Novartis AG (NVS) | Debt and Solvency

Ratios (Summary)

Novartis AG, debt and solvency ratios

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Debt to equity	0.29	0.31	0.36	0.24	0.15
Debt to capital	0.22	0.24	0.27	0.20	0.13
Interest coverage	16.53	15.34	17.91	19.01	34.00

Source: Based on data from Novartis AG Annual Reports

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Novartis AG's debt-to-equity ratio improved from 2010 to 2011 and from 2011 to 2012.
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Novartis AG's debt-to-capital ratio improved from 2010 to 2011 and from 2011 to 2012.
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Novartis AG's interest coverage ratio deteriorated from 2010 to 2011 but then slightly improved from 2011 to 2012.

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Non-current financial debt	13,781	13,855	14,360	8,675	2,178
Current financial debt	5,945	6,374	8,627	5,313	5,186
Total debt	19,726	20,229	22,987	13,988	7,364
Issued share capital and reserves attributable to Novartis AG shareholders	69,093	65,844	63,196	57,387	50,288
Debt to Equity, Comparison to Industry
Novartis AG¹	0.29	0.31	0.36	0.24	0.15
Industry, Health Care	0.44	0.42	0.43	0.43	0.41

Source: Based on data from Novartis AG Annual Reports

2012 Calculations

¹ Debt to equity = Total debt ÷ Issued share capital and reserves attributable to Novartis AG shareholders
= 19,726 ÷ 69,093 = 0.29

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Novartis AG's debt-to-equity ratio improved from 2010 to 2011 and from 2011 to 2012.

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Non-current financial debt	13,781	13,855	14,360	8,675	2,178
Current financial debt	5,945	6,374	8,627	5,313	5,186
Total debt	19,726	20,229	22,987	13,988	7,364
Issued share capital and reserves attributable to Novartis AG shareholders	69,093	65,844	63,196	57,387	50,288
Total capital	88,819	86,073	86,183	71,375	57,652
Debt to Capital, Comparison to Industry
Novartis AG¹	0.22	0.24	0.27	0.20	0.13
Industry, Health Care	0.31	0.30	0.30	0.30	0.29

Source: Based on data from Novartis AG Annual Reports

2012 Calculations

¹ Debt to capital = Total debt ÷ Total capital
= 19,726 ÷ 88,819 = 0.22

Ratio	Description	The company
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Novartis AG's debt-to-capital ratio improved from 2010 to 2011 and from 2011 to 2012.

	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010	Dec 31, 2009	Dec 31, 2008
Selected Financial Data (USD $ in millions)
Net income attributable to shareholders of Novartis AG	9,505	9,113	9,794	8,400	8,195
Add: Net income attributable to non-controlling interests	113	132	175	54	38
Add: Total interest expense	724	751	692	551	290
Add: Income tax expense (benefit)	1,625	1,528	1,733	1,468	1,336
Earnings before interest and tax (EBIT)	11,967	11,524	12,394	10,473	9,859
Interest Coverage, Comparison to Industry
Novartis AG¹	16.53	15.34	17.91	19.01	34.00
Industry, Health Care	15.59	15.45	13.81	19.23	17.13

Source: Based on data from Novartis AG Annual Reports

2012 Calculations

¹ Interest coverage = EBIT ÷ Interest expense
= 11,967 ÷ 724 = 16.53

Ratio	Description	The company
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Novartis AG's interest coverage ratio deteriorated from 2010 to 2011 but then slightly improved from 2011 to 2012.