Johnson Controls International PLC (JCI)
Solvency ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 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 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.55 | 2.59 | 2.39 | 2.34 | 2.14 |
The solvency ratios of Johnson Controls International plc provide insight into the company's ability to meet its long-term financial obligations and the proportion of debt in its capital structure over the years 2019 to 2023.
Firstly, the debt-to-assets ratio remained relatively stable over the past five years, ranging from 0.17 to 0.21. This ratio indicates the percentage of a company's assets that are financed by debt, and in this case, Johnson Controls has consistently maintained a low level of debt in relation to its total assets.
Next, the debt-to-capital ratio measures the proportion of a company's capital that is financed by debt. Johnson Controls' ratio fluctuated slightly, but generally remained within the range of 0.27 to 0.36, showing the company's ability to maintain a balanced capital structure with a significant portion funded through equity.
The debt-to-equity ratio, which compares a company's total debt to its shareholders' equity, also demonstrated consistent trends. Johnson Controls' ratio increased over the years from 0.37 in 2019 to 0.53 in 2023, signaling a higher reliance on debt in relation to equity, but it's worth noting that the ratio remained within a reasonable range indicating a manageable level of debt in proportion to equity.
Lastly, the financial leverage ratio, which indicates the extent to which a company is using debt to finance its assets, increased from 2.14 in 2019 to 2.55 in 2023, reflecting a rise in the level of financial leverage. While an increasing financial leverage ratio could indicate higher financial risk, Johnson Controls appears to have maintained a relatively stable and prudent level of leverage in the context of its overall financial performance.
In conclusion, Johnson Controls International plc has exhibited a relatively conservative approach to its capital structure and debt management, with consistent and manageable levels of debt in relation to assets, capital, equity, and leverage over the past five years. These solvency ratios suggest a prudent approach to long-term financial obligations and a well-balanced capital structure, providing stability and resilience in the face of economic uncertainties.
Coverage ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.96 | 7.75 | 12.44 | 4.08 | 17.24 |
The interest coverage ratio measures a company's ability to make interest payments on its debt obligations. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payment requirements, which is a positive signal for creditors and investors.
Based on the data provided for Johnson Controls International plc, the interest coverage ratio has shown a decreasing trend from 2019 to 2023. In 2019, it was 5.99 and has since fluctuated between 8.83 and 14.58, before reaching 10.57 in 2023.
The trend indicates that the company's ability to cover its interest payments improved from 2019 to 2021, with the ratio increasing to 14.58 in 2021. However, there was a decline in 2022 and again in 2023, resulting in the interest coverage ratio falling to 10.57.
The declining trend in the interest coverage ratio raises concerns about the company's ability to meet its interest payment obligations from its operating income. Investors and creditors may view this as a potential risk, as a lower interest coverage ratio suggests a higher risk of default on debt payments.
It is essential to closely monitor the trend in the interest coverage ratio and assess the company's debt management and profitability to understand the factors influencing this trend and to evaluate the company's financial health and risk levels.
In summary, while Johnson Controls International plc has generally maintained an interest coverage ratio above 1, indicating that it can meet its interest payment obligations, the declining trend in recent years warrants further analysis to understand the underlying factors affecting its ability to cover interest payments.