In this case study, let's look at the leverage ratios for four companies, starting with Coca-Cola. So we'll start with debt to EBITDA. Our debt has been summed at the bottom of our balance sheet. There it is, and we divide that by EBITDA, which is up in the income statements. That's in C15. Now I can do net debt over EBITDA. Again, that net debt just at the bottom of the balance sheet and I'm going to type in C15 for that EBITDA again. Great. Now I come to debt over equity or debt over debt plus equity, both of those at the bottom of the balance sheets.

Debt over equity and debt over debt plus equity.

Now, it can be useful to look at the company's net debt over equity or net debt over net debt plus equity to get a better idea of the company's true indebtedness to its equity financing. So net debt, again, it's just at the bottom of the balance sheet. Divide that by the shareholder's equity and then do something similar for the next calculation.

The last one is interest coverage. Both of those figures will be in the income statement at the top, so let's go find their EBITDA and then divide it by the interest expense. You might notice the interest expense is a negative and I want to change it to a positive.

Great, let's copy those to the right and then we can copy them into the other three companies.

Let's have a look at Coca-Cola's ratios then. Well, unfortunately, for their debt to EBITDA ratios, it went up and this really wasn't due to their debt increase and their debt increase, only a very, very marginal amount. It was mainly due to their EBITDA coming down. Coca-Cola had a bad year in year '20. Their revenues were down and their EBITDA was down. That net debt to EBITDA of 2.7 to 2.8 times, getting quite high for a publicly owned company. In terms of their debt to equity ratios, very much flat because their debt and their equity very much didn't change during the year but we see the same problem in their interest coverage. Their interest didn't really increase. It was their EBITDA that came down and that means their interest coverage has come down as well. It's certainly going in the wrong direction. However, interest coverage around the 12 level, a very, very healthy level. No bank's going to be worried about that. Now, if we compare it to Keurig Dr Pepper, fantastic. Their debt to EBITDA figures came down. They had a great year, and their EBITDA was growing. Similarly, we see their interest coverage going up because their EBITDA grew. In terms of debt to equity, we didn't really see any change for Keurig Dr Pepper. Now, National Beverage and Monster tell a great story. At the end of the year, neither of them had any debt. National Beverage have a tiny amount of interest probably due to a brief moment of debt during the year. But there's little to be gained from looking at their leverage ratios because neither of them have any debt.