Microsoft Excel LibreOffice Calc

3M Co. (MMM)

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)

3M Co., debt and solvency ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Debt Ratios
Debt to equity 1.50 1.21 1.14 0.93 0.53
Debt to capital 0.60 0.55 0.53 0.48 0.34
Debt to assets 0.40 0.37 0.36 0.33 0.22
Financial leverage 3.73 3.29 3.20 2.79 2.39
Coverage Ratios
Interest coverage 21.00 24.44 36.44 46.79 50.48
Fixed charge coverage 10.42 12.35 14.64 15.67 15.82

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

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 2016 to 2017 and from 2017 to 2018.
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 2016 to 2017 and from 2017 to 2018.
Debt to assets ratio A solvency ratio calculated as total debt divided by total assets. 3M Co.’s debt to assets ratio deteriorated from 2016 to 2017 and from 2017 to 2018.
Financial leverage ratio A solvency ratio calculated as total assets divided by total shareholders’ equity. 3M Co.’s financial leverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.
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 2016 to 2017 and from 2017 to 2018.
Fixed charge coverage ratio A solvency ratio calculated as earnings before fixed charges and tax divided by fixed charges. 3M Co.’s fixed charge coverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Debt to Equity

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term borrowings and current portion of long-term debt 1,211  1,853  972  2,044  106 
Long-term debt, excluding current portion 13,411  12,096  10,678  8,753  6,731 
Capital lease obligations 75  60  45  46  59 
Total debt 14,697  14,009  11,695  10,843  6,896 
 
Total 3M Company shareholders’ equity 9,796  11,563  10,298  11,708  13,109 
Ratio
Debt to equity1 1.50 1.21 1.14 0.93 0.53
Benchmarks
Debt to Equity, Competitors
Danaher Corp. 0.35 0.40 0.53 0.54 0.15
General Electric Co. 3.55 2.09 1.80 2.02 2.85
Honeywell International Inc. 0.89 1.04 0.81 0.66 0.49
Debt to Equity, Sector
General Industrials 1.73 1.48 1.37 1.54 2.11
Debt to Equity, Industry
Industrials 1.51 1.36 1.31 1.30 1.50

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Debt to equity = Total debt ÷ Total 3M Company shareholders’ equity
= 14,697 ÷ 9,796 = 1.50

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 2016 to 2017 and from 2017 to 2018.

Debt to Capital

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term borrowings and current portion of long-term debt 1,211  1,853  972  2,044  106 
Long-term debt, excluding current portion 13,411  12,096  10,678  8,753  6,731 
Capital lease obligations 75  60  45  46  59 
Total debt 14,697  14,009  11,695  10,843  6,896 
Total 3M Company shareholders’ equity 9,796  11,563  10,298  11,708  13,109 
Total capital 24,493  25,572  21,993  22,551  20,005 
Ratio
Debt to capital1 0.60 0.55 0.53 0.48 0.34
Benchmarks
Debt to Capital, Competitors
Danaher Corp. 0.26 0.29 0.35 0.35 0.13
General Electric Co. 0.78 0.68 0.64 0.67 0.74
Honeywell International Inc. 0.47 0.51 0.45 0.40 0.33
Debt to Capital, Sector
General Industrials 0.63 0.60 0.58 0.61 0.68
Debt to Capital, Industry
Industrials 0.60 0.58 0.57 0.56 0.60

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 14,697 ÷ 24,493 = 0.60

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 2016 to 2017 and from 2017 to 2018.

Debt to Assets

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term borrowings and current portion of long-term debt 1,211  1,853  972  2,044  106 
Long-term debt, excluding current portion 13,411  12,096  10,678  8,753  6,731 
Capital lease obligations 75  60  45  46  59 
Total debt 14,697  14,009  11,695  10,843  6,896 
 
Total assets 36,500  37,987  32,906  32,718  31,269 
Ratio
Debt to assets1 0.40 0.37 0.36 0.33 0.22
Benchmarks
Debt to Assets, Competitors
Danaher Corp. 0.20 0.23 0.27 0.27 0.09
General Electric Co. 0.36 0.36 0.37 0.40 0.56
Honeywell International Inc. 0.28 0.30 0.29 0.24 0.19
Debt to Assets, Sector
General Industrials 0.33 0.34 0.35 0.38 0.50
Debt to Assets, Industry
Industrials 0.31 0.31 0.30 0.31 0.37

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Debt to assets = Total debt ÷ Total assets
= 14,697 ÷ 36,500 = 0.40

Ratio Description The company
Debt to assets ratio A solvency ratio calculated as total debt divided by total assets. 3M Co.’s debt to assets ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Financial Leverage

3M Co., financial leverage calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Total assets 36,500  37,987  32,906  32,718  31,269 
Total 3M Company shareholders’ equity 9,796  11,563  10,298  11,708  13,109 
Ratio
Financial leverage1 3.73 3.29 3.20 2.79 2.39
Benchmarks
Financial Leverage, Competitors
Danaher Corp. 1.70 1.77 1.97 2.04 1.58
General Electric Co. 9.98 5.88 4.82 5.01 5.06
Honeywell International Inc. 3.18 3.44 2.80 2.70 2.57
Financial Leverage, Sector
General Industrials 5.18 4.37 3.87 4.10 4.18
Financial Leverage, Industry
Industrials 4.86 4.45 4.36 4.19 4.03

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Financial leverage = Total assets ÷ Total 3M Company shareholders’ equity
= 36,500 ÷ 9,796 = 3.73

Ratio Description The company
Financial leverage ratio A solvency ratio calculated as total assets divided by total shareholders’ equity. 3M Co.’s financial leverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Interest Coverage

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Net income attributable to 3M 5,349  4,858  5,050  4,833  4,956 
Add: Net income attributable to noncontrolling interest 14  11  8  8  42 
Add: Income tax expense 1,637  2,679  1,995  1,982  2,028 
Add: Interest expense 350  322  199  149  142 
Earnings before interest and tax (EBIT) 7,350  7,870  7,252  6,972  7,168 
Ratio
Interest coverage1 21.00 24.44 36.44 46.79 50.48
Benchmarks
Interest Coverage, Competitors
Danaher Corp. 21.92 19.06 15.16 21.42 29.38
General Electric Co. -2.98 -0.81 2.80 3.36 2.82
Honeywell International Inc. 21.40 22.84 20.07 22.25 19.30
Interest Coverage, Sector
General Industrials 0.60 2.52 5.38 7.10 4.33
Interest Coverage, Industry
Industrials 7.01 7.95 8.24 10.83 7.76

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 7,350 ÷ 350 = 21.00

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 2016 to 2017 and from 2017 to 2018.

Fixed Charge Coverage

3M Co., fixed charge coverage calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Net income attributable to 3M 5,349  4,858  5,050  4,833  4,956 
Add: Net income attributable to noncontrolling interest 14  11  8  8  42 
Add: Income tax expense 1,637  2,679  1,995  1,982  2,028 
Add: Interest expense 350  322  199  149  142 
Earnings before interest and tax (EBIT) 7,350  7,870  7,252  6,972  7,168 
Add: Rental expense under operating leases 393  343  318  316  332 
Earnings before fixed charges and tax 7,743  8,213  7,570  7,288  7,500 
 
Interest expense 350  322  199  149  142 
Rental expense under operating leases 393  343  318  316  332 
Fixed charges 743  665  517  465  474 
Ratio
Fixed charge coverage1 10.42 12.35 14.64 15.67 15.82
Benchmarks
Fixed Charge Coverage, Competitors
Danaher Corp. 8.49 8.14 7.46 8.84 10.82
General Electric Co. -1.77 -0.30 2.07 2.74 2.58
Honeywell International Inc. 11.30 10.85 9.89 10.41 8.88
Fixed Charge Coverage, Sector
General Industrials 0.69 1.90 3.70 4.97 3.69
Fixed Charge Coverage, Industry
Industrials 4.19 4.60 4.79 5.89 5.14

Based on: 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11), 10-K (filing date: 2015-02-12).

2018 Calculations

1 Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 7,743 ÷ 743 = 10.42

Ratio Description The company
Fixed charge coverage ratio A solvency ratio calculated as earnings before fixed charges and tax divided by fixed charges. 3M Co.’s fixed charge coverage ratio deteriorated from 2016 to 2017 and from 2017 to 2018.