.Analysis of Debt
Difficulty: Advanced
Total Debt (Carrying Amount)
3M Co., Statement of Financial Position, Debt
USD $ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| | Short-term borrowings and current portion of long-term debt | |||||
| | Long-term debt, excluding current portion | |||||
| | Capital lease obligations | |||||
| | Total debt (carrying amount) |
Source: Based on data from 3M Co., Annual Reports
| Item | Description | The company |
|---|---|---|
| Total debt (carrying amount) | Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. | 3M Co.'s total debt increased from 2015 to 2016 and from 2016 to 2017. |
Total Debt (Fair Value)
| Dec 31, 2017 | |
|---|---|
| Selected Financial Data (USD $ in millions) | |
| Short-term borrowings and current portion of long-term debt, except Medium-term fixed rate note nad Eurobond securities | |
| Long-term debt, excluding current portion, except Medium-term fixed rate note nad Eurobond securities | |
| Medium-term fixed rate note | |
| Eurobond securities | |
| Total debt (fair value) | |
| Ratio | |
| Debt, fair value to carrying amount | |
Source: Based on data from 3M Co., Annual Reports
Weighted-average Interest Rate on Debt
Weighted-average effective interest rate on debt: %
| Interest Rate | Debt Amount1 | Interest Rate × Debt Amount | Weighted-average Interest Rate2 | |
|---|---|---|---|---|
| % | ||||
| % | ||||
| % | ||||
| % | ||||
| Total | % |
Source: Based on data from 3M Co., Annual Reports
1 USD $ in millions
2 Weighted-average interest rate = 100 × ÷ = %
Interest Costs Incurred
3M Co.
USD $ in millions
| 12 months ended | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | |
|---|---|---|---|---|---|---|
| | Interest expense | |||||
| | Capitalized interest | |||||
| | Interest costs incurred |
Source: Based on data from 3M Co., Annual Reports
| Item | Description | The company |
|---|---|---|
| Interest expense | Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings. | 3M Co.'s interest expense increased from 2015 to 2016 and from 2016 to 2017. |
| Capitalized interest | The amount of interest that was capitalized during the period. | 3M Co.'s capitalized interest declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level. |
| Interest costs incurred | Total interest costs incurred during the period and either capitalized or charged against earnings. | 3M Co.'s interest costs incurred increased from 2015 to 2016 and from 2016 to 2017. |
Adjusted Interest Coverage Ratio
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | ||||||
| | Net income attributable to 3M | |||||
| | Add: Net income attributable to noncontrolling interest | |||||
| | Add: Income tax expense | |||||
| | Add: Interest expense | |||||
| | Earnings before interest and tax (EBIT) | |||||
| | Interest costs incurred | |||||
| Ratio With and Without Capitalized Interest | ||||||
| | Interest coverage ratio (excluding capitalized interest)1 | |||||
| | Adjusted interest coverage ratio (including capitalized interest)2 | |||||
2017 Calculations
1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). | 3M Co.'s adjusted interest coverage ratio deteriorated from 2015 to 2016 and from 2016 to 2017. |
