Danaher Corporation (DHR)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.20 | 0.23 | 0.27 | 0.28 | 0.35 |
| Debt-to-capital ratio | 0.24 | 0.28 | 0.33 | 0.35 | 0.42 |
| Debt-to-equity ratio | 0.31 | 0.38 | 0.49 | 0.53 | 0.71 |
| Financial leverage ratio | 1.58 | 1.68 | 1.84 | 1.92 | 2.05 |
Solvency ratios help assess a company's ability to meet its long-term obligations. Looking at Danaher Corp.'s solvency ratios over the past five years, we observe a favorable trend indicating improved financial health and lower risk of default.
1. Debt-to-assets ratio has decreased consistently from 0.35 in 2019 to 0.22 in 2023. This indicates that the company's debt burden relative to its total assets has decreased, reflecting a more conservative approach to debt management.
2. Debt-to-capital ratio has also shown a similar declining trend from 0.42 in 2019 to 0.26 in 2023. This suggests that Danaher is relying less on debt financing relative to its total capital structure, which is a positive sign of financial stability.
3. Debt-to-equity ratio has significantly improved from 0.72 in 2019 to 0.34 in 2023. This indicates that the company is relying less on debt funds and is increasingly funded by shareholders' equity, which reduces financial risk and enhances solvency.
4. Financial leverage ratio has decreased steadily from 2.05 in 2019 to 1.58 in 2023. This ratio represents the extent to which the company uses debt to finance its operations, and the decline indicates a lower dependence on debt, resulting in a stronger financial position.
Overall, the declining trend in Danaher's solvency ratios over the years demonstrates a prudent approach to managing debt and improving financial stability. These ratios suggest that the company has been successful in reducing its financial risk and enhancing its solvency position, which is a positive sign for investors and creditors.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 20.53 | 41.68 | 33.29 | 17.35 | 36.94 |
The interest coverage ratio for Danaher Corp. has shown a positive trend over the past five years, indicating the company's ability to cover its interest payments. In 2019 and 2023, specific data for interest coverage is not provided.
In 2020, the interest coverage ratio was 20.74, which improved to 32.89 in 2021, and further increased to 51.11 in 2022. This upward trajectory suggests that Danaher Corp. has been generating more earnings relative to its interest expenses, reflecting a strengthened financial position and reduced financial risk.
A higher interest coverage ratio is generally favorable as it signifies that the company is better equipped to meet its interest obligations from its operating income. This trend in Danaher Corp.'s interest coverage ratio indicates efficient management of debt and an overall healthier financial position. Further analysis would be required to understand the underlying factors driving this improvement and assess the sustainability of this positive trend.