AbbVie Inc (ABBV)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | — |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | — |
| Financial leverage ratio | 13.00 | 8.04 | 9.51 | 11.51 | — |
The solvency ratios of Abbvie Inc reflect its ability to meet its long-term financial obligations and the extent to which the company relies on debt to finance its operations.
The debt-to-assets ratio measures the proportion of the company's assets financed by debt. Abbvie Inc's debt-to-assets ratio has been declining over the past five years, from 0.75 in 2019 to 0.44 in 2023. This reduction indicates a lower reliance on debt financing relative to total assets, which can be seen as a positive trend for the company's solvency.
The debt-to-capital ratio assesses the extent of a company's capital structure that is funded through debt. Abbvie Inc's debt-to-capital ratio fluctuated over the years, with a range between 0.79 in 2022 to 0.85 in 2023. A higher debt-to-capital ratio signifies a greater reliance on debt financing, which may increase financial risk but also amplify potential returns.
The debt-to-equity ratio compares a company's total debt to its shareholders' equity, indicating the level of leverage or financial risk. Abbvie Inc's debt-to-equity ratio has varied significantly, reaching a peak of 6.58 in 2020 and then dropping to 5.73 in 2023. A decreasing trend in this ratio suggests a more conservative approach towards debt financing and a stronger equity base to support the company's operations.
The financial leverage ratio, although not available for 2019, demonstrates the proportion of the company's assets that are financed through debt. Abbvie Inc's financial leverage ratio has shown an upward trend from 8.04 in 2020 to 13.00 in 2023. This increase indicates a higher level of financial leverage, which can amplify both positive and negative financial outcomes for the company.
Overall, the declining trend in debt metrics such as the debt-to-assets and debt-to-equity ratios, coupled with fluctuations in the debt-to-capital ratio, suggests that Abbvie Inc has been gradually reducing its reliance on debt financing to support its operations. However, the increasing financial leverage ratio implies a higher level of debt utilization in the company's capital structure, which may warrant closer monitoring of its financial risk management strategies.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 3.81 | 7.04 | 6.36 | 2.38 | 5.72 |
The interest coverage ratio for Abbvie Inc has shown fluctuations over the past five years. In 2023, the interest coverage ratio was 7.93, which indicates that the company generated operating income 7.93 times higher than its interest expenses for the year. This reflects a slight decrease from the previous year, where the ratio was 9.23.
While the 2023 ratio is lower than the prior year, it is still considered healthy as it is above 1. A ratio above 1 indicates that the company is generating sufficient operating income to cover its interest obligations.
Comparing to the previous four years, Abbvie Inc had varying interest coverage ratios, ranging from 5.51 to 8.27. The ratios demonstrate the company's ability to meet its interest payments comfortably, although the 2023 ratio shows a slight decrease in coverage compared to the peak in 2022.
Overall, Abbvie Inc's interest coverage ratio has generally been at acceptable levels over the past five years, indicating the company's ability to manage its interest obligations effectively. However, it is essential for the company to monitor its interest coverage ratio closely to ensure continued financial stability.