Baxter International Inc (BAX)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 3.37 | 3.78 | 5.01 | 4.81 | 4.85 | 5.05 | 3.59 | 3.61 | 3.69 | 2.26 | 2.32 | 2.30 | 2.30 | 2.35 | 2.39 | 2.48 | 2.31 | 2.28 | 2.25 | 2.15 |
Baxter International Inc.'s solvency ratios indicate the company's ability to meet its long-term debt obligations and maintain financial stability.
The debt-to-assets ratio has shown a declining trend over the past eight quarters, decreasing from 0.59 in Q2 2022 to 0.49 in Q4 2023. This suggests that the company has been successful in reducing its level of debt relative to its total assets, which is a positive sign for creditors and investors.
Similarly, the debt-to-capital and debt-to-equity ratios have also displayed a downward trajectory over the same period. The debt-to-capital ratio decreased from 0.75 in Q2 2022 to 0.62 in Q4 2023, indicating that the proportion of debt in the company's capital structure has decreased. The debt-to-equity ratio followed a similar pattern, declining from 2.97 in Q2 2022 to 1.64 in Q4 2023, showing that the company has been relying less on debt financing and increasing its equity base.
Furthermore, the financial leverage ratio, which measures the company's total assets relative to its equity, has also shown a declining trend over the quarters, indicating that Baxter International Inc. has been decreasing its financial leverage and relying more on equity financing.
Overall, the decreasing trend in these solvency ratios reflects positively on Baxter International Inc.'s financial health and its ability to manage long-term debt effectively. Investors and creditors may view these trends favorably as they suggest a decreasing financial risk and improved stability in the company's capital structure.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 6.14 | 5.78 | -4.66 | -4.23 | -4.66 | -5.34 | 4.53 | 5.70 | 8.12 | 9.25 | 9.64 | 8.85 | 9.39 | 6.99 | 8.13 | 9.20 | 9.65 | 16.33 | 15.91 | 17.34 |
Interest coverage is a key financial ratio that measures a company's ability to cover its interest expenses with its operating income. In the case of Baxter International Inc., we observe fluctuations in the interest coverage ratio over the past eight quarters.
In Q4 2023, the interest coverage ratio was 0.82, indicating that Baxter International's operating income was only sufficient to cover 82% of its interest expenses for that quarter. This low ratio raises concerns about the company's ability to meet its interest obligations from its operating earnings alone.
The trend in the interest coverage ratio over the past quarters shows some variability. The ratio was at its lowest in Q4 2023 and has fluctuated between 0.82 and 5.75 in the preceding quarters. The company demonstrated stronger interest coverage in Q1 and Q2 2022, with ratios of 5.75 and 4.43, respectively, suggesting a more comfortable position in meeting interest payments during those periods.
However, the declining trend in the interest coverage ratio in recent quarters, especially in Q3 and Q4 2023, raises concerns about Baxter International's ability to generate sufficient operating income to cover its interest expenses. Investors and creditors may view this downward trend negatively as it indicates a potential strain on the company's financial health and ability to service its debt.
It is crucial for Baxter International Inc. to monitor and improve its interest coverage ratio to ensure long-term financial stability and mitigate the risks associated with high levels of debt relative to operating income. Further analysis of the company's financial performance and strategies to enhance profitability may be warranted to address these concerns.