.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)
Caterpillar Inc., debt and solvency ratios
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| | Debt to equity | |||||
| | Debt to capital | |||||
| | Interest coverage |
Source: Based on data from Caterpillar Inc. Annual Reports
| Ratio | Description | The company |
|---|---|---|
| Debt-to-equity ratio | A solvency ratio calculated as total debt divided by total shareholders' equity. | Caterpillar Inc.'s debt-to-equity ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
| Debt-to-capital ratio | A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. | Caterpillar Inc.'s debt-to-capital ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
| Interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments. | Caterpillar Inc.'s interest coverage ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
Debt to Equity
Caterpillar Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | ||||||
| | Short-term borrowings | |||||
| | Long-term debt due within one year | |||||
| | Long-term debt due after one year | |||||
| | Total debt | |||||
| | Equity attributable to common stockholders | |||||
| Ratio | ||||||
| | Debt to equity1 | |||||
| Benchmarks | ||||||
| Debt to Equity, Competitors | ||||||
| Illinois Tool Works Inc. | ||||||
| Debt to Equity, Sector | ||||||
| Industrial Engineering | ||||||
| Debt to Equity, Industry | ||||||
| Industrials | ||||||
Source: Based on data from Caterpillar Inc. Annual Reports
2017 Calculations
1 Debt to equity = Total debt ÷ Equity attributable to common stockholders
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Debt-to-equity ratio | A solvency ratio calculated as total debt divided by total shareholders' equity. | Caterpillar Inc.'s debt-to-equity ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
Debt to Capital
Caterpillar Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | ||||||
| | Short-term borrowings | |||||
| | Long-term debt due within one year | |||||
| | Long-term debt due after one year | |||||
| | Total debt | |||||
| | Equity attributable to common stockholders | |||||
| | Total capital | |||||
| Ratio | ||||||
| | Debt to capital1 | |||||
| Benchmarks | ||||||
| Debt to Capital, Competitors | ||||||
| Illinois Tool Works Inc. | ||||||
| Debt to Capital, Sector | ||||||
| Industrial Engineering | ||||||
| Debt to Capital, Industry | ||||||
| Industrials | ||||||
Source: Based on data from Caterpillar Inc. Annual Reports
2017 Calculations
1 Debt to capital = Total debt ÷ Total capital
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Debt-to-capital ratio | A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. | Caterpillar Inc.'s debt-to-capital ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
Interest Coverage
Caterpillar Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (USD $ in millions) | ||||||
| | Profit (loss) attributable to common stockholders | |||||
| | Add: Net income attributable to noncontrolling interest | |||||
| | Add: Income tax expense | |||||
| | Add: Interest expense excluding Financial Products | |||||
| | Earnings before interest and tax (EBIT) | |||||
| Ratio | ||||||
| | Interest coverage1 | |||||
| Benchmarks | ||||||
| Interest Coverage, Competitors | ||||||
| Illinois Tool Works Inc. | ||||||
| Interest Coverage, Sector | ||||||
| Industrial Engineering | ||||||
| Interest Coverage, Industry | ||||||
| Industrials | ||||||
Source: Based on data from Caterpillar Inc. Annual Reports
2017 Calculations
1 Interest coverage = EBIT ÷ Interest expense
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments. | Caterpillar Inc.'s interest coverage ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level. |
