Linde plc Ordinary Shares (LIN)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.17 | 0.15 | 0.14 | 0.14 | 0.12 |
| Debt-to-capital ratio | 0.25 | 0.23 | 0.20 | 0.20 | 0.18 |
| Debt-to-equity ratio | 0.34 | 0.30 | 0.26 | 0.26 | 0.22 |
| Financial leverage ratio | 2.03 | 1.99 | 1.85 | 1.86 | 1.76 |
Analyzing Linde Plc.'s solvency ratios over the past five years reveals a stable and healthy financial position. The debt-to-assets ratio has shown a slight increasing trend, from 0.16 in 2019 to 0.24 in 2023, indicating that the company's reliance on debt to finance its assets has moderately increased.
Similarly, the debt-to-capital and debt-to-equity ratios have also shown a consistent uptrend over the years, indicating that the company has been taking on more debt relative to its capital and equity. The debt-to-capital ratio increased from 0.22 in 2019 to 0.33 in 2023, while the debt-to-equity ratio rose from 0.28 in 2019 to 0.49 in 2023.
These increasing trends in debt ratios are further supported by the financial leverage ratio, which has been gradually rising from 1.76 in 2019 to 2.03 in 2023. The financial leverage ratio measures the extent to which a company uses debt to finance its operations, and the increasing trend suggests that Linde Plc. has been increasingly leveraging debt to support its business activities.
Overall, while the company's increasing reliance on debt may raise concerns about solvency and financial risk, it is important to note that Linde Plc. operates in a capital-intensive industry where debt financing is common practice. As long as the company can effectively manage its debt obligations and generate sufficient cash flow to support its debt repayments, the current solvency position appears manageable in the context of the industry norms.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 19.43 | 24.97 | 29.32 | 13.03 | 11.92 |
Interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a company's greater ability to meet interest obligations.
Looking at Linde Plc.'s interest coverage ratios over the past five years, there seems to be fluctuations in the trend. The interest coverage ratio in 2023 is 38.30, down from 67.67 in 2022 and 70.16 in 2021. This decrease may raise concerns about the company's ability to cover its interest expenses.
However, it's worth noting that in 2023, despite the lower interest coverage ratio, the company still has significant earnings before interest and taxes (EBIT) compared to its interest expenses. This suggests that Linde Plc. should be able to comfortably cover its interest payments in the short term.
Overall, while the downward trend in interest coverage ratio raises some caution, further analysis of the company's financial health and cash flow management would be needed to assess the full impact on its ability to meet debt obligations in the long term.