Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Kraft Heinz Co., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-28), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30), 10-K (reporting date: 2018-12-29), 10-Q (reporting date: 2018-09-29), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-30), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-07-01), 10-Q (reporting date: 2017-04-01), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03).
- Debt to Equity Ratio
- The debt to equity ratio exhibits moderate fluctuations throughout the observed periods. Initially, it increased from 0.44 to around 0.57 by the end of 2016, indicating a rising reliance on debt compared to equity. A temporary decline occurred in late 2017 to 0.48, followed by a general upward trend reaching approximately 0.6 by late 2018 and mid-2019. The ratio slightly declined to 0.57 in early 2020 but increased again near 0.64 before settling around 0.59. Overall, the ratio reflects a gradual increase in leverage with some short-term variability.
- Debt to Capital Ratio
- This ratio remained relatively stable over the periods, fluctuating between 0.30 and 0.39. There was an initial increase from 0.30 in early 2016 to 0.36 by the end of that year. Subsequent values generally hovered in the mid to upper 0.30s range, peaking at 0.39 in early 2020. The consistency suggests a maintained balance between debt and total capital employed with slight upward pressure on debt components.
- Debt to Assets Ratio
- The debt to assets ratio consistently stayed within a narrow range from 0.21 to 0.31. It rose from 0.21 in early 2016 to about 0.27 by the end of that year and maintained around 0.26-0.27 throughout 2017 and 2018. There was a mild increase reaching 0.30 in 2018 and 2019, before a slight dip near 0.29 in mid-2020. This ratio illustrates steady leverage against the company’s asset base, with moderate increases over time.
- Financial Leverage
- Financial leverage showed relative stability with ratios around 2.1 in 2016, slightly decreasing to approximately 1.82 by the end of 2017. A rebound to about 2.0 occurred in 2018 and 2019, indicating a moderate shift in asset financing strategies. By mid-2020, leverage remained near 2.0, signaling no significant changes in the capital structure in terms of asset-to-equity relationship.
- Interest Coverage Ratio
- Interest coverage experienced notable variability with a generally positive and stable trend through 2016 and most of 2017, peaking near 5.4 times coverage. However, starting late 2018 and during 2019, the ratio sharply declined, reaching deeply negative values as low as approximately -8.7, indicative of significant operational or financial challenges impacting earnings relative to interest expense. Early 2020 showed a recovery back into positive territory but at reduced levels (around 2.9 and falling to 1.22 by mid-2020), suggesting ongoing pressure in covering interest obligations though with some improvement.
Debt Ratios
Coverage Ratios
Debt to Equity
Kraft Heinz Co., debt to equity calculation (quarterly data)
| Jun 27, 2020 | Mar 28, 2020 | Dec 28, 2019 | Sep 28, 2019 | Jun 29, 2019 | Mar 30, 2019 | Dec 29, 2018 | Sep 29, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 30, 2017 | Sep 30, 2017 | Jul 1, 2017 | Apr 1, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Commercial paper and other short-term debt | 6) | 6) | 6) | 15) | 1) | 2) | 21) | 973) | 34) | 1,001) | 460) | 455) | 1,090) | 909) | 645) | 653) | 645) | —) | ||||||
| Current portion of long-term debt | 757) | 1,242) | 1,022) | 2,545) | 1,298) | 1,305) | 377) | 405) | 2,754) | 2,742) | 2,743) | 2,755) | 19) | 2,023) | 2,046) | 2,047) | 2,106) | 133) | ||||||
| Long-term debt, excluding current portion | 28,097) | 31,531) | 28,216) | 28,112) | 29,832) | 29,803) | 30,770) | 30,998) | 31,380) | 28,561) | 28,333) | 28,299) | 29,979) | 29,748) | 29,713) | 29,980) | 30,002) | 25,167) | ||||||
| Total debt | 28,860) | 32,779) | 29,244) | 30,672) | 31,131) | 31,110) | 31,168) | 32,376) | 34,168) | 32,304) | 31,536) | 31,509) | 31,088) | 32,680) | 32,404) | 32,680) | 32,753) | 25,300) | ||||||
| Shareholders’ equity | 49,040) | 51,009) | 51,623) | 51,673) | 51,543) | 51,703) | 51,657) | 65,385) | 65,677) | 66,248) | 66,034) | 58,759) | 58,333) | 57,732) | 57,358) | 57,642) | 57,826) | 58,043) | ||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to equity1 | 0.59 | 0.64 | 0.57 | 0.59 | 0.60 | 0.60 | 0.60 | 0.50 | 0.52 | 0.49 | 0.48 | 0.54 | 0.53 | 0.57 | 0.56 | 0.57 | 0.57 | 0.44 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-28), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30), 10-K (reporting date: 2018-12-29), 10-Q (reporting date: 2018-09-29), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-30), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-07-01), 10-Q (reporting date: 2017-04-01), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03).
1 Q2 2020 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 28,860 ÷ 49,040 = 0.59
2 Click competitor name to see calculations.
- Total Debt
- The total debt demonstrated variability over the analyzed periods. Beginning at $25.3 billion, the amount increased sharply by mid-2016, reaching approximately $32.8 billion. Subsequently, total debt fluctuated around $31 to $32 billion through 2017 and 2018, with a slight declining trend toward late 2019, dropping to around $29 billion in mid-2020. There was a notable spike in the first quarter of 2020 to nearly $32.8 billion before a subsequent decrease.
- Shareholders’ Equity
- Shareholders’ equity remained relatively stable initially, staying within the $57 billion to $66 billion range from early 2016 through 2017. However, from late 2018 onward, equity exhibited a downward trend, decreasing significantly from approximately $65 billion to around $49 billion by mid-2020. This decline suggests a reduction in net assets attributable to shareholders during this timeframe.
- Debt to Equity Ratio
- The debt to equity ratio increased from 0.44 in early 2016 to peak levels around 0.60 during late 2018 and 2019, reflecting a relative increase in debt or decrease in equity. The ratio showed some fluctuations, with a notable rise to 0.64 in early 2020, followed by a slight reduction to 0.59 by mid-2020. Overall, the ratio indicates a rise in financial leverage over the period, particularly pronounced in the later years of the data.
- Summary Insights
- The financial data indicates growing leverage within the company, characterized by increasing debt levels relative to equity. While total debt showed some oscillations, its general level remained elevated after 2016 compared to initial figures. Concurrently, shareholders' equity declined notably after 2017, exacerbating the rise in the debt to equity ratio. The interplay of these factors points to a progressively more leveraged capital structure, which may imply increased financial risk or strategic borrowing activity during the later periods.
Debt to Capital
Kraft Heinz Co., debt to capital calculation (quarterly data)
| Jun 27, 2020 | Mar 28, 2020 | Dec 28, 2019 | Sep 28, 2019 | Jun 29, 2019 | Mar 30, 2019 | Dec 29, 2018 | Sep 29, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 30, 2017 | Sep 30, 2017 | Jul 1, 2017 | Apr 1, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Commercial paper and other short-term debt | 6) | 6) | 6) | 15) | 1) | 2) | 21) | 973) | 34) | 1,001) | 460) | 455) | 1,090) | 909) | 645) | 653) | 645) | —) | ||||||
| Current portion of long-term debt | 757) | 1,242) | 1,022) | 2,545) | 1,298) | 1,305) | 377) | 405) | 2,754) | 2,742) | 2,743) | 2,755) | 19) | 2,023) | 2,046) | 2,047) | 2,106) | 133) | ||||||
| Long-term debt, excluding current portion | 28,097) | 31,531) | 28,216) | 28,112) | 29,832) | 29,803) | 30,770) | 30,998) | 31,380) | 28,561) | 28,333) | 28,299) | 29,979) | 29,748) | 29,713) | 29,980) | 30,002) | 25,167) | ||||||
| Total debt | 28,860) | 32,779) | 29,244) | 30,672) | 31,131) | 31,110) | 31,168) | 32,376) | 34,168) | 32,304) | 31,536) | 31,509) | 31,088) | 32,680) | 32,404) | 32,680) | 32,753) | 25,300) | ||||||
| Shareholders’ equity | 49,040) | 51,009) | 51,623) | 51,673) | 51,543) | 51,703) | 51,657) | 65,385) | 65,677) | 66,248) | 66,034) | 58,759) | 58,333) | 57,732) | 57,358) | 57,642) | 57,826) | 58,043) | ||||||
| Total capital | 77,900) | 83,788) | 80,867) | 82,345) | 82,674) | 82,813) | 82,825) | 97,761) | 99,845) | 98,552) | 97,570) | 90,268) | 89,421) | 90,412) | 89,762) | 90,322) | 90,579) | 83,343) | ||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to capital1 | 0.37 | 0.39 | 0.36 | 0.37 | 0.38 | 0.38 | 0.38 | 0.33 | 0.34 | 0.33 | 0.32 | 0.35 | 0.35 | 0.36 | 0.36 | 0.36 | 0.36 | 0.30 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-28), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30), 10-K (reporting date: 2018-12-29), 10-Q (reporting date: 2018-09-29), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-30), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-07-01), 10-Q (reporting date: 2017-04-01), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03).
1 Q2 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= 28,860 ÷ 77,900 = 0.37
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited fluctuations throughout the observation period. Starting at approximately $25.3 billion, debt increased significantly to a peak of around $32.8 billion by mid-2016. After remaining relatively stable around that level through late 2017, it experienced a moderate decrease reaching approximately $29.2 billion by mid-2020, with intermittent variations. This overall pattern suggests periods of increased leverage followed by efforts to reduce debt levels.
- Total Capital
- Total capital followed a somewhat inconsistent trajectory. It began near $83.3 billion and increased gradually to peak levels above $99.8 billion by mid-2018. Subsequently, there was a marked decline, with capital dropping sharply to approximately $82.8 billion by the end of 2018. The capital levels remained relatively flat with a mild downward trend afterward, ending near $77.9 billion by mid-2020. This indicates variability in equity and long-term funding sources over time, including potential asset base changes or equity adjustments.
- Debt to Capital Ratio
- The ratio of debt to capital showed an overall upward trend with some fluctuations. It started at 0.30, reflecting a moderate proportion of debt in the capital structure. The ratio rose to about 0.36 by mid-2016 and remained near this level until late 2017, when it briefly decreased to approximately 0.32. It then increased again, reaching about 0.39 by mid-2020. The gradual increase implies a growing reliance on debt relative to total capital during the period, suggesting incremental leveraging despite some periods of capital reduction.
Debt to Assets
Kraft Heinz Co., debt to assets calculation (quarterly data)
| Jun 27, 2020 | Mar 28, 2020 | Dec 28, 2019 | Sep 28, 2019 | Jun 29, 2019 | Mar 30, 2019 | Dec 29, 2018 | Sep 29, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 30, 2017 | Sep 30, 2017 | Jul 1, 2017 | Apr 1, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Commercial paper and other short-term debt | 6) | 6) | 6) | 15) | 1) | 2) | 21) | 973) | 34) | 1,001) | 460) | 455) | 1,090) | 909) | 645) | 653) | 645) | —) | ||||||
| Current portion of long-term debt | 757) | 1,242) | 1,022) | 2,545) | 1,298) | 1,305) | 377) | 405) | 2,754) | 2,742) | 2,743) | 2,755) | 19) | 2,023) | 2,046) | 2,047) | 2,106) | 133) | ||||||
| Long-term debt, excluding current portion | 28,097) | 31,531) | 28,216) | 28,112) | 29,832) | 29,803) | 30,770) | 30,998) | 31,380) | 28,561) | 28,333) | 28,299) | 29,979) | 29,748) | 29,713) | 29,980) | 30,002) | 25,167) | ||||||
| Total debt | 28,860) | 32,779) | 29,244) | 30,672) | 31,131) | 31,110) | 31,168) | 32,376) | 34,168) | 32,304) | 31,536) | 31,509) | 31,088) | 32,680) | 32,404) | 32,680) | 32,753) | 25,300) | ||||||
| Total assets | 98,306) | 104,073) | 101,450) | 102,822) | 103,201) | 103,562) | 103,461) | 119,730) | 121,896) | 120,787) | 120,232) | 120,051) | 119,416) | 120,802) | 120,480) | 121,080) | 121,684) | 123,273) | ||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to assets1 | 0.29 | 0.31 | 0.29 | 0.30 | 0.30 | 0.30 | 0.30 | 0.27 | 0.28 | 0.27 | 0.26 | 0.26 | 0.26 | 0.27 | 0.27 | 0.27 | 0.27 | 0.21 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-28), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30), 10-K (reporting date: 2018-12-29), 10-Q (reporting date: 2018-09-29), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-30), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-07-01), 10-Q (reporting date: 2017-04-01), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03).
1 Q2 2020 Calculation
Debt to assets = Total debt ÷ Total assets
= 28,860 ÷ 98,306 = 0.29
2 Click competitor name to see calculations.
The financial data over the reported quarters indicates several notable trends concerning debt levels, asset base, and leverage ratios.
- Total Debt
- Total debt fluctuated between approximately $25.3 billion and $32.8 billion during the period. Initial values rose significantly from $25.3 billion to around $32.7 billion within the first year. Thereafter, total debt experienced moderate volatility, peaking again near $32.8 billion near the end of the period but ending somewhat lower at $28.9 billion. The general pattern suggests active management of debt levels with periods of incremental increase followed by reductions.
- Total Assets
- Total assets remained relatively stable but exhibited a downward trend, decreasing from roughly $123.3 billion to $98.3 billion by the last quarter. The asset base dipped moderately after early 2018, with a notable decline around 2018 ending and continuing gradually thereafter. This contraction in total assets could indicate divestitures, depreciation, or other factors reducing asset valuation.
- Debt to Assets Ratio
- The debt to assets ratio showed a gradual increasing trend over the period. It started at 0.21 and increased to a range around 0.27 to 0.31 in later quarters. This rise indicates a leverage increase, implying that debt grew faster than assets or assets decreased while debt levels remained elevated. The peak ratio reached 0.31, reflecting higher financial risk and increased dependence on debt financing.
In summary, the data reveals a consistent use of leverage with rising debt relative to assets, accompanied by a shrinking asset base. This trend points to a strategic choice or external influences leading to increased leverage and a contraction of total assets over the observed timeframe.
Financial Leverage
Kraft Heinz Co., financial leverage calculation (quarterly data)
| Jun 27, 2020 | Mar 28, 2020 | Dec 28, 2019 | Sep 28, 2019 | Jun 29, 2019 | Mar 30, 2019 | Dec 29, 2018 | Sep 29, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 30, 2017 | Sep 30, 2017 | Jul 1, 2017 | Apr 1, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Total assets | 98,306) | 104,073) | 101,450) | 102,822) | 103,201) | 103,562) | 103,461) | 119,730) | 121,896) | 120,787) | 120,232) | 120,051) | 119,416) | 120,802) | 120,480) | 121,080) | 121,684) | 123,273) | ||||||
| Shareholders’ equity | 49,040) | 51,009) | 51,623) | 51,673) | 51,543) | 51,703) | 51,657) | 65,385) | 65,677) | 66,248) | 66,034) | 58,759) | 58,333) | 57,732) | 57,358) | 57,642) | 57,826) | 58,043) | ||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Financial leverage1 | 2.00 | 2.04 | 1.97 | 1.99 | 2.00 | 2.00 | 2.00 | 1.83 | 1.86 | 1.82 | 1.82 | 2.04 | 2.05 | 2.09 | 2.10 | 2.10 | 2.10 | 2.12 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Mondelēz International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| PepsiCo Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Philip Morris International Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-28), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30), 10-K (reporting date: 2018-12-29), 10-Q (reporting date: 2018-09-29), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-30), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-07-01), 10-Q (reporting date: 2017-04-01), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03).
1 Q2 2020 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 98,306 ÷ 49,040 = 2.00
2 Click competitor name to see calculations.
The quarterly financial data reveals several noteworthy trends in the company's asset base, equity position, and leverage over the span from April 2016 through June 2020.
- Total assets
-
Total assets remained relatively stable between approximately 120 billion and 123 billion US dollars from early 2016 through mid-2018. However, a significant decrease occurred starting in late 2018, with assets declining to around 103 billion and further dropping to under 100 billion by mid-2020. This drop suggests a reduction in the asset base which might be attributable to disposals, write-downs, or other balance sheet adjustments during this period.
- Shareholders’ equity
-
Shareholders' equity remained fairly steady during 2016 and the first three quarters of 2017, fluctuating near 58 billion US dollars. There was a noticeable increase to over 66 billion in the last quarter of 2017, followed by moderate fluctuations through 2018. From late 2018 onward, equity levels dropped sharply to approximately 51 billion and remained around that value through mid-2020, indicating either accumulated losses, dividend distributions, or other factors reducing retained earnings or equity reserves.
- Financial leverage
-
The financial leverage ratio decreased gradually from about 2.12 in early 2016 to approximately 1.82 at the end of 2017, signifying a deleveraging trend or increased equity relative to debt during that time. However, after late 2017, leverage increased again, hovering around a ratio of 2.0 by mid-2020. This shift indicates that the company resumed higher reliance on debt financing relative to equity, which coincides with the declines in shareholders’ equity observed during the same period.
Overall, the data illustrates an initial phase of stability followed by a phase of asset reduction and equity erosion beginning in late 2018. The leverage ratio movements suggest the company was initially reducing financial risk but later shifted toward higher leverage. These patterns may warrant further investigation into the causes behind the asset and equity declines and their implications for the company's financial health and risk profile.
Interest Coverage
Kraft Heinz Co., interest coverage calculation (quarterly data)
| Jun 27, 2020 | Mar 28, 2020 | Dec 28, 2019 | Sep 28, 2019 | Jun 29, 2019 | Mar 30, 2019 | Dec 29, 2018 | Sep 29, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 30, 2017 | Sep 30, 2017 | Jul 1, 2017 | Apr 1, 2017 | Dec 31, 2016 | Oct 2, 2016 | Jul 3, 2016 | Apr 3, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Net income (loss) attributable to Kraft Heinz | (1,651) | 378) | 182) | 899) | 449) | 405) | (12,568) | 619) | 754) | 1,003) | 8,003) | 944) | 1,159) | 893) | 944) | 842) | 950) | 896) | ||||||
| Add: Net income attributable to noncontrolling interest | (1) | 3) | 1) | (1) | (1) | (1) | (60) | (1) | (1) | —) | (7) | (1) | 1) | (2) | —) | 1) | 5) | 4) | ||||||
| Add: Income tax expense | (51) | 160) | 144) | 264) | 103) | 217) | (1,846) | 201) | 308) | 270) | (6,665) | 416) | 430) | 359) | 336) | 262) | 411) | 372) | ||||||
| Add: Interest expense | 442) | 310) | 326) | 398) | 316) | 321) | 325) | 326) | 316) | 317) | 308) | 306) | 307) | 313) | 310) | 311) | 264) | 249) | ||||||
| Earnings before interest and tax (EBIT) | (1,261) | 851) | 653) | 1,560) | 867) | 942) | (14,149) | 1,145) | 1,377) | 1,590) | 1,639) | 1,665) | 1,897) | 1,563) | 1,590) | 1,416) | 1,630) | 1,521) | ||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Interest coverage1 | 1.22 | 2.91 | 2.96 | -7.93 | -8.69 | -8.30 | -7.82 | 4.54 | 5.03 | 5.49 | 5.48 | 5.43 | 5.21 | 5.17 | 5.43 | 5.38 | 3.82 | 2.42 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||
| Coca-Cola Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2020-06-27), 10-Q (reporting date: 2020-03-28), 10-K (reporting date: 2019-12-28), 10-Q (reporting date: 2019-09-28), 10-Q (reporting date: 2019-06-29), 10-Q (reporting date: 2019-03-30), 10-K (reporting date: 2018-12-29), 10-Q (reporting date: 2018-09-29), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-30), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-07-01), 10-Q (reporting date: 2017-04-01), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-10-02), 10-Q (reporting date: 2016-07-03), 10-Q (reporting date: 2016-04-03).
1 Q2 2020 Calculation
Interest coverage
= (EBITQ2 2020
+ EBITQ1 2020
+ EBITQ4 2019
+ EBITQ3 2019)
÷ (Interest expenseQ2 2020
+ Interest expenseQ1 2020
+ Interest expenseQ4 2019
+ Interest expenseQ3 2019)
= (-1,261 + 851 + 653 + 1,560)
÷ (442 + 310 + 326 + 398)
= 1.22
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- Over the observed periods, EBIT displayed fluctuations with a general pattern of moderate stability before a significant and abrupt decline in the quarter ending December 29, 2018. Prior to this quarter, EBIT values mostly ranged between approximately 1,400 and 1,900 million USD, indicating relatively consistent operational profitability. However, this metric plunged drastically to a large negative value of -14,149 million USD, marking a substantial one-time event or extraordinary loss. Following this downturn, EBIT recovered somewhat but remained volatile, with values oscillating between positive and negative, including another negative figure in the quarter ending June 27, 2020.
- Interest Expense
- Interest expense remained relatively stable throughout the periods, generally ranging from around 249 to 442 million USD. There was a slight upward trend towards the end, particularly noticeable in the last few quarters, with the highest expense recorded in June 27, 2020, at 442 million USD. This stability indicates consistent debt servicing costs with moderate fluctuations, likely reflecting steady borrowing levels or interest rates with some variability.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the company's ability to meet its interest obligations from operational earnings, showed strong improvement from the beginning periods up to the quarter ending December 29, 2018, peaking near values above 5. Following the quarter with the significant EBIT decline, the ratio sharply deteriorated into negative figures for three consecutive quarters, signifying an inability to cover interest expenses from earnings during that period. Subsequently, the ratio returned to positive but remained low and volatile, with values around 2.9 and dropping to 1.22 in the last recorded quarter, suggesting weakened financial resilience and increasing difficulty in servicing interest from operational earnings.