Dow Chemical Co. (DOW)

Analysis of Debt

Total Debt Disclosure

Dow Chemical Co., Statement of Financial Position, Debt

USD $ in millions

 
    Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Notes payable 443  396  541  1,467  2,139 
Long-term debt due within one year 697  672  2,749  1,755  1,082 
Long-term debt, excluding debt due within one year 16,820  19,919  18,310  20,605  19,152 
Total debt 17,960  20,987  21,600  23,827  22,373 

Source: Based on data from Dow Chemical Co., Annual Reports

Item Description The company
Total debt Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. Dow Chemical Co.'s total debt declined from 2011 to 2012 and from 2012 to 2013.

Interest Costs Incurred

Dow Chemical Co.

USD $ in millions

 
  12 months ended Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
Interest expense and amortization of debt discount 1,101  1,269  1,341  1,473  1,571 
Capitalized interest 78  84  90  72  61 
Interest costs incurred 1,179  1,353  1,431  1,545  1,632 

Source: Based on data from Dow Chemical Co., Annual Reports

Item Description The company
Interest expense and amortization of debt discount Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings. Dow Chemical Co.'s interest expense and amortization of debt discount declined from 2011 to 2012 and from 2012 to 2013.
Capitalized interest The amount of interest that was capitalized during the period. Dow Chemical Co.'s capitalized interest declined from 2011 to 2012 and from 2012 to 2013.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. Dow Chemical Co.'s interest costs incurred declined from 2011 to 2012 and from 2012 to 2013.

Adjusted Interest Coverage Ratio

 
    Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010 Dec 31, 2009
  Selected Financial Data (USD $ in millions)
Net income attributable to The Dow Chemical Company 4,787  1,182  2,742  2,310  648 
Add: Net (income) loss attributable to noncontrolling interests 29  (82) 42  11  28 
Add: Interest expense and amortization of debt discount 1,101  1,269  1,341  1,473  1,571 
Add: Income tax expense (benefit) 1,988  565  817  481  (97)
Earnings before interest and tax (EBIT) 7,905  2,934  4,942  4,275  2,150 
   
Interest costs incurred 1,179  1,353  1,431  1,545  1,632 
  Ratio With and Without Capitalized Interest
Interest coverage ratio (excluding capitalized interest)1 7.18 2.31 3.69 2.90 1.37
Adjusted interest coverage ratio (including capitalized interest)2 6.70 2.17 3.45 2.77 1.32

2013 Calculations

1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense and amortization of debt discount
= 7,905 ÷ 1,101 = 7.18

2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= 7,905 ÷ 1,179 = 6.70

Ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). Dow Chemical Co.'s adjusted interest coverage ratio deteriorated from 2011 to 2012 but then improved from 2012 to 2013 exceeding 2011 level.