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)

Accenture PLC, debt and solvency ratios

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Debt to equity 0.00 0.00 0.00 0.00 0.01 0.00
Debt to capital 0.00 0.00 0.00 0.00 0.01 0.00
Interest coverage 297.95 345.67 303.55 244.90 310.18 260.22

Source: Based on data from Accenture PLC Annual Reports

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Accenture PLC's debt-to-equity ratio improved 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. Accenture PLC's debt-to-capital ratio improved from 2015 to 2016 and from 2016 to 2017.
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Accenture PLC's interest coverage ratio improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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Debt to Equity

Accenture PLC, debt to equity calculation, comparison to benchmarks

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Selected Financial Data (USD $ in thousands)
Current portion of long-term debt and bank borrowings 2,907  2,773  1,848  330  11 
Long-term debt, excluding current portion 22,163  24,457  25,587  26,403  25,600  22 
Total debt 25,070  27,230  27,435  26,733  25,600  33 
Total Accenture plc shareholders' equity 8,949,477  7,555,262  6,133,725  5,732,035  4,960,186  4,145,833 
Ratio
Debt to equity1 0.00 0.00 0.00 0.00 0.01 0.00
Benchmarks
Debt to Equity, Competitors
Automatic Data Processing Inc. 0.50 0.45 0.00 0.33 0.04 0.00
Debt to Equity, Sector
Support Services 0.16 0.17 0.00 0.18 0.03
Debt to Equity, Industry
Industrials 1.19 1.10 0.99 0.49 0.42

Source: Based on data from Accenture PLC Annual Reports

2017 Calculations

1 Debt to equity = Total debt ÷ Total Accenture plc shareholders' equity
= 25,070 ÷ 8,949,477 = 0.00

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Accenture PLC's debt-to-equity ratio improved from 2015 to 2016 and from 2016 to 2017.

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Debt to Capital

Accenture PLC, debt to capital calculation, comparison to benchmarks

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Selected Financial Data (USD $ in thousands)
Current portion of long-term debt and bank borrowings 2,907  2,773  1,848  330  11 
Long-term debt, excluding current portion 22,163  24,457  25,587  26,403  25,600  22 
Total debt 25,070  27,230  27,435  26,733  25,600  33 
Total Accenture plc shareholders' equity 8,949,477  7,555,262  6,133,725  5,732,035  4,960,186  4,145,833 
Total capital 8,974,547  7,582,492  6,161,160  5,758,768  4,985,786  4,145,866 
Ratio
Debt to capital1 0.00 0.00 0.00 0.00 0.01 0.00
Benchmarks
Debt to Capital, Competitors
Automatic Data Processing Inc. 0.33 0.31 0.00 0.25 0.04 0.00
Debt to Capital, Sector
Support Services 0.14 0.14 0.00 0.15 0.03
Debt to Capital, Industry
Industrials 0.54 0.52 0.50 0.33 0.29

Source: Based on data from Accenture PLC Annual Reports

2017 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 25,070 ÷ 8,974,547 = 0.00

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

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Interest Coverage

Accenture PLC, interest coverage calculation, comparison to benchmarks

 
Aug 31, 2017 Aug 31, 2016 Aug 31, 2015 Aug 31, 2014 Aug 31, 2013 Aug 31, 2012
Selected Financial Data (USD $ in thousands)
Net income attributable to Accenture plc 3,445,149  4,111,892  3,053,581  2,941,498  3,281,878  2,553,510 
Add: Net income attributable to noncontrolling interest 189,783  237,711  220,208  234,460  272,641  271,423 
Add: Income tax expense 981,100  1,253,969  1,136,741  1,121,743  784,775  1,079,241 
Add: Interest expense 15,545  16,258  14,578  17,621  14,035  15,061 
Earnings before interest and tax (EBIT) 4,631,577  5,619,830  4,425,108  4,315,322  4,353,329  3,919,235 
Ratio
Interest coverage1 297.95 345.67 303.55 244.90 310.18 260.22
Benchmarks
Interest Coverage, Competitors
Automatic Data Processing Inc. 32.64 40.76 319.57 373.89 230.04 276.60
Interest Coverage, Sector
Support Services 75.80 109.18 308.49 278.07 278.66
Interest Coverage, Industry
Industrials 10.30 11.25 12.98 15.93 16.04

Source: Based on data from Accenture PLC Annual Reports

2017 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 4,631,577 ÷ 15,545 = 297.95

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Accenture PLC's interest coverage ratio improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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