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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.

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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.

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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.

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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.

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