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3M Co. (MMM)

Long-term Debt and Solvency Analysis

Difficulty: Beginner

  • Annual Data
  • Quarterly Data

    • Solvency ratios also known as long-term debt ratios measure a company's ability to meet long-term obligations.

    Ratios (Summary)

    3M Co., debt and solvency ratios

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    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Debt to equity 1.21 1.14 0.93 0.53 0.35
    Debt to capital 0.55 0.53 0.48 0.34 0.26
    Interest coverage 24.44 36.44 46.79 50.48 46.26

    Source: Based on data from 3M Co. Annual Reports

    Ratio Description The company
    Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. 3M Co.'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. 3M Co.'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. 3M Co.'s interest coverage ratio deteriorated from 2015 to 2016 and from 2016 to 2017.

    Debt to Equity

    3M Co., debt to equity calculation, comparison to benchmarks

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    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data (USD $ in millions)
    Short-term borrowings and current portion of long-term debt 1,853  972  2,044  106  1,683 
    Long-term debt, excluding current portion 12,096  10,678  8,753  6,731  4,326 
    Capital lease obligations 60  45  46  59  58 
    Total debt 14,009  11,695  10,843  6,896  6,067 
    Total 3M Company shareholders' equity 11,563  10,298  11,708  13,109  17,502 
    Ratio
    Debt to equity1 1.21 1.14 0.93 0.53 0.35
    Benchmarks
    Debt to Equity, Competitors
    Danaher Corp. 0.40 0.53 0.54 0.15 0.16
    General Electric Co. 2.09 1.80 2.02 2.85 2.93
    Honeywell International Inc. 1.04 0.81 0.66 0.49 0.51
    Debt to Equity, Sector
    General Industrials 1.48 1.37 1.54 2.11 2.14
    Debt to Equity, Industry
    Industrials 1.36 1.31 1.30 1.50 1.39

    Source: Based on data from 3M Co. Annual Reports

    2017 Calculations

    1 Debt to equity = Total debt ÷ Total 3M Company shareholders' equity
    = 14,009 ÷ 11,563 = 1.21

    Ratio Description The company
    Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. 3M Co.'s debt-to-equity ratio deteriorated from 2015 to 2016 and from 2016 to 2017.

    Debt to Capital

    3M Co., debt to capital calculation, comparison to benchmarks

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    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data (USD $ in millions)
    Short-term borrowings and current portion of long-term debt 1,853  972  2,044  106  1,683 
    Long-term debt, excluding current portion 12,096  10,678  8,753  6,731  4,326 
    Capital lease obligations 60  45  46  59  58 
    Total debt 14,009  11,695  10,843  6,896  6,067 
    Total 3M Company shareholders' equity 11,563  10,298  11,708  13,109  17,502 
    Total capital 25,572  21,993  22,551  20,005  23,569 
    Ratio
    Debt to capital1 0.55 0.53 0.48 0.34 0.26
    Benchmarks
    Debt to Capital, Competitors
    Danaher Corp. 0.29 0.35 0.35 0.13 0.14
    General Electric Co. 0.68 0.64 0.67 0.74 0.75
    Honeywell International Inc. 0.51 0.45 0.40 0.33 0.34
    Debt to Capital, Sector
    General Industrials 0.60 0.58 0.61 0.68 0.68
    Debt to Capital, Industry
    Industrials 0.58 0.57 0.56 0.60 0.58

    Source: Based on data from 3M Co. Annual Reports

    2017 Calculations

    1 Debt to capital = Total debt ÷ Total capital
    = 14,009 ÷ 25,572 = 0.55

    Ratio Description The company
    Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. 3M Co.'s debt-to-capital ratio deteriorated from 2015 to 2016 and from 2016 to 2017.

    Interest Coverage

    3M Co., interest coverage calculation, comparison to benchmarks

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    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 4,858  5,050  4,833  4,956  4,659 
    Add: Net income attributable to noncontrolling interest 11  8  8  42  62 
    Add: Income tax expense 2,679  1,995  1,982  2,028  1,841 
    Add: Interest expense 322  199  149  142  145 
    Earnings before interest and tax (EBIT) 7,870  7,252  6,972  7,168  6,707 
    Ratio
    Interest coverage1 24.44 36.44 46.79 50.48 46.26
    Benchmarks
    Interest Coverage, Competitors
    Danaher Corp. 19.06 15.16 21.42 29.38 25.44
    General Electric Co. -0.81 2.80 3.36 2.82 2.60
    Honeywell International Inc. 22.84 20.07 22.25 19.30 17.55
    Interest Coverage, Sector
    General Industrials 2.52 5.38 7.10 4.33 3.95
    Interest Coverage, Industry
    Industrials 7.95 8.24 10.83 7.76 7.15

    Source: Based on data from 3M Co. Annual Reports

    2017 Calculations

    1 Interest coverage = EBIT ÷ Interest expense
    = 7,870 ÷ 322 = 24.44

    Ratio Description The company
    Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. 3M Co.'s interest coverage ratio deteriorated from 2015 to 2016 and from 2016 to 2017.