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
Zoetis Inc., solvency ratios
Based on: 10-K (reporting date: 2023-12-31), 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).
The solvency profile exhibits a general strengthening over the five-year period from 2019 to 2023, characterized by a systematic reduction in leverage and a consistent increase in the capacity to service financial obligations.
- Leverage and Capital Structure
- A sustained downward trend in leverage is evident across multiple metrics. The debt to equity ratio declined from 2.38 in 2019 to 1.32 in 2023, and the debt to assets ratio decreased from 0.56 to 0.46. While a temporary increase in these ratios occurred in 2022, the 2023 figures represent the lowest levels in the observed period. The inclusion of operating lease liabilities marginally increases these ratios but does not alter the overall downward trajectory.
- Debt to Capital and Financial Leverage
- The debt to capital ratio shifted from 0.70 in 2019 to 0.57 in 2023, indicating a shift toward a more equity-heavy capital structure. Correspondingly, financial leverage decreased from 4.26 in 2019 to 2.86 in 2023, reflecting a reduction in the use of debt to finance assets.
- Debt Service Coverage
- A strong and consistent improvement in coverage ratios is observed. Interest coverage increased steadily from 9.08 in 2019 to 13.28 in 2023, suggesting a growing margin of safety for interest payments. Similarly, the fixed charge coverage ratio improved from 7.85 in 2019 to 10.95 in 2023, confirming an enhanced ability to meet all fixed financial commitments.
Overall, the data indicates a strategic deleveraging process coupled with improved operational efficiency in generating earnings relative to debt obligations, resulting in a significantly lower risk profile by the end of 2023.
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Debt to Equity
Zoetis Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings | 3) | 2) | —) | 4) | —) | |
| Current portion of long-term debt | —) | 1,350) | —) | 600) | 500) | |
| Finance lease liabilities, current | 1) | —) | —) | —) | —) | |
| Long-term debt, net of discount and issuance costs, excluding current portion | 6,564) | 6,552) | 6,592) | 6,595) | 5,947) | |
| Finance lease liabilities, noncurrent | 8) | —) | —) | —) | —) | |
| Total debt | 6,576) | 7,904) | 6,592) | 7,199) | 6,447) | |
| Total Zoetis Inc. equity | 4,997) | 4,405) | 4,543) | 3,769) | 2,708) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.32 | 1.79 | 1.45 | 1.91 | 2.38 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| AbbVie Inc. | 5.73 | 3.67 | 4.98 | — | — | |
| Amgen Inc. | 10.37 | 10.64 | 4.97 | — | — | |
| Bristol-Myers Squibb Co. | 1.35 | 1.27 | 1.24 | — | — | |
| Danaher Corp. | 0.34 | 0.39 | 0.49 | — | — | |
| Eli Lilly & Co. | 2.34 | 1.52 | 1.88 | — | — | |
| Gilead Sciences Inc. | 1.09 | 1.19 | 1.27 | — | — | |
| Johnson & Johnson | 0.43 | 0.52 | 0.46 | — | — | |
| Merck & Co. Inc. | 0.93 | 0.67 | 0.87 | — | — | |
| Pfizer Inc. | 0.81 | 0.37 | 0.50 | — | — | |
| Regeneron Pharmaceuticals Inc. | 0.10 | 0.12 | 0.14 | — | — | |
| Thermo Fisher Scientific Inc. | 0.75 | 0.78 | 0.85 | — | — | |
| Vertex Pharmaceuticals Inc. | 0.02 | 0.03 | 0.06 | — | — | |
| Debt to Equity, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.97 | 0.80 | 0.93 | — | — | |
| Debt to Equity, Industry | ||||||
| Health Care | 0.82 | 0.72 | 0.80 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Debt to equity = Total debt ÷ Total Zoetis Inc. equity
= 6,576 ÷ 4,997 = 1.32
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a general improvement in financial leverage between 2019 and 2023. The overall trend is characterized by a significant reduction in the debt-to-equity ratio, indicating a shift toward a more equity-funded capital structure and reduced financial risk.
- Debt-to-Equity Ratio Trends
- The debt-to-equity ratio experienced a notable decline from 2.38 in 2019 to 1.32 by the end of 2023. Although a temporary increase was observed in 2022, when the ratio rose to 1.79, the subsequent drop to 1.32 represents the lowest leverage level recorded during the five-year period.
- Total Debt Dynamics
- Total debt exhibited a fluctuating pattern, increasing from US$ 6,447 million in 2019 to a peak of US$ 7,904 million in 2022. This peak was followed by a sharp contraction in 2023, with total debt falling to US$ 6,576 million, returning the debt load to a level similar to that of 2019.
- Equity Expansion
- Total equity showed a consistent and strong upward trajectory, growing from US$ 2,708 million in 2019 to US$ 4,997 million in 2023. This steady accumulation of equity has served as the primary driver for the improvement in solvency, providing a larger capital cushion to support the organization's obligations.
The combination of a substantial increase in equity and a strategic reduction in total debt by the end of 2023 has resulted in a strengthened balance sheet. The downward trend in the debt-to-equity ratio suggests an enhanced capacity to meet long-term obligations and a decreased reliance on external borrowing.
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Debt to Equity (including Operating Lease Liability)
Zoetis Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings | 3) | 2) | —) | 4) | —) | |
| Current portion of long-term debt | —) | 1,350) | —) | 600) | 500) | |
| Finance lease liabilities, current | 1) | —) | —) | —) | —) | |
| Long-term debt, net of discount and issuance costs, excluding current portion | 6,564) | 6,552) | 6,592) | 6,595) | 5,947) | |
| Finance lease liabilities, noncurrent | 8) | —) | —) | —) | —) | |
| Total debt | 6,576) | 7,904) | 6,592) | 7,199) | 6,447) | |
| Operating lease liabilities, current (in Other current liabilities) | 48) | 43) | 41) | 40) | 35) | |
| Operating lease liabilities, noncurrent | 188) | 186) | 151) | 163) | 164) | |
| Total debt (including operating lease liability) | 6,812) | 8,133) | 6,784) | 7,402) | 6,646) | |
| Total Zoetis Inc. equity | 4,997) | 4,405) | 4,543) | 3,769) | 2,708) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 1.36 | 1.85 | 1.49 | 1.96 | 2.45 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| AbbVie Inc. | 5.82 | 3.72 | 5.03 | — | — | |
| Amgen Inc. | 10.50 | 10.83 | 5.07 | — | — | |
| Bristol-Myers Squibb Co. | 1.41 | 1.31 | 1.27 | — | — | |
| Danaher Corp. | 0.37 | 0.41 | 0.52 | — | — | |
| Eli Lilly & Co. | 2.44 | 1.59 | 1.96 | — | — | |
| Gilead Sciences Inc. | 1.12 | 1.22 | 1.30 | — | — | |
| Johnson & Johnson | 0.44 | 0.53 | 0.47 | — | — | |
| Merck & Co. Inc. | 0.97 | 0.70 | 0.91 | — | — | |
| Pfizer Inc. | 0.84 | 0.41 | 0.54 | — | — | |
| Regeneron Pharmaceuticals Inc. | 0.11 | 0.12 | 0.15 | — | — | |
| Thermo Fisher Scientific Inc. | 0.78 | 0.82 | 0.89 | — | — | |
| Vertex Pharmaceuticals Inc. | 0.05 | 0.06 | 0.10 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 1.00 | 0.83 | 0.96 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.85 | 0.76 | 0.83 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Zoetis Inc. equity
= 6,812 ÷ 4,997 = 1.36
2 Click competitor name to see calculations.
The solvency profile of the organization demonstrates a general improvement in leverage from 2019 to 2023, characterized by a significant reduction in the debt-to-equity ratio.
- Debt to Equity Ratio Trend
- The debt-to-equity ratio exhibited a overall downward trajectory, falling from 2.45 in 2019 to 1.36 by the end of 2023. While a temporary increase occurred in 2022, where the ratio rose to 1.85, the five-year trend indicates a transition toward a more conservative capital structure and reduced relative reliance on borrowed funds.
- Total Debt Dynamics
- Total debt, inclusive of operating lease liabilities, experienced fluctuations throughout the period. Debt levels rose to 7,402 million US$ in 2020, declined in 2021, and peaked at 8,133 million US$ in 2022. A notable reduction followed in 2023, with debt decreasing to 6,812 million US$, returning to a level comparable to the 6,646 million US$ reported in 2019.
- Equity Growth
- Total equity showed a strong upward trend, increasing from 2,708 million US$ in 2019 to 4,997 million US$ in 2023. This expansion of the equity base provided a stabilizing effect on the solvency ratio, effectively offsetting the impact of increased debt during the 2020 and 2022 periods and contributing to the overall strengthening of the balance sheet.
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Debt to Capital
Zoetis Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings | 3) | 2) | —) | 4) | —) | |
| Current portion of long-term debt | —) | 1,350) | —) | 600) | 500) | |
| Finance lease liabilities, current | 1) | —) | —) | —) | —) | |
| Long-term debt, net of discount and issuance costs, excluding current portion | 6,564) | 6,552) | 6,592) | 6,595) | 5,947) | |
| Finance lease liabilities, noncurrent | 8) | —) | —) | —) | —) | |
| Total debt | 6,576) | 7,904) | 6,592) | 7,199) | 6,447) | |
| Total Zoetis Inc. equity | 4,997) | 4,405) | 4,543) | 3,769) | 2,708) | |
| Total capital | 11,573) | 12,309) | 11,135) | 10,968) | 9,155) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.57 | 0.64 | 0.59 | 0.66 | 0.70 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| AbbVie Inc. | 0.85 | 0.79 | 0.83 | — | — | |
| Amgen Inc. | 0.91 | 0.91 | 0.83 | — | — | |
| Bristol-Myers Squibb Co. | 0.57 | 0.56 | 0.55 | — | — | |
| Danaher Corp. | 0.26 | 0.28 | 0.33 | — | — | |
| Eli Lilly & Co. | 0.70 | 0.60 | 0.65 | — | — | |
| Gilead Sciences Inc. | 0.52 | 0.54 | 0.56 | — | — | |
| Johnson & Johnson | 0.30 | 0.34 | 0.31 | — | — | |
| Merck & Co. Inc. | 0.48 | 0.40 | 0.46 | — | — | |
| Pfizer Inc. | 0.45 | 0.27 | 0.33 | — | — | |
| Regeneron Pharmaceuticals Inc. | 0.09 | 0.11 | 0.13 | — | — | |
| Thermo Fisher Scientific Inc. | 0.43 | 0.44 | 0.46 | — | — | |
| Vertex Pharmaceuticals Inc. | 0.02 | 0.03 | 0.05 | — | — | |
| Debt to Capital, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.49 | 0.44 | 0.48 | — | — | |
| Debt to Capital, Industry | ||||||
| Health Care | 0.45 | 0.42 | 0.44 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 6,576 ÷ 11,573 = 0.57
2 Click competitor name to see calculations.
The analysis of the solvency metrics from 2019 to 2023 indicates a general improvement in the company's capital structure, characterized by a reduction in the proportion of debt relative to total capital. Although absolute debt levels experienced volatility throughout the period, the overall trajectory of the debt-to-capital ratio suggests a shift toward a more conservative financial leverage position.
- Total Debt Trends
- Total debt exhibited a non-linear progression, beginning at 6,447 million US$ in 2019 and peaking at 7,904 million US$ in 2022. A notable contraction occurred in 2023, where debt levels fell to 6,576 million US$, nearly returning to 2019 levels. This volatility suggests periodic adjustments in borrowing activities or debt repayment cycles.
- Total Capital Expansion
- Total capital showed a consistent upward trend for the majority of the period, growing from 9,155 million US$ in 2019 to a peak of 12,309 million US$ in 2022. A slight decrease to 11,573 million US$ was recorded in 2023. The growth in total capital generally outpaced the growth in total debt, which contributed to the strengthening of the solvency ratio.
- Debt to Capital Ratio Analysis
- The debt-to-capital ratio declined from 0.70 in 2019 to 0.57 in 2023. A steady decrease was observed through 2021, reaching 0.59, followed by a temporary increase to 0.64 in 2022, which correlates with the peak in total debt. However, the ratio reached its lowest point of the five-year period in 2023. This overall downward trend indicates a decrease in financial leverage and an increased reliance on equity or other non-debt capital sources to fund operations and growth.
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Debt to Capital (including Operating Lease Liability)
Zoetis Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings | 3) | 2) | —) | 4) | —) | |
| Current portion of long-term debt | —) | 1,350) | —) | 600) | 500) | |
| Finance lease liabilities, current | 1) | —) | —) | —) | —) | |
| Long-term debt, net of discount and issuance costs, excluding current portion | 6,564) | 6,552) | 6,592) | 6,595) | 5,947) | |
| Finance lease liabilities, noncurrent | 8) | —) | —) | —) | —) | |
| Total debt | 6,576) | 7,904) | 6,592) | 7,199) | 6,447) | |
| Operating lease liabilities, current (in Other current liabilities) | 48) | 43) | 41) | 40) | 35) | |
| Operating lease liabilities, noncurrent | 188) | 186) | 151) | 163) | 164) | |
| Total debt (including operating lease liability) | 6,812) | 8,133) | 6,784) | 7,402) | 6,646) | |
| Total Zoetis Inc. equity | 4,997) | 4,405) | 4,543) | 3,769) | 2,708) | |
| Total capital (including operating lease liability) | 11,809) | 12,538) | 11,327) | 11,171) | 9,354) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.58 | 0.65 | 0.60 | 0.66 | 0.71 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| AbbVie Inc. | 0.85 | 0.79 | 0.83 | — | — | |
| Amgen Inc. | 0.91 | 0.92 | 0.84 | — | — | |
| Bristol-Myers Squibb Co. | 0.58 | 0.57 | 0.56 | — | — | |
| Danaher Corp. | 0.27 | 0.29 | 0.34 | — | — | |
| Eli Lilly & Co. | 0.71 | 0.61 | 0.66 | — | — | |
| Gilead Sciences Inc. | 0.53 | 0.55 | 0.56 | — | — | |
| Johnson & Johnson | 0.31 | 0.35 | 0.32 | — | — | |
| Merck & Co. Inc. | 0.49 | 0.41 | 0.48 | — | — | |
| Pfizer Inc. | 0.46 | 0.29 | 0.35 | — | — | |
| Regeneron Pharmaceuticals Inc. | 0.10 | 0.11 | 0.13 | — | — | |
| Thermo Fisher Scientific Inc. | 0.44 | 0.45 | 0.47 | — | — | |
| Vertex Pharmaceuticals Inc. | 0.04 | 0.06 | 0.09 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.50 | 0.45 | 0.49 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.46 | 0.43 | 0.45 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 6,812 ÷ 11,809 = 0.58
2 Click competitor name to see calculations.
The solvency profile exhibits a general improvement in the capital structure from 2019 to 2023. While total debt levels fluctuated throughout the period, the overall reliance on borrowed funds relative to total capital has declined, suggesting a strengthened solvency position and a strategic shift toward a more balanced financing mix.
- Debt to Capital Ratio Trends
- A consistent downward trend is observed in the debt to capital ratio, which decreased from 0.71 in 2019 to a five-year low of 0.58 by the end of 2023. Although a temporary increase to 0.65 occurred in 2022, the subsequent drop in 2023 indicates a successful reduction in leverage relative to the company's total capital base.
- Total Debt Volatility
- Total debt, including operating lease liabilities, showed significant volatility. After an initial increase in 2020, debt levels peaked in 2022 at 8,133 million US$. However, a substantial reduction followed in 2023, bringing the total debt down to 6,812 million US$, a level closely aligned with the 2019 and 2021 figures.
- Capitalization Base Expansion
- Total capital experienced a general expansion over the period, growing from 9,354 million US$ in 2019 to 11,809 million US$ in 2023. The growth in total capital, particularly between 2019 and 2022, outpaced the growth of debt in most years, which contributed to the overall reduction in the debt-to-capital ratio and improved the long-term financial stability of the organization.
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Debt to Assets
Zoetis Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings | 3) | 2) | —) | 4) | —) | |
| Current portion of long-term debt | —) | 1,350) | —) | 600) | 500) | |
| Finance lease liabilities, current | 1) | —) | —) | —) | —) | |
| Long-term debt, net of discount and issuance costs, excluding current portion | 6,564) | 6,552) | 6,592) | 6,595) | 5,947) | |
| Finance lease liabilities, noncurrent | 8) | —) | —) | —) | —) | |
| Total debt | 6,576) | 7,904) | 6,592) | 7,199) | 6,447) | |
| Total assets | 14,286) | 14,925) | 13,900) | 13,609) | 11,545) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.46 | 0.53 | 0.47 | 0.53 | 0.56 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| AbbVie Inc. | 0.44 | 0.46 | 0.52 | — | — | |
| Amgen Inc. | 0.67 | 0.60 | 0.54 | — | — | |
| Bristol-Myers Squibb Co. | 0.42 | 0.41 | 0.41 | — | — | |
| Danaher Corp. | 0.22 | 0.23 | 0.27 | — | — | |
| Eli Lilly & Co. | 0.39 | 0.33 | 0.35 | — | — | |
| Gilead Sciences Inc. | 0.40 | 0.40 | 0.39 | — | — | |
| Johnson & Johnson | 0.18 | 0.21 | 0.19 | — | — | |
| Merck & Co. Inc. | 0.33 | 0.28 | 0.31 | — | — | |
| Pfizer Inc. | 0.32 | 0.18 | 0.21 | — | — | |
| Regeneron Pharmaceuticals Inc. | 0.08 | 0.09 | 0.11 | — | — | |
| Thermo Fisher Scientific Inc. | 0.35 | 0.35 | 0.37 | — | — | |
| Vertex Pharmaceuticals Inc. | 0.02 | 0.03 | 0.04 | — | — | |
| Debt to Assets, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.34 | 0.31 | 0.32 | — | — | |
| Debt to Assets, Industry | ||||||
| Health Care | 0.30 | 0.28 | 0.30 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 6,576 ÷ 14,286 = 0.46
2 Click competitor name to see calculations.
The solvency analysis for the period between 2019 and 2023 reveals a general reduction in the proportion of assets financed by debt, indicating a strengthening of the long-term financial position.
- Total Debt Trajectory
- Total debt exhibited volatility over the five-year period. After an initial increase from US$ 6,447 million in 2019 to US$ 7,199 million in 2020, levels fluctuated, reaching a peak of US$ 7,904 million in 2022 before declining to US$ 6,576 million by the end of 2023.
- Total Asset Growth
- The asset base demonstrated a consistent upward trend for the majority of the period, expanding from US$ 11,545 million in 2019 to a maximum of US$ 14,925 million in 2022. A slight contraction was observed in 2023, with total assets settling at US$ 14,286 million.
- Debt to Assets Ratio Analysis
- The debt to assets ratio reflects an overall downward trajectory, moving from 0.56 in 2019 to 0.46 in 2023. A notable decrease occurred by 2021, reaching 0.47, followed by a temporary increase to 0.53 in 2022, which coincided with the peak in total debt. The final reduction to 0.46 in 2023 represents the lowest leverage level within the analyzed timeframe, suggesting a shift toward a more conservative capital structure.
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Debt to Assets (including Operating Lease Liability)
Zoetis Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings | 3) | 2) | —) | 4) | —) | |
| Current portion of long-term debt | —) | 1,350) | —) | 600) | 500) | |
| Finance lease liabilities, current | 1) | —) | —) | —) | —) | |
| Long-term debt, net of discount and issuance costs, excluding current portion | 6,564) | 6,552) | 6,592) | 6,595) | 5,947) | |
| Finance lease liabilities, noncurrent | 8) | —) | —) | —) | —) | |
| Total debt | 6,576) | 7,904) | 6,592) | 7,199) | 6,447) | |
| Operating lease liabilities, current (in Other current liabilities) | 48) | 43) | 41) | 40) | 35) | |
| Operating lease liabilities, noncurrent | 188) | 186) | 151) | 163) | 164) | |
| Total debt (including operating lease liability) | 6,812) | 8,133) | 6,784) | 7,402) | 6,646) | |
| Total assets | 14,286) | 14,925) | 13,900) | 13,609) | 11,545) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.48 | 0.54 | 0.49 | 0.54 | 0.58 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| AbbVie Inc. | 0.45 | 0.46 | 0.53 | — | — | |
| Amgen Inc. | 0.67 | 0.61 | 0.56 | — | — | |
| Bristol-Myers Squibb Co. | 0.44 | 0.42 | 0.42 | — | — | |
| Danaher Corp. | 0.23 | 0.25 | 0.28 | — | — | |
| Eli Lilly & Co. | 0.41 | 0.34 | 0.36 | — | — | |
| Gilead Sciences Inc. | 0.41 | 0.41 | 0.40 | — | — | |
| Johnson & Johnson | 0.18 | 0.22 | 0.19 | — | — | |
| Merck & Co. Inc. | 0.34 | 0.29 | 0.33 | — | — | |
| Pfizer Inc. | 0.33 | 0.20 | 0.23 | — | — | |
| Regeneron Pharmaceuticals Inc. | 0.08 | 0.09 | 0.11 | — | — | |
| Thermo Fisher Scientific Inc. | 0.37 | 0.37 | 0.38 | — | — | |
| Vertex Pharmaceuticals Inc. | 0.04 | 0.05 | 0.07 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 0.35 | 0.32 | 0.34 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Health Care | 0.32 | 0.29 | 0.31 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 6,812 ÷ 14,286 = 0.48
2 Click competitor name to see calculations.
The analysis of solvency indicates a general improvement in the leverage position between 2019 and 2023, characterized by a reduction in the proportion of assets financed by debt.
- Debt to Assets Ratio Trend
- A fluctuating but downward trajectory is observed, moving from 0.58 in 2019 to a period low of 0.48 in 2023. Although a temporary increase to 0.54 occurred in 2022, the overall trend suggests an improvement in the solvency margin over the five-year window.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, exhibited significant volatility. Debt levels rose from US$ 6,646 million in 2019 to a peak of US$ 8,133 million in 2022, followed by a substantial reduction to US$ 6,812 million by the end of 2023. The 2023 debt level is nearly aligned with the 2019 baseline despite the growth in company scale.
- Asset Base Evolution
- Total assets demonstrated a consistent growth pattern from 2019 through 2022, increasing from US$ 11,545 million to US$ 14,925 million. A slight contraction was noted in 2023, with assets totaling US$ 14,286 million. This expansion of the asset base contributed to the lowering of the debt-to-assets ratio during the growth years.
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Financial Leverage
Zoetis Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 14,286) | 14,925) | 13,900) | 13,609) | 11,545) | |
| Total Zoetis Inc. equity | 4,997) | 4,405) | 4,543) | 3,769) | 2,708) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.86 | 3.39 | 3.06 | 3.61 | 4.26 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| AbbVie Inc. | 13.00 | 8.04 | 9.51 | — | — | |
| Amgen Inc. | 15.59 | 17.79 | 9.13 | — | — | |
| Bristol-Myers Squibb Co. | 3.23 | 3.12 | 3.04 | — | — | |
| Danaher Corp. | 1.58 | 1.68 | 1.84 | — | — | |
| Eli Lilly & Co. | 5.94 | 4.65 | 5.44 | — | — | |
| Gilead Sciences Inc. | 2.72 | 2.97 | 3.23 | — | — | |
| Johnson & Johnson | 2.44 | 2.44 | 2.46 | — | — | |
| Merck & Co. Inc. | 2.84 | 2.37 | 2.77 | — | — | |
| Pfizer Inc. | 2.54 | 2.06 | 2.35 | — | — | |
| Regeneron Pharmaceuticals Inc. | 1.27 | 1.29 | 1.36 | — | — | |
| Thermo Fisher Scientific Inc. | 2.11 | 2.21 | 2.33 | — | — | |
| Vertex Pharmaceuticals Inc. | 1.29 | 1.30 | 1.33 | — | — | |
| Financial Leverage, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 2.85 | 2.62 | 2.86 | — | — | |
| Financial Leverage, Industry | ||||||
| Health Care | 2.70 | 2.57 | 2.69 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Financial leverage = Total assets ÷ Total Zoetis Inc. equity
= 14,286 ÷ 4,997 = 2.86
2 Click competitor name to see calculations.
A comprehensive evaluation of the financial structure between 2019 and 2023 reveals a consistent trend toward deleveraging and a strengthening of the solvency position. The organization has successfully reduced its reliance on external financing relative to its equity base, resulting in a lower risk profile over the analyzed five-year period.
- Financial Leverage Ratio
- The financial leverage ratio demonstrates a significant overall decline, moving from 4.26 in 2019 to 2.86 in 2023. While a brief increase occurred in 2022, where the ratio rose to 3.39 from 3.06 in the previous year, the general trajectory remains downward. This indicates a systematic reduction in the proportion of debt used to finance assets.
- Equity Growth and Capitalization
- Total equity exhibited robust growth, increasing from 2,708 million US dollars in 2019 to 4,997 million US dollars by the end of 2023. This expansion of the equity base, which represents an increase of approximately 84%, served as the primary driver for the improvement in the leverage ratio, as equity grew at a faster rate than total assets.
- Asset Dynamics
- Total assets showed a general upward trend for the majority of the period, rising from 11,545 million US dollars in 2019 to a peak of 14,925 million US dollars in 2022. A slight contraction was observed in 2023, with assets decreasing to 14,286 million US dollars. The simultaneous increase in equity and the slight reduction in assets in the final year contributed to the lowest leverage ratio of the period (2.86) being achieved in 2023.
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Interest Coverage
Zoetis Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Zoetis Inc. | 2,344) | 2,114) | 2,037) | 1,638) | 1,500) | |
| Add: Net income attributable to noncontrolling interest | (4) | (3) | (3) | (2) | —) | |
| Add: Income tax expense | 596) | 545) | 454) | 360) | 301) | |
| Add: Interest expense, net of capitalized interest | 239) | 221) | 224) | 231) | 223) | |
| Earnings before interest and tax (EBIT) | 3,175) | 2,877) | 2,712) | 2,227) | 2,024) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 13.28 | 13.02 | 12.11 | 9.64 | 9.08 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| AbbVie Inc. | 3.81 | 7.04 | 6.36 | — | — | |
| Amgen Inc. | 3.73 | 6.22 | 6.60 | — | — | |
| Bristol-Myers Squibb Co. | 8.24 | 7.26 | 7.07 | — | — | |
| Danaher Corp. | 18.64 | 40.30 | 32.92 | — | — | |
| Eli Lilly & Co. | 14.49 | 21.53 | 19.12 | — | — | |
| Gilead Sciences Inc. | 8.27 | 7.22 | 9.27 | — | — | |
| Johnson & Johnson | 20.51 | 79.71 | 125.46 | — | — | |
| Merck & Co. Inc. | 2.65 | 18.09 | 18.22 | — | — | |
| Pfizer Inc. | 1.48 | 29.05 | 19.83 | — | — | |
| Regeneron Pharmaceuticals Inc. | 58.52 | 82.80 | 163.75 | — | — | |
| Thermo Fisher Scientific Inc. | 5.54 | 11.56 | 17.49 | — | — | |
| Vertex Pharmaceuticals Inc. | 100.32 | 78.23 | 45.40 | — | — | |
| Interest Coverage, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 6.43 | 15.40 | 14.91 | — | — | |
| Interest Coverage, Industry | ||||||
| Health Care | 7.51 | 14.75 | 14.14 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,175 ÷ 239 = 13.28
2 Click competitor name to see calculations.
The solvency profile regarding interest coverage shows a strong and consistent improvement over the five-year period ending December 31, 2023. The capacity to service debt obligations from operating profits has increased significantly, reflecting a reduced financial risk profile and enhanced creditworthiness.
- Earnings Before Interest and Tax (EBIT) Trend
- A sustained upward trajectory is observed in EBIT, which grew from US$ 2,024 million in 2019 to US$ 3,175 million in 2023. This consistent growth in operational earnings indicates a robust expansion in profitability, providing a substantially larger cushion for the fulfillment of fixed financial obligations.
- Interest Expense Stability
- Interest expenses remained relatively stable throughout the analyzed period, fluctuating within a narrow range between US$ 221 million and US$ 239 million. The absence of significant volatility in these costs suggests a well-managed debt structure and a lack of substantial new high-cost borrowing during this timeframe.
- Interest Coverage Ratio Analysis
- The interest coverage ratio improved from 9.08 in 2019 to 13.28 in 2023. A notable acceleration in this ratio occurred between 2020 and 2021, rising from 9.64 to 12.11. Because EBIT grew steadily while interest expenses remained flat, the margin of safety for debt servicing has expanded by approximately 46% over the five-year duration.
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Fixed Charge Coverage
Zoetis Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Zoetis Inc. | 2,344) | 2,114) | 2,037) | 1,638) | 1,500) | |
| Add: Net income attributable to noncontrolling interest | (4) | (3) | (3) | (2) | —) | |
| Add: Income tax expense | 596) | 545) | 454) | 360) | 301) | |
| Add: Interest expense, net of capitalized interest | 239) | 221) | 224) | 231) | 223) | |
| Earnings before interest and tax (EBIT) | 3,175) | 2,877) | 2,712) | 2,227) | 2,024) | |
| Add: Operating lease expense | 56) | 51) | 50) | 46) | 40) | |
| Earnings before fixed charges and tax | 3,231) | 2,928) | 2,762) | 2,273) | 2,064) | |
| Interest expense, net of capitalized interest | 239) | 221) | 224) | 231) | 223) | |
| Operating lease expense | 56) | 51) | 50) | 46) | 40) | |
| Fixed charges | 295) | 272) | 274) | 277) | 263) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 10.95 | 10.76 | 10.08 | 8.21 | 7.85 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| AbbVie Inc. | 3.59 | 6.54 | 5.90 | — | — | |
| Amgen Inc. | 3.55 | 5.52 | 5.67 | — | — | |
| Bristol-Myers Squibb Co. | 6.69 | 6.30 | 6.01 | — | — | |
| Danaher Corp. | 9.55 | 13.41 | 10.85 | — | — | |
| Eli Lilly & Co. | 10.98 | 15.17 | 13.33 | — | — | |
| Gilead Sciences Inc. | 7.18 | 6.30 | 8.15 | — | — | |
| Johnson & Johnson | 16.50 | 38.72 | 48.16 | — | — | |
| Merck & Co. Inc. | 2.27 | 13.69 | 13.08 | — | — | |
| Pfizer Inc. | 1.34 | 18.79 | 14.22 | — | — | |
| Regeneron Pharmaceuticals Inc. | 46.55 | 68.67 | 138.96 | — | — | |
| Thermo Fisher Scientific Inc. | 4.61 | 8.12 | 12.19 | — | — | |
| Vertex Pharmaceuticals Inc. | 48.66 | 47.97 | 29.62 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 5.40 | 11.85 | 11.49 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Health Care | 6.08 | 10.95 | 10.48 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 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).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,231 ÷ 295 = 10.95
2 Click competitor name to see calculations.
An analysis of the solvency position between 2019 and 2023 reveals a consistent improvement in the capacity to meet fixed financial obligations. The steady growth in earnings relative to the stability of fixed charges has resulted in a significantly strengthened coverage profile over the five-year period.
- Earnings before fixed charges and tax
- A sustained upward trajectory is observed in earnings, which increased from US$ 2,064 million in 2019 to US$ 3,231 million by the end of 2023. This growth indicates a substantial expansion in the funds available to service debt and other fixed commitments, with particularly strong gains noted between 2020 and 2021.
- Fixed charges
- Fixed obligations remained relatively stable throughout the period, fluctuating within a narrow range between US$ 263 million and US$ 295 million. The consistency of these charges, despite the growth in earnings, suggests that the cost of fixed obligations has been well-managed and has not scaled proportionally with the increase in earnings.
- Fixed charge coverage ratio
- The coverage ratio exhibited a steady increase from 7.85 in 2019 to 10.95 in 2023. This upward trend reflects a diminishing risk profile and an expanding margin of safety. By 2023, the ability to cover fixed charges had improved to a level where earnings were nearly eleven times the amount of those charges, denoting high solvency and a robust capacity to withstand potential operational downturns.
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