Warner Bros Discovery Inc (WBD)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.33 | 0.28 | 0.42 | 0.44 | 0.44 |
| Debt-to-capital ratio | 0.47 | 0.45 | 0.55 | 0.59 | 0.60 |
| Debt-to-equity ratio | 0.90 | 0.81 | 1.24 | 1.44 | 1.50 |
| Financial leverage ratio | 2.71 | 2.85 | 2.97 | 3.26 | 3.41 |
The solvency ratios of Warner Bros. Discovery Inc show a trend of improvement over the past five years. The debt-to-assets ratio has decreased from 0.46 in 2019 to 0.36 in 2023, indicating that the company's reliance on debt to finance its assets has reduced. Similarly, the debt-to-capital and debt-to-equity ratios have also shown a declining trend, reflecting a decrease in the proportion of debt used in the company's capital structure.
Furthermore, the financial leverage ratio has decreased from 3.41 in 2019 to 2.71 in 2023, signifying a reduction in the company's financial leverage and risk. Overall, these improving solvency ratios suggest that Warner Bros. Discovery Inc has been effectively managing its debt levels and strengthening its financial position over the years.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -0.76 | -4.08 | 2.96 | 3.46 | 4.18 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates a greater ability to meet interest obligations, while a lower ratio may signal financial distress.
Analyzing Warner Bros. Discovery Inc's interest coverage over the past five years, we observe a declining trend. The interest coverage ratio was 4.87 in 2019, indicating the company's strong ability to cover interest payments with operating income. However, this ratio decreased to 4.11 in 2020 and 3.18 in 2021, although it still remained above 1, indicating that the company was able to cover its interest expenses with operating income.
The interest coverage ratio dropped significantly to -2.06 in 2022, implying that the company's operating income was insufficient to cover its interest expenses during that period. This could raise concerns about the company's financial health and its ability to meet debt obligations.
In 2023, the interest coverage ratio further deteriorated to -0.40, continuing the negative trend and indicating a worsening ability to cover interest payments with operating income. This substantial decline in the interest coverage ratio over the past two years may suggest increased financial risk and potential challenges in meeting debt obligations without operational improvements or financial restructuring.
Overall, the declining trend in Warner Bros. Discovery Inc's interest coverage ratios raises concerns about the company's ability to manage its debt and highlights the importance of closely monitoring its financial performance and debt repayment capabilities in the future.