Long-term Debt and Solvency Analysis

Difficulty level: Basic

Solvency ratios also known as long-term debt ratios measure a company's ability to meet long-term obligations.


Ratios (Summary)

Altria Group Inc., debt and solvency ratios

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Debt to equity 3.52 4.38 3.72 2.35 2.94
Debt to capital 0.78 0.81 0.79 0.70 0.75
Interest coverage 7.59 6.74 5.58 6.04 5.10

Source: Based on data from Altria Group Inc. Annual Reports

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Altria Group Inc.'s debt-to-equity ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Altria Group Inc.'s debt-to-capital ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Altria Group Inc.'s interest coverage ratio improved from 2011 to 2012 and from 2012 to 2013.

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Debt to Equity

Altria Group Inc., debt to equity calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Current portion of long-term debt 525  1,459  600  775 
Long-term debt, excluding current portion 13,992  12,419  13,089  12,194  11,185 
Total debt 14,517  13,878  13,689  12,194  11,960 
Stockholders’ equity attributable to Altria Group, Inc. 4,119  3,168  3,680  5,192  4,069 
Ratio
Debt to equity1 3.52 4.38 3.72 2.35 2.94
Benchmarks
Debt to Equity, Competitors
Philip Morris International Inc. 80.98 4.71 2.70
Debt to Equity, Sector
Tobacco 8.25 3.30 2.80
Debt to Equity, Industry
Consumer Goods 0.98 0.94 0.92 0.94 1.07

Source: Based on data from Altria Group Inc. Annual Reports

2013 Calculations

1 Debt to equity = Total debt ÷ Stockholders’ equity attributable to Altria Group, Inc.
= 14,517 ÷ 4,119 = 3.52

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Altria Group Inc.'s debt-to-equity ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Debt to Capital

Altria Group Inc., debt to capital calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Current portion of long-term debt 525  1,459  600  775 
Long-term debt, excluding current portion 13,992  12,419  13,089  12,194  11,185 
Total debt 14,517  13,878  13,689  12,194  11,960 
Stockholders’ equity attributable to Altria Group, Inc. 4,119  3,168  3,680  5,192  4,069 
Total capital 18,636  17,046  17,369  17,386  16,029 
Ratio
Debt to capital1 0.78 0.81 0.79 0.70 0.75
Benchmarks
Debt to Capital, Competitors
Philip Morris International Inc. 1.39 1.18 0.99 0.82 0.73
Debt to Capital, Sector
Tobacco 1.09 1.01 0.89 0.77 0.74
Debt to Capital, Industry
Consumer Goods 0.49 0.48 0.48 0.48 0.52

Source: Based on data from Altria Group Inc. Annual Reports

2013 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 14,517 ÷ 18,636 = 0.78

Ratio Description The company
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Altria Group Inc.'s debt-to-capital ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.

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Interest Coverage

Altria Group Inc., interest coverage calculation, comparison to benchmarks

 
Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Selected Financial Data (USD $ in millions)
Net earnings attributable to Altria Group, Inc. 4,535  4,180  3,390  3,905  3,206 
Add: Net income attributable to noncontrolling interest
Add: Income tax expense 2,407  2,294  2,189  1,816  1,669 
Add: Interest expense 1,053  1,128  1,220  1,136  1,189 
Earnings before interest and tax (EBIT) 7,995  7,605  6,802  6,859  6,066 
Ratio
Interest coverage1 7.59 6.74 5.58 6.04 5.10
Benchmarks
Interest Coverage, Competitors
Philip Morris International Inc. 12.34 13.90 14.42 11.60 11.21
Interest Coverage, Sector
Tobacco 10.02 10.12 9.41 8.61 7.74
Interest Coverage, Industry
Consumer Goods 15.76 8.61 13.89 9.67 8.59

Source: Based on data from Altria Group Inc. Annual Reports

2013 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 7,995 ÷ 1,053 = 7.59

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Altria Group Inc.'s interest coverage ratio improved from 2011 to 2012 and from 2012 to 2013.

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