Analysis of Debt
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Total Debt (Carrying Amount)
Air Products & Chemicals Inc., balance sheet: debt
US$ in thousands
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
- Short-term borrowings
- The short-term borrowings exhibit a clear downward trend over the analyzed period. Starting at 1,494,300 thousand US dollars in 2015, the amount sharply decreased each year, reaching a low of 7,700 thousand US dollars by 2020. This dramatic reduction indicates a significant decline in reliance on short-term debt financing.
- Current portion of long-term debt
- This category shows some fluctuation throughout the years. Initially, there is a decline from 435,600 thousand US dollars in 2015 to 371,300 thousand US dollars in 2016. The amount slightly rises to 416,400 in 2017, followed by a marginal decrease to 406,600 in 2018. A striking drop occurs in 2019 to 40,400 thousand US dollars, but this falls back upward substantially to 470,000 thousand US dollars in 2020. The volatility suggests changes in the timing and structure of debt repayments.
- Long-term debt, excluding current portion
- Long-term debt excluding the current portion presents a mixed trend. From 2015 to 2016, there is an increase from 3,949,100 to 4,918,100 thousand US dollars. However, the number subsequently decreases over the next three years to 2,907,300 thousand US dollars by 2019. A considerable increase is observed in 2020, with the debt more than doubling to 7,132,900 thousand US dollars. This sharp increase in the final year indicates a significant new long-term borrowing or refinancing event.
- Long-term debt, related party
- Data for related party long-term debt is missing for the initial years but becomes available from 2018, showing a decreasing trend from 384,300 thousand US dollars in 2018 down to 297,200 thousand US dollars in 2020. This reduction suggests a gradual repayment or restructuring of related party debt during the observed period.
- Total debt (carrying amount)
- The total debt carrying amount follows a fluctuating pattern. It increases slightly from 5,879,000 thousand US dollars in 2015 to 6,225,200 thousand US dollars in 2016, then declines significantly to 3,326,000 thousand US dollars by 2019. In 2020, total debt rises sharply to 7,907,800 thousand US dollars. This pattern reflects the overall trends in the components of debt and indicates that the company reduced its overall debt substantially from 2016 to 2019 before undertaking sizable borrowing or debt accumulation in 2020.
Total Debt (Fair Value)
| Sep 30, 2020 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Short-term borrowings | |
| Long-term debt, including current portion and related party | |
| Total debt (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2020-09-30).
Weighted-average Interest Rate on Debt
Weighted average interest rate of debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2020-09-30).
1 US$ in thousands
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Air Products & Chemicals Inc., interest costs incurred
US$ in thousands
| 12 months ended: | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||||
| Capitalized interest | |||||||||||||
| Interest costs incurred |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
- Interest Expense
- The interest expense exhibits a general upward trend from 2015 to 2019, increasing from $103,500 thousand to a peak of $137,000 thousand. However, in 2020, there is a notable decline to $109,300 thousand, which may suggest reduced borrowing costs or lower debt obligations during that year.
- Capitalized Interest
- Capitalized interest shows a declining trend over the period analyzed. Starting at $49,100 thousand in 2015, it decreases sharply in the subsequent years, reaching a low of $13,500 thousand in 2019. A slight increase to $15,900 thousand is observed in 2020, but the overall pattern indicates a reduction in the amount of interest being capitalized.
- Interest Costs Incurred
- Interest costs incurred, which combine both interest expense and capitalized interest, fluctuate within a narrower range. Despite some variability, the total interest costs decrease from $152,600 thousand in 2015 to $125,200 thousand in 2020. The values dip in 2017 and again in 2020, with the highest amounts recorded in 2015 and 2019. This trend suggests an overall reduction in total interest-related costs, with 2020 showing a significant year-over-year decline.
- Overall Insights
- The data reflects a pattern where incurred interest costs, although fluctuating, generally decline over the six-year period. The drop in capitalized interest suggests less investment in projects requiring capitalization of borrowing costs or more efficient capitalization policies. The peak in interest expense in 2019 followed by a decline in 2020 could indicate changes in financing strategies, possibly lower debt levels or renegotiated interest rates. The decrease in total interest costs by 2020 suggests improved cost management or a reduction in overall debt obligations.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
2020 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio without capitalized interest showed an overall increasing trend from 2015 to 2020. Starting at 17.75 in 2015, it rose to a peak of 19.46 in 2016 before declining significantly to 12.74 in 2017. After this dip, the ratio recovered steadily, reaching 16.44 in 2018, then 17.71 in 2019, and finally reaching its highest value of 23.18 in 2020. This pattern indicates some volatility in the company's ability to cover interest expenses initially, followed by a consistent strengthening of this capacity in the later years.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio, which includes capitalized interest, followed a similar trajectory to the unadjusted ratio but with overall lower values. It began at 12.04 in 2015 and increased to 15.15 in 2016, then experienced a decline to 11.01 in 2017, mirroring the dip seen in the unadjusted ratio. Subsequently, the ratio improved steadily from 14.3 in 2018 to 16.12 in 2019, and further increased to 20.23 in 2020. The observed trend suggests an enhancement in the company's interest coverage when accounting for capitalized interest, especially notable in the latter period.
- Comparative Insights
- Both ratios demonstrate a dip in 2017, indicating possible challenges in that fiscal year impacting the company's interest coverage ability. The subsequent years show recovery and improvement, with 2020 reflecting the strongest ratios in the observed period. The consistent difference between the two ratios highlights the impact of capitalized interest on the measurement of interest coverage, yet both metrics confirm the overall positive trend towards increased financial stability over time.