.Long-term Debt and Solvency Analysis
Difficulty: Beginner
Solvency ratios also known as long-term debt ratios measure a company's ability to meet long-term obligations.
Ratios (Summary)
Automatic Data Processing Inc., debt and solvency ratios
| Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | Jun 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| | Debt to equity | ||||||
| | Debt to capital | ||||||
| | Interest coverage |
Source: Based on data from Automatic Data Processing Inc. Annual Reports
| Ratio | Description | The company |
|---|---|---|
| Debt-to-equity ratio | A solvency ratio calculated as total debt divided by total shareholders' equity. | Automatic Data Processing Inc.'s debt-to-equity ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Debt-to-capital ratio | A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. | Automatic Data Processing Inc.'s debt-to-capital ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments. | Automatic Data Processing Inc.'s interest coverage ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
Debt to Equity
Automatic Data Processing Inc., debt to equity calculation, comparison to benchmarks
| Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | Jun 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Obligations under reverse repurchase agreements | ||||||
| | Obligations under commercial paper borrowings | ||||||
| | Long-term debt | ||||||
| | Total debt | ||||||
| | Stockholders' equity | ||||||
| Ratio | |||||||
| | Debt to equity1 | ||||||
| Benchmarks | |||||||
| Debt to Equity, Competitors | |||||||
| Accenture PLC | |||||||
| Debt to Equity, Sector | |||||||
| Support Services | |||||||
| Debt to Equity, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Automatic Data Processing Inc. Annual Reports
2017 Calculations
1 Debt to equity = Total debt ÷ Stockholders' equity
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Debt-to-equity ratio | A solvency ratio calculated as total debt divided by total shareholders' equity. | Automatic Data Processing Inc.'s debt-to-equity ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
Debt to Capital
Automatic Data Processing Inc., debt to capital calculation, comparison to benchmarks
| Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | Jun 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Obligations under reverse repurchase agreements | ||||||
| | Obligations under commercial paper borrowings | ||||||
| | Long-term debt | ||||||
| | Total debt | ||||||
| | Stockholders' equity | ||||||
| | Total capital | ||||||
| Ratio | |||||||
| | Debt to capital1 | ||||||
| Benchmarks | |||||||
| Debt to Capital, Competitors | |||||||
| Accenture PLC | |||||||
| Debt to Capital, Sector | |||||||
| Support Services | |||||||
| Debt to Capital, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Automatic Data Processing Inc. Annual Reports
2017 Calculations
1 Debt to capital = Total debt ÷ Total capital
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Debt-to-capital ratio | A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. | Automatic Data Processing Inc.'s debt-to-capital ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
Interest Coverage
Automatic Data Processing Inc., interest coverage calculation, comparison to benchmarks
| Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | Jun 30, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in thousands) | |||||||
| | Net earnings | ||||||
| | Less: Net earnings (loss) from discontinued operations | ||||||
| | Add: Income tax expense | ||||||
| | Add: Interest expense | ||||||
| | Earnings before interest and tax (EBIT) | ||||||
| Ratio | |||||||
| | Interest coverage1 | ||||||
| Benchmarks | |||||||
| Interest Coverage, Competitors | |||||||
| Accenture PLC | |||||||
| Interest Coverage, Sector | |||||||
| Support Services | |||||||
| Interest Coverage, Industry | |||||||
| Industrials | |||||||
Source: Based on data from Automatic Data Processing Inc. Annual Reports
2017 Calculations
1 Interest coverage = EBIT ÷ Interest expense
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments. | Automatic Data Processing Inc.'s interest coverage ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
