Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
Twenty-First Century Fox Inc., solvency ratios
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
The solvency profile reflects a period of increasing financial leverage that peaked in 2016, followed by a subsequent deleveraging phase through 2018. While total debt levels relative to equity and assets decreased toward the end of the period, the capacity to cover fixed charges experienced a significant decline.
- Debt and Capitalization Trends
- Debt to equity ratios increased from 0.97 in 2013 to a peak of 1.44 in 2016, before returning to 1.00 by 2018. This pattern is consistent across other capital structure metrics; debt to capital peaked at 0.59 in 2016 and descended to 0.50 by 2018, while debt to assets rose from 0.32 in 2013 to a maximum of 0.41 in 2016 before settling at 0.36 in 2018. These movements indicate a period of aggressive borrowing followed by a targeted reduction in debt reliance.
- Financial Leverage
- Financial leverage displayed volatility over the six-year period, reaching its highest point of 3.54 in 2016. A subsequent contraction is observed, with the ratio falling to 2.75 by June 30, 2018, marking the lowest leverage level within the analyzed timeframe.
- Obligation Coverage
- A diverging trend is evident in coverage ratios, which weakened despite the overall reduction in debt levels after 2016. Interest coverage, which stood at 9.22 in both 2013 and 2015, declined sharply to 4.53 by 2018. Similarly, fixed charge coverage fell from a peak of 7.75 in 2015 to 3.98 in 2018. This downward trajectory indicates a diminished margin of safety for meeting fixed financial commitments relative to earnings.
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Debt to Equity
Twenty-First Century Fox Inc., debt to equity calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current borrowings | 1,054) | 457) | 427) | 244) | 799) | 137) | |
| Non-current borrowings | 18,469) | 19,456) | 19,298) | 18,795) | 18,259) | 16,321) | |
| Total debt | 19,523) | 19,913) | 19,725) | 19,039) | 19,058) | 16,458) | |
| Total Twenty-First Century Fox, Inc. stockholders’ equity | 19,564) | 15,722) | 13,661) | 17,220) | 17,418) | 16,998) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 1.00 | 1.27 | 1.44 | 1.11 | 1.09 | 0.97 | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 2018 Calculation
Debt to equity = Total debt ÷ Total Twenty-First Century Fox, Inc. stockholders’ equity
= 19,523 ÷ 19,564 = 1.00
2 Click competitor name to see calculations.
The solvency profile exhibits a cyclical trend in leverage over the six-year period ending June 30, 2018. An overall increase in total debt coincided with fluctuations in stockholders' equity, resulting in a peak leverage ratio in 2016 followed by a return to a more balanced capital structure by 2018.
- Total Debt Trends
- Total debt experienced a steady upward trajectory from US$ 16,458 million in 2013 to a peak of US$ 19,913 million in 2017. A slight reduction followed in the final year, with total debt settling at US$ 19,523 million by June 30, 2018.
- Stockholders' Equity Volatility
- Equity remained relatively stable between 2013 and 2015 before undergoing a significant contraction to US$ 13,661 million in 2016. A subsequent recovery period saw equity grow to US$ 15,722 million in 2017 and further increase to US$ 19,564 million in 2018, surpassing the initial 2013 levels.
- Debt to Equity Ratio Dynamics
- The debt to equity ratio increased from 0.97 in 2013 to a maximum of 1.44 in 2016. This peak was the result of simultaneous debt accumulation and a sharp decline in equity. From 2017 onward, a downward trend is observed, with the ratio returning to 1.00 by 2018, indicating a stabilization of the company's solvency position relative to its equity base.
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Debt to Capital
Twenty-First Century Fox Inc., debt to capital calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current borrowings | 1,054) | 457) | 427) | 244) | 799) | 137) | |
| Non-current borrowings | 18,469) | 19,456) | 19,298) | 18,795) | 18,259) | 16,321) | |
| Total debt | 19,523) | 19,913) | 19,725) | 19,039) | 19,058) | 16,458) | |
| Total Twenty-First Century Fox, Inc. stockholders’ equity | 19,564) | 15,722) | 13,661) | 17,220) | 17,418) | 16,998) | |
| Total capital | 39,087) | 35,635) | 33,386) | 36,259) | 36,476) | 33,456) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.50 | 0.56 | 0.59 | 0.53 | 0.52 | 0.49 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 2018 Calculation
Debt to capital = Total debt ÷ Total capital
= 19,523 ÷ 39,087 = 0.50
2 Click competitor name to see calculations.
The solvency profile of the organization exhibited a period of increasing leverage between 2013 and 2016, followed by a corrective trend toward a more conservative capital structure by 2018. While total debt levels rose steadily in the early part of the period, fluctuations in total capital drove the primary movements in the debt-to-capital ratio.
- Total Debt Trends
- A general upward trajectory in total debt was observed from June 30, 2013, to June 30, 2017, with the balance increasing from 16,458 million US$ to a peak of 19,913 million US$. A slight reduction occurred by June 30, 2018, as total debt decreased to 19,523 million US$, suggesting a stabilization of borrowing levels toward the end of the analyzed period.
- Total Capital Fluctuations
- Total capital demonstrated volatility, starting at 33,456 million US$ in 2013 and reaching 36,476 million US$ in 2014. A notable contraction occurred by June 30, 2016, where capital fell to 33,386 million US$. However, a strong recovery followed, with capital expanding to 39,087 million US$ by June 30, 2018, marking the highest capital level in the six-year sequence.
- Debt to Capital Ratio Analysis
- The debt to capital ratio increased progressively from 0.49 in 2013 to a peak of 0.59 in 2016. This peak was the result of the simultaneous increase in total debt and the contraction of total capital during that fiscal year. Subsequently, the ratio declined to 0.56 in 2017 and further to 0.50 in 2018. This downward trend in the final two years is attributed to the significant growth in total capital outweighing the relatively stable debt levels, effectively returning the solvency ratio to near-2013 levels.
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Debt to Assets
Twenty-First Century Fox Inc., debt to assets calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current borrowings | 1,054) | 457) | 427) | 244) | 799) | 137) | |
| Non-current borrowings | 18,469) | 19,456) | 19,298) | 18,795) | 18,259) | 16,321) | |
| Total debt | 19,523) | 19,913) | 19,725) | 19,039) | 19,058) | 16,458) | |
| Total assets | 53,831) | 50,724) | 48,365) | 50,051) | 54,793) | 50,944) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.36 | 0.39 | 0.41 | 0.38 | 0.35 | 0.32 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 2018 Calculation
Debt to assets = Total debt ÷ Total assets
= 19,523 ÷ 53,831 = 0.36
2 Click competitor name to see calculations.
An analysis of the solvency position between June 30, 2013, and June 30, 2018, reveals a period of increasing financial leverage followed by a moderate deleveraging phase. The debt-to-assets ratio experienced a steady climb for the first four years of the period before reversing its trajectory.
- Total Debt Trends
- Total debt increased from US$ 16,458 million in 2013 to a peak of US$ 19,913 million in 2017. The most significant increase occurred between 2013 and 2014, after which debt levels remained relatively stable, ending the period at US$ 19,523 million in 2018.
- Total Asset Fluctuations
- Total assets exhibited volatility throughout the observed timeframe. Following an increase to US$ 54,793 million in 2014, a downward trend occurred over the next two years, with assets reaching a minimum of US$ 48,365 million in 2016. A subsequent recovery was observed, with assets growing to US$ 53,831 million by June 30, 2018.
- Debt to Assets Ratio Analysis
- The debt-to-assets ratio rose consistently from 0.32 in 2013 to a peak of 0.41 in 2016. This peak was a result of the convergence of rising total debt and declining total assets during the 2015-2016 interval. A reversal of this trend began in 2017, with the ratio improving to 0.36 by 2018, indicating an improvement in the overall solvency profile as asset growth outpaced debt levels.
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Financial Leverage
Twenty-First Century Fox Inc., financial leverage calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Total assets | 53,831) | 50,724) | 48,365) | 50,051) | 54,793) | 50,944) | |
| Total Twenty-First Century Fox, Inc. stockholders’ equity | 19,564) | 15,722) | 13,661) | 17,220) | 17,418) | 16,998) | |
| Solvency Ratio | |||||||
| Financial leverage1 | 2.75 | 3.23 | 3.54 | 2.91 | 3.15 | 3.00 | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 2018 Calculation
Financial leverage = Total assets ÷ Total Twenty-First Century Fox, Inc. stockholders’ equity
= 53,831 ÷ 19,564 = 2.75
2 Click competitor name to see calculations.
The financial position between 2013 and 2018 is characterized by fluctuations in the asset base and shareholders' equity, which directly influenced the organization's financial leverage and overall solvency profile.
- Total Assets Trend
- Total assets experienced a period of volatility, peaking in 2014 at 54,793 million USD. A subsequent decline occurred over the next two years, reaching a low of 48,365 million USD in 2016. This was followed by a recovery phase, with assets climbing to 53,831 million USD by June 30, 2018.
- Stockholders' Equity Volatility
- Equity remained relatively stable between 2013 and 2015, followed by a significant contraction in 2016, where it dropped to 13,661 million USD. From 2017 onward, a strong upward trend was observed, culminating in a period high of 19,564 million USD in 2018.
- Financial Leverage Ratio Analysis
- The financial leverage ratio exhibited an inverse correlation with stockholders' equity. The ratio peaked at 3.54 in 2016, coinciding with the lowest recorded equity level. Following this peak, the ratio declined steadily, reaching 2.75 by June 30, 2018. This represents the lowest leverage level across the analyzed six-year period.
By the conclusion of the period, the simultaneous increase in total assets and the substantial growth in stockholders' equity resulted in a reduction of the financial leverage ratio. This trend indicates a shift toward a more conservative capital structure and an improved solvency position relative to the peak leverage observed in 2016.
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Interest Coverage
Twenty-First Century Fox Inc., interest coverage calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income attributable to Twenty-First Century Fox, Inc. stockholders | 4,464) | 2,952) | 2,755) | 8,306) | 4,514) | 7,097) | |
| Add: Net income attributable to noncontrolling interest | 298) | 274) | 261) | 231) | 132) | 226) | |
| Less: Income (loss) from discontinued operations, net of tax | (12) | (44) | (8) | (67) | 729) | 277) | |
| Add: Income tax expense | (364) | 1,419) | 1,130) | 1,243) | 1,272) | 1,690) | |
| Add: Interest expense, net | 1,248) | 1,219) | 1,184) | 1,198) | 1,121) | 1,063) | |
| Earnings before interest and tax (EBIT) | 5,658) | 5,908) | 5,338) | 11,045) | 6,310) | 9,799) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 4.53 | 4.85 | 4.51 | 9.22 | 5.63 | 9.22 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 2018 Calculation
Interest coverage = EBIT ÷ Interest expense
= 5,658 ÷ 1,248 = 4.53
2 Click competitor name to see calculations.
The solvency profile exhibits significant volatility in the capacity to service debt obligations between 2013 and 2018, primarily driven by fluctuations in operating performance rather than changes in financing costs.
- Earnings Before Interest and Tax (EBIT)
- Operating earnings demonstrate substantial variability, reaching a peak of US$ 11,045 million in 2015. This was followed by a sharp decline to US$ 5,338 million in 2016. From 2016 to 2018, EBIT remained relatively stagnant, fluctuating within a narrow range between US$ 5,338 million and US$ 5,908 million.
- Interest Expense, Net
- Net interest expenses show a consistent and incremental upward trend over the analyzed period. Costs rose steadily from US$ 1,063 million in 2013 to US$ 1,248 million by 2018, indicating a gradual increase in the cost of debt or an expansion of the total debt load.
- Interest Coverage Ratio
- The interest coverage ratio reflects the underlying volatility of EBIT, peaking at 9.22 in both 2013 and 2015. A notable deterioration in coverage is observed from 2016 onwards, with the ratio declining to a range between 4.51 and 4.85. This downward shift indicates a reduced margin of safety for meeting interest obligations in the latter three years of the period compared to the initial years.
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Fixed Charge Coverage
Twenty-First Century Fox Inc., fixed charge coverage calculation, comparison to benchmarks
| Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | Jun 30, 2015 | Jun 30, 2014 | Jun 30, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net income attributable to Twenty-First Century Fox, Inc. stockholders | 4,464) | 2,952) | 2,755) | 8,306) | 4,514) | 7,097) | |
| Add: Net income attributable to noncontrolling interest | 298) | 274) | 261) | 231) | 132) | 226) | |
| Less: Income (loss) from discontinued operations, net of tax | (12) | (44) | (8) | (67) | 729) | 277) | |
| Add: Income tax expense | (364) | 1,419) | 1,130) | 1,243) | 1,272) | 1,690) | |
| Add: Interest expense, net | 1,248) | 1,219) | 1,184) | 1,198) | 1,121) | 1,063) | |
| Earnings before interest and tax (EBIT) | 5,658) | 5,908) | 5,338) | 11,045) | 6,310) | 9,799) | |
| Add: Operating lease expense | 230) | 205) | 200) | 260) | 365) | 385) | |
| Earnings before fixed charges and tax | 5,888) | 6,113) | 5,538) | 11,305) | 6,675) | 10,184) | |
| Interest expense, net | 1,248) | 1,219) | 1,184) | 1,198) | 1,121) | 1,063) | |
| Operating lease expense | 230) | 205) | 200) | 260) | 365) | 385) | |
| Fixed charges | 1,478) | 1,424) | 1,384) | 1,458) | 1,486) | 1,448) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 3.98 | 4.29 | 4.00 | 7.75 | 4.49 | 7.03 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Alphabet Inc. | — | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30), 10-K (reporting date: 2015-06-30), 10-K (reporting date: 2014-06-30), 10-K (reporting date: 2013-06-30).
1 2018 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 5,888 ÷ 1,478 = 3.98
2 Click competitor name to see calculations.
The solvency analysis indicates a period of significant volatility in earnings available to cover fixed obligations, despite a stable fixed charge expense profile. While the capacity to meet these obligations remained intact throughout the observed period, the margin of safety experienced substantial fluctuations.
- Earnings Before Fixed Charges and Tax
- Earnings exhibited a non-linear trend, characterized by two distinct peaks in June 2013 and June 2015, reaching US$ 10,184 million and US$ 11,305 million, respectively. These peaks were followed by sharp declines, with the lowest value recorded in June 2016 at US$ 5,538 million, followed by a period of relative stagnation between June 2017 and June 2018.
- Fixed Charge Stability
- Fixed charges remained remarkably consistent over the six-year period, fluctuating within a narrow range between US$ 1,384 million and US$ 1,486 million. This stability suggests a consistent debt service requirement or fixed lease obligation structure that remained independent of operational earnings performance.
- Fixed Charge Coverage Ratio
- The coverage ratio mirrored the volatility of earnings, shifting from a high of 7.75 in June 2015 to a low of 3.98 by June 2018. A general downward trend is observed following the 2015 peak, indicating a reduction in the solvency cushion. Despite this decline, the ratio remained above 3.90 throughout the observed window, suggesting that earnings consistently exceeded fixed obligations by approximately four times.
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