Long-term Debt and Solvency Analysis

Difficulty level: Basic

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


Ratios (Summary)

Altria Group Inc., debt and solvency ratios

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Debt to equity 4.87 3.52 4.38 3.72 2.35
Debt to capital 0.83 0.78 0.81 0.79 0.70
Interest coverage 10.07 7.59 6.74 5.58 6.04

Source: Based on data from Altria Group Inc. Annual Reports

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Altria Group Inc.'s debt-to-equity ratio improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Altria Group Inc.'s debt-to-capital ratio improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Altria Group Inc.'s interest coverage ratio improved from 2012 to 2013 and from 2013 to 2014.

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Debt to Equity

Altria Group Inc., debt to equity calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Current portion of long-term debt 1,000  525  1,459  600 
Long-term debt, excluding current portion 13,693  13,992  12,419  13,089  12,194 
Total debt 14,693  14,517  13,878  13,689  12,194 
Stockholders’ equity attributable to Altria Group, Inc. 3,014  4,119  3,168  3,680  5,192 
Ratio
Debt to equity1 4.87 3.52 4.38 3.72 2.35
Benchmarks
Debt to Equity, Competitors
Philip Morris International Inc. 80.98 4.71
Debt to Equity, Sector
Tobacco 8.25 3.30
Debt to Equity, Industry
Consumer Goods 1.39 1.21 1.17 1.13 1.16

Source: Based on data from Altria Group Inc. Annual Reports

2014 Calculations

1 Debt to equity = Total debt ÷ Stockholders’ equity attributable to Altria Group, Inc.
= 14,693 ÷ 3,014 = 4.87

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Altria Group Inc.'s debt-to-equity ratio improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.

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Debt to Capital

Altria Group Inc., debt to capital calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Current portion of long-term debt 1,000  525  1,459  600 
Long-term debt, excluding current portion 13,693  13,992  12,419  13,089  12,194 
Total debt 14,693  14,517  13,878  13,689  12,194 
Stockholders’ equity attributable to Altria Group, Inc. 3,014  4,119  3,168  3,680  5,192 
Total capital 17,707  18,636  17,046  17,369  17,386 
Ratio
Debt to capital1 0.83 0.78 0.81 0.79 0.70
Benchmarks
Debt to Capital, Competitors
Philip Morris International Inc. 1.75 1.39 1.18 0.99 0.82
Debt to Capital, Sector
Tobacco 1.28 1.09 1.01 0.89 0.77
Debt to Capital, Industry
Consumer Goods 0.58 0.55 0.54 0.53 0.54

Source: Based on data from Altria Group Inc. Annual Reports

2014 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 14,693 ÷ 17,707 = 0.83

Ratio Description The company
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Altria Group Inc.'s debt-to-capital ratio improved from 2012 to 2013 but then deteriorated significantly from 2013 to 2014.

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Interest Coverage

Altria Group Inc., interest coverage calculation, comparison to benchmarks

 
Dec 31, 2014 Dec 31, 2013 Dec 31, 2012 Dec 31, 2011 Dec 31, 2010
Selected Financial Data (USD $ in millions)
Net earnings attributable to Altria Group, Inc. 5,070  4,535  4,180  3,390  3,905 
Add: Net income attributable to noncontrolling interest
Add: Income tax expense 2,704  2,407  2,294  2,189  1,816 
Add: Interest expense 857  1,053  1,128  1,220  1,136 
Earnings before interest and tax (EBIT) 8,631  7,995  7,605  6,802  6,859 
Ratio
Interest coverage1 10.07 7.59 6.74 5.58 6.04
Benchmarks
Interest Coverage, Competitors
Philip Morris International Inc. 10.19 12.34 13.90 14.42 11.60
Interest Coverage, Sector
Tobacco 10.14 10.02 10.12 9.41 8.61
Interest Coverage, Industry
Consumer Goods 15.80 15.33 8.67 13.89 9.67

Source: Based on data from Altria Group Inc. Annual Reports

2014 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 8,631 ÷ 857 = 10.07

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Altria Group Inc.'s interest coverage ratio improved from 2012 to 2013 and from 2013 to 2014.

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