Devon Energy Corp. (DVN) | Long-term Debt and Solvency Analysis

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

Ratios (Summary)

Devon Energy Corp., debt and solvency ratios

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Debt to equity	0.29	0.47	0.34	0.36	0.45
Debt to capital	0.23	0.32	0.26	0.26	0.31
Interest coverage	17.82	-11.18	-8.44	11.87	10.56

Source: Based on data from Devon Energy Corp. Annual Reports

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Devon Energy Corp.'s debt-to-equity ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Devon Energy Corp.'s debt-to-capital ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Devon Energy Corp.'s interest coverage ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions)
Short-term debt	1,811	1,432	180	1,004	2,205
Long-term debt	3,819	5,847	5,661	6,924	5,568
Total debt	5,630	7,279	5,841	7,928	7,773
Stockholders’ equity	19,253	15,570	17,060	22,006	17,442
Debt to Equity, Comparison to Industry
Devon Energy Corp.¹	0.29	0.47	0.34	0.36	0.45
Industry, Oil & Gas	0.32	0.34	0.31	0.28	–

Source: Based on data from Devon Energy Corp. Annual Reports

2010 Calculations

¹ Debt to equity = Total debt ÷ Stockholders’ equity
= 5,630 ÷ 19,253 = 0.29

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Devon Energy Corp.'s debt-to-equity ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions)
Short-term debt	1,811	1,432	180	1,004	2,205
Long-term debt	3,819	5,847	5,661	6,924	5,568
Total debt	5,630	7,279	5,841	7,928	7,773
Stockholders’ equity	19,253	15,570	17,060	22,006	17,442
Total capital	24,883	22,849	22,901	29,934	25,215
Debt to Capital, Comparison to Industry
Devon Energy Corp.¹	0.23	0.32	0.26	0.26	0.31
Industry, Oil & Gas	0.24	0.26	0.24	0.22	–

Source: Based on data from Devon Energy Corp. Annual Reports

2010 Calculations

¹ Debt to capital = Total debt ÷ Total capital
= 5,630 ÷ 24,883 = 0.23

Ratio	Description	The company
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Devon Energy Corp.'s debt-to-capital ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.

	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008	Dec 31, 2007	Dec 31, 2006
Selected Financial Data (USD $ in millions)
Net earnings (loss) applicable to common stockholders	4,550	(2,479)	(2,153)	3,596	2,836
Add: Interest expense, excluding early retirement of debt	344	349	329	430	421
Add: Income tax expense (benefit)	1,235	(1,773)	(954)	1,078	1,189
Earnings before interest and tax (EBIT)	6,129	(3,903)	(2,778)	5,104	4,446
Interest Coverage, Comparison to Industry
Devon Energy Corp.¹	17.82	-11.18	-8.44	11.87	10.56
Industry, Oil & Gas	29.34	23.85	38.42	33.59	–

Source: Based on data from Devon Energy Corp. Annual Reports

2010 Calculations

¹ Interest coverage = EBIT ÷ Interest expense
= 6,129 ÷ 344 = 17.82

Ratio	Description	The company
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Devon Energy Corp.'s interest coverage ratio deteriorated from 2008 to 2009 but then improved from 2009 to 2010 exceeding 2008 level.