3M Company (MMM)
Solvency ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.28 | 0.28 | 0.27 | 0.37 | 0.26 | 0.26 | 0.27 | 0.28 | 0.30 | 0.30 | 0.31 | 0.32 | 0.34 | 0.34 | 0.34 | 0.36 | 0.38 | 0.41 | 0.43 | 0.42 |
| Debt-to-capital ratio | 0.74 | 0.71 | 0.75 | 0.81 | 0.73 | 0.73 | 0.62 | 0.46 | 0.49 | 0.50 | 0.50 | 0.50 | 0.52 | 0.53 | 0.53 | 0.55 | 0.58 | 0.61 | 0.64 | 0.65 |
| Debt-to-equity ratio | 2.90 | 2.44 | 3.01 | 4.23 | 2.72 | 2.76 | 1.66 | 0.85 | 0.95 | 0.98 | 1.02 | 0.99 | 1.07 | 1.12 | 1.13 | 1.22 | 1.40 | 1.55 | 1.78 | 1.90 |
| Financial leverage ratio | 10.38 | 8.81 | 11.08 | 11.35 | 10.52 | 10.62 | 6.27 | 3.06 | 3.16 | 3.28 | 3.32 | 3.07 | 3.13 | 3.34 | 3.34 | 3.43 | 3.68 | 3.82 | 4.15 | 4.55 |
The solvency ratios of 3M Company provide insights into the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio measures the proportion of a company's assets financed by debt. From March 2020 to December 2024, 3M's debt-to-assets ratio decreased steadily from 0.42 to 0.28, indicating a decreasing reliance on debt to fund its assets over the period.
2. Debt-to-capital ratio: This ratio reflects the proportion of a company's capital structure that is funded by debt. 3M's debt-to-capital ratio fluctuated over the years, reaching a peak of 0.81 in March 2024. However, it trended downwards to 0.74 by December 2024. This suggests that 3M has been gradually reducing its reliance on debt to finance its operations.
3. Debt-to-equity ratio: The debt-to-equity ratio indicates the extent to which a company is financing its operations through debt compared to equity. 3M's debt-to-equity ratio showed significant fluctuations, peaking at 4.23 in March 2024 before declining to 2.90 by December 2024. This indicates that 3M has been reducing its debt levels relative to equity, which is a positive sign for solvency.
4. Financial leverage ratio: This ratio measures the company's overall leverage, considering both debt and equity. 3M's financial leverage ratio increased significantly from 4.55 in March 2020 to 11.08 in June 2024 before slightly decreasing to 10.38 by December 2024. The increase in leverage indicates higher financial risk, but the slight reduction towards the end of the period suggests efforts to manage leverage levels.
Overall, the trend in 3M Company's solvency ratios shows a decreasing reliance on debt and an improvement in financial health over the period from 2020 to 2024. This indicates that the company has been effectively managing its debt levels and moving towards a more sustainable capital structure.
Coverage ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 4.61 | 4.42 | 1.53 | -7.01 | -9.28 | -13.71 | -5.36 | 13.66 | 14.83 | 16.81 | 11.46 | 15.64 | 15.77 | 15.38 | 15.20 | 14.25 | 13.80 | 13.22 | 13.97 | 14.24 |
The interest coverage ratio of 3M Company witnessed a generally positive trend from March 31, 2020, to June 30, 2022, ranging from 14.24 to 16.81. This indicates the company's ability to meet its interest obligations comfortably from its operating income. However, there was a significant decline in the interest coverage ratio from June 30, 2022, to June 30, 2023, where it fell sharply to -5.36, indicating a potential inability to cover interest expenses with operating income.
This negative trend continued until December 31, 2023, with the interest coverage ratio remaining below zero. This may raise concerns about the company's financial health and its ability to service its debt obligations effectively. However, there was a slight improvement in the ratio from June 30, 2024, to December 31, 2024, showing signs of an upward trajectory.
Overall, the fluctuation in the interest coverage ratio of 3M Company from positive to negative values during the period under review highlights the importance of monitoring the company's ability to generate sufficient earnings to cover its interest expenses.