Eli Lilly and Company (LLY)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.36 | 0.29 | 0.30 | 0.31 | 0.36 |
| Debt-to-capital ratio | 0.67 | 0.63 | 0.58 | 0.63 | 0.75 |
| Debt-to-equity ratio | 2.01 | 1.70 | 1.38 | 1.71 | 2.94 |
| Financial leverage ratio | 5.55 | 5.94 | 4.65 | 5.44 | 8.27 |
Eli Lilly and Company's solvency ratios indicate the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio shows the proportion of the company's assets financed by debt. The trend from 2020 to 2024 indicates a decreasing reliance on debt to fund assets, improving from 0.36 in 2020 to 0.29 in 2023 before slightly increasing to 0.36 in 2024.
2. Debt-to-capital ratio: This ratio reflects the extent to which debt is used to finance the company's operations compared to equity. Eli Lilly and Company's debt-to-capital ratio decreased significantly from 0.75 in 2020 to 0.58 in 2022, showing a conservative approach to financing before rising slightly to 0.67 in 2024.
3. Debt-to-equity ratio: The debt-to-equity ratio indicates the proportion of debt and equity used to finance the company's assets. Eli Lilly and Company's debt-to-equity ratio decreased from 2.94 in 2020 to 1.38 in 2022, reflecting a reduction in financial leverage. However, it increased to 2.01 in 2024, indicating a higher reliance on debt financing compared to equity.
4. Financial leverage ratio: This ratio measures the company's total assets relative to shareholders' equity. Eli Lilly and Company's financial leverage ratio declined from 8.27 in 2020 to 4.65 in 2022, suggesting improved financial stability. However, it increased to 5.55 in 2024, indicating a slight increase in leverage.
Overall, the solvency ratios demonstrate a mixed performance for Eli Lilly and Company, showing improvements in debt management and financial stability over the period analyzed, although there are slight fluctuations in certain ratios in the later years.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | — | 14.49 | 21.53 | 19.12 | 21.11 |
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. In the case of Eli Lilly and Company, the interest coverage ratio has shown some fluctuations over the years.
As of December 31, 2020, the interest coverage ratio was 21.11, indicating that the company generated more than enough earnings to cover its interest expenses. This strong ratio suggests a healthy financial position and the ability to comfortably meet interest payments.
By December 31, 2021, the interest coverage ratio slightly decreased to 19.12, but still remained at a level considered adequate for creditors and investors. However, it is important to monitor this trend to ensure that the company can continue to fulfill its interest obligations.
The ratio improved to 21.53 by December 31, 2022, which is a positive sign of the company's ability to generate earnings to cover its interest expenses efficiently. This improvement may indicate effective financial management and operational performance.
However, a notable decrease was observed by December 31, 2023, with the interest coverage ratio dropping to 14.49. This could signal a potential strain on the company's ability to meet interest payments from its operating income. It may be necessary for Eli Lilly and Company to closely evaluate its financial structure and strategies to address this decline.
Unfortunately, the data for December 31, 2024 is not available, indicated by "NA" in the JSON data provided. It is essential for investors and stakeholders to monitor future interest coverage ratios to assess Eli Lilly and Company's financial health and ability to fulfill its debt obligations.