022. This represents the lowest leverage level within the five-year period analyzed.
- Total Debt Dynamics
- Total debt increased substantially over the first three years, rising from 2,381 million US dollars in 2018 to a maximum of 4,887 million US dollars in 2020. Following this peak, debt levels were reduced to 3,891 million US dollars in 2021 and remained relatively stable at 3,977 million US dollars in 2022, suggesting a move toward stabilizing total liabilities.
- Total Capital Expansion
- Total capital showed consistent growth throughout the entire period. While the growth was steady between 2018 and 2020, a significant acceleration was observed in 2021, where capital jumped from 8,673 million US dollars to 12,901 million US dollars. This expansion continued into 2022, reaching 14,195 million US dollars. The rapid increase in total capital, paired with the stabilization of debt, served as the primary driver for the reduction in the debt to capital ratio.
The convergence of decreasing debt levels and aggressively expanding total capital after 2020 indicates a substantial improvement in the long-term solvency of the organization. The transition from a peak ratio of 0.56 to 0.28 reflects a strengthened balance sheet and a reduced dependence on debt financing relative to total capital investments.
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Debt to Capital (including Operating Lease Liability)
United States Steel Corp., 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 | 63) | 28) | 192) | 14) | 65) | |
| Long-term debt, less unamortized discount and debt issuance costs, excluding current maturities | 3,914) | 3,863) | 4,695) | 3,627) | 2,316) | |
| Total debt | 3,977) | 3,891) | 4,887) | 3,641) | 2,381) | |
| Current operating lease liabilities | 49) | 58) | 59) | 60) | —) | |
| Noncurrent operating lease liabilities | 105) | 136) | 163) | 177) | —) | |
| Total debt (including operating lease liability) | 4,131) | 4,085) | 5,109) | 3,878) | 2,381) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Total capital (including operating lease liability) | 14,349) | 13,095) | 8,895) | 7,970) | 6,583) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.29 | 0.31 | 0.57 | 0.49 | 0.36 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.41 | 0.41 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Materials | 0.42 | 0.38 | — | — | — | |
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)
= 4,131 ÷ 14,349 = 0.29
2 Click competitor name to see calculations.
The solvency profile between 2018 and 2022 is characterized by an initial increase in leverage followed by a significant strengthening of the capital structure. This period reflects a cyclical movement in debt levels paired with a consistent and substantial expansion of the total capital base.
- Total Debt Trends
- Total debt, including operating lease liabilities, experienced a sharp upward trajectory from 2018 to 2020, rising from US$ 2,381 million to a peak of US$ 5,109 million. This growth was reversed in 2021, with debt decreasing to US$ 4,085 million and remaining relatively stable at US$ 4,131 million by the end of 2022.
- Total Capital Growth
- Total capital demonstrated a continuous and accelerating increase throughout the five-year period. Starting at US$ 6,583 million in 2018, the capital base grew to US$ 14,349 million by 2022. A particularly notable expansion occurred between 2020 and 2021, where total capital increased by US$ 4,200 million.
- Debt to Capital Ratio Analysis
- The debt to capital ratio mirrored the debt trends initially, increasing from 0.36 in 2018 to a high of 0.57 in 2020, signaling a period of increased financial leverage. However, a significant correction occurred in 2021, as the ratio dropped to 0.31. This downward trend continued into 2022, reaching 0.29, the lowest point in the analyzed period. This decline indicates a shift toward a more conservative solvency position, driven by the combination of debt reduction and a rapidly expanding capital base.
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Debt to Assets
United States Steel Corp., 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 | 63) | 28) | 192) | 14) | 65) | |
| Long-term debt, less unamortized discount and debt issuance costs, excluding current maturities | 3,914) | 3,863) | 4,695) | 3,627) | 2,316) | |
| Total debt | 3,977) | 3,891) | 4,887) | 3,641) | 2,381) | |
| Total assets | 19,458) | 17,816) | 12,059) | 11,608) | 10,982) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.20 | 0.22 | 0.41 | 0.31 | 0.22 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.21 | 0.20 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Materials | 0.26 | 0.22 | — | — | — | |
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
= 3,977 ÷ 19,458 = 0.20
2 Click competitor name to see calculations.
An analysis of solvency metrics from 2018 to 2022 reveals a period of increasing leverage followed by a significant expansion of the asset base and a subsequent improvement in the solvency ratio.
- Debt Accumulation Trend (2018–2020)
- Total debt experienced a consistent upward trajectory during the first three years of the period, rising from US$ 2,381 million in 2018 to a peak of US$ 4,887 million in 2020. This increase in liabilities resulted in the debt to assets ratio climbing from 0.22 to 0.41, indicating that a larger portion of the company's assets was financed through debt by the end of 2020.
- Asset Growth and Deleveraging (2021–2022)
- A significant shift is observed starting in 2021, characterized by a substantial increase in total assets, which grew from US$ 12,059 million in 2020 to US$ 19,458 million by December 31, 2022. Concurrently, total debt was reduced from its 2020 peak, decreasing to US$ 3,891 million in 2021 and stabilizing at US$ 3,977 million in 2022.
- Solvency Ratio Interpretation
- The debt to assets ratio followed a peaked trajectory, ascending to 0.41 in 2020 before declining sharply to 0.22 in 2021 and further to 0.20 in 2022. This trend demonstrates a strengthened solvency position, as the rapid growth of the asset base combined with a reduction in total debt effectively lowered the company's financial leverage to levels below those recorded in 2018.
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Debt to Assets (including Operating Lease Liability)
United States Steel Corp., 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 | 63) | 28) | 192) | 14) | 65) | |
| Long-term debt, less unamortized discount and debt issuance costs, excluding current maturities | 3,914) | 3,863) | 4,695) | 3,627) | 2,316) | |
| Total debt | 3,977) | 3,891) | 4,887) | 3,641) | 2,381) | |
| Current operating lease liabilities | 49) | 58) | 59) | 60) | —) | |
| Noncurrent operating lease liabilities | 105) | 136) | 163) | 177) | —) | |
| Total debt (including operating lease liability) | 4,131) | 4,085) | 5,109) | 3,878) | 2,381) | |
| Total assets | 19,458) | 17,816) | 12,059) | 11,608) | 10,982) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.21 | 0.23 | 0.42 | 0.33 | 0.22 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Freeport-McMoRan Inc. | 0.21 | 0.20 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Materials | 0.28 | 0.24 | — | — | — | |
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
= 4,131 ÷ 19,458 = 0.21
2 Click competitor name to see calculations.
The solvency profile from 2018 to 2022 is characterized by a distinct peak in leverage mid-period followed by a substantial expansion of the asset base, resulting in a lower overall debt-to-asset ratio by the conclusion of the analyzed timeframe.
- Debt Accumulation and Reduction
- Total debt, inclusive of operating lease liabilities, experienced a consistent upward trajectory from 2018 to 2020, rising from US$ 2,381 million to a peak of US$ 5,109 million. Following this peak, debt levels were reduced to US$ 4,085 million in 2021 and remained relatively stable at US$ 4,131 million in 2022.
- Asset Base Expansion
- Total assets grew steadily between 2018 and 2020, increasing from US$ 10,982 million to US$ 12,059 million. A significant acceleration in asset growth occurred between 2020 and 2022, with total assets increasing to US$ 17,816 million in 2021 and further reaching US$ 19,458 million by the end of 2022.
- Debt to Assets Ratio Dynamics
- The debt to assets ratio reflects these underlying shifts, climbing from 0.22 in 2018 to a high of 0.42 in 2020, indicating a period of increased financial leverage. Subsequently, the combination of debt reduction and aggressive asset growth led to a sharp decline in the ratio to 0.23 in 2021 and a further decrease to 0.21 in 2022. This represents a return to, and slight improvement upon, the solvency levels observed at the beginning of the five-year period.
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Financial Leverage
United States Steel Corp., 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 | 19,458) | 17,816) | 12,059) | 11,608) | 10,982) | |
| Total United States Steel Corporation stockholders’ equity | 10,218) | 9,010) | 3,786) | 4,092) | 4,202) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.90 | 1.98 | 3.19 | 2.84 | 2.61 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 3.28 | 3.44 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Materials | 2.61 | 2.49 | — | — | — | |
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 ÷ Total United States Steel Corporation stockholders’ equity
= 19,458 ÷ 10,218 = 1.90
2 Click competitor name to see calculations.
An analysis of solvency metrics from 2018 to 2022 reveals a significant transition in the capital structure. While the asset base expanded consistently throughout the period, the reliance on debt relative to equity peaked in 2020 before undergoing a sharp decline, indicating a strategic shift toward a more conservative financial position.
- Total Asset Growth
- Total assets demonstrated a continuous upward trajectory, rising from 10,982 million in 2018 to 19,458 million in 2022. The most pronounced expansion occurred between 2020 and 2021, coinciding with a substantial increase in the overall scale of the balance sheet.
- Stockholders' Equity Dynamics
- Stockholders' equity experienced a period of slight contraction between 2018 and 2020, decreasing from 4,202 million to 3,786 million. This trend reversed sharply in 2021, with equity increasing to 9,010 million and continuing to grow to 10,218 million by the end of 2022.
- Financial Leverage Trend
- The financial leverage ratio exhibited an initial increase, rising from 2.61 in 2018 to a peak of 3.19 in 2020, which suggests an increase in financial risk and a higher proportion of debt-funded assets. However, a marked improvement in solvency is observed from 2021 onward, as the ratio fell to 1.98 and further declined to 1.90 in 2022. This downward trend indicates a strengthened equity position and a reduction in the company's overall financial leverage.
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Interest Coverage
United States Steel Corp., 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 earnings (loss) attributable to United States Steel Corporation | 2,524) | 4,174) | (1,165) | (630) | 1,115) | |
| Add: Net income attributable to noncontrolling interest | —) | —) | —) | —) | —) | |
| Add: Income tax expense | 735) | 170) | (142) | 178) | (303) | |
| Add: Interest expense | 159) | 313) | 280) | 142) | 168) | |
| Earnings before interest and tax (EBIT) | 3,418) | 4,657) | (1,027) | (310) | 980) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 21.50 | 14.88 | -3.67 | -2.18 | 5.83 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 13.05 | 13.73 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Materials | 14.30 | 15.36 | — | — | — | |
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
= 3,418 ÷ 159 = 21.50
2 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by extreme volatility in operating results and a subsequent strengthening of debt-servicing capacity. A period of operational distress occurred between 2019 and 2020, followed by a substantial recovery in earnings and solvency margins during the 2021-2022 period.
- Earnings Before Interest and Tax (EBIT)
- Operating earnings experienced a sharp decline starting in 2019, falling from 980 million USD to a nadir of negative 1,027 million USD in 2020. A rapid turnaround occurred in 2021, with EBIT surging to 4,657 million USD, before moderating to 3,418 million USD in 2022. This indicates a significant recovery in operational profitability following a two-year period of losses.
- Interest Expense
- Interest obligations showed an upward trend from 2019, peaking at 313 million USD in 2021. However, a notable reduction is observed in 2022, where expenses decreased to 159 million USD. This decline in the cost of debt occurred simultaneously with high operating earnings, further enhancing the company's financial flexibility.
- Interest Coverage Ratio
- The interest coverage ratio reflects the volatility of the EBIT. After starting at 5.83 in 2018, the ratio shifted to negative values of -2.18 in 2019 and -3.67 in 2020, signifying that operating profits were insufficient to cover interest payments. A dramatic recovery followed, with the ratio ascending to 14.88 in 2021 and peaking at 21.50 in 2022. This progression demonstrates a shift from a position of solvency risk to a high margin of safety in debt servicing.
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Fixed Charge Coverage
United States Steel Corp., 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 earnings (loss) attributable to United States Steel Corporation | 2,524) | 4,174) | (1,165) | (630) | 1,115) | |
| Add: Net income attributable to noncontrolling interest | —) | —) | —) | —) | —) | |
| Add: Income tax expense | 735) | 170) | (142) | 178) | (303) | |
| Add: Interest expense | 159) | 313) | 280) | 142) | 168) | |
| Earnings before interest and tax (EBIT) | 3,418) | 4,657) | (1,027) | (310) | 980) | |
| Add: Operating lease cost | 79) | 83) | 81) | 92) | 133) | |
| Earnings before fixed charges and tax | 3,497) | 4,740) | (946) | (218) | 1,113) | |
| Interest expense | 159) | 313) | 280) | 142) | 168) | |
| Operating lease cost | 79) | 83) | 81) | 92) | 133) | |
| Fixed charges | 238) | 396) | 361) | 234) | 301) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 14.69 | 11.97 | -2.62 | -0.93 | 3.70 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Freeport-McMoRan Inc. | 12.13 | 11.86 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Materials | 8.68 | 8.75 | — | — | — | |
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
= 3,497 ÷ 238 = 14.69
2 Click competitor name to see calculations.
The solvency profile of the entity experienced significant volatility between 2018 and 2022, characterized by a severe contraction in coverage capabilities followed by a robust recovery.
- Earnings Before Fixed Charges and Tax
- A sharp decline was observed between 2018 and 2020, with earnings shifting from a positive 1,113 million US$ to a deficit of 946 million US$ by the end of 2020. This downward trajectory reversed aggressively in 2021, reaching a peak of 4,740 million US$, before moderating to 3,497 million US$ in 2022.
- Fixed Charge Obligations
- Fixed charges remained relatively stable over the five-year period, fluctuating between a high of 396 million US$ in 2021 and a low of 234 million US$ in 2019. The decrease to 238 million US$ in 2022 enhanced the overall solvency position by reducing the total obligations required to be covered by earnings.
- Fixed Charge Coverage Ratio
- The coverage ratio reflects extreme variance corresponding to earnings volatility. A stable ratio of 3.70 in 2018 deteriorated into negative territory in 2019 (-0.93) and 2020 (-2.62), signifying that earnings were insufficient to cover fixed charges. A substantial recovery occurred in 2021, with the ratio ascending to 11.97 and further increasing to 14.69 by 2022, representing a significant increase in the margin of safety.
The analysis indicates that the entity transitioned from a period of critical solvency risk during 2019 and 2020 to a position of exceptional strength by 2022. The current coverage ratio is substantially higher than the 2018 baseline, suggesting a greatly improved capacity to service fixed obligations.
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