Microsoft Excel LibreOffice Calc

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Debt to equity 2.60 2.55 2.80 2.57 2.35
Debt to capital 0.72 0.72 0.74 0.72 0.70
Interest coverage 20.42 8.72 1.26 6.63 11.52

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

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 improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.
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 improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Caterpillar Inc.’s interest coverage ratio improved from 2016 to 2017 and from 2017 to 2018.

Debt to Equity

Caterpillar Inc., debt to equity calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term borrowings 5,723  4,837  7,303  6,967  4,708 
Long-term debt due within one year 5,830  6,194  6,662  5,879  6,793 
Long-term debt due after one year 25,000  23,847  22,818  25,247  27,784 
Total debt 36,553  34,878  36,783  38,093  39,285 
Equity attributable to common stockholders 14,039  13,697  13,137  14,809  16,746 
Ratio
Debt to equity1 2.60 2.55 2.80 2.57 2.35
Benchmarks
Debt to Equity, Competitors
Illinois Tool Works Inc. 2.27 1.82 1.84 1.42 1.09
Debt to Equity, Sector
Industrial Engineering 2.36 2.57 2.27 1.98
Debt to Equity, Industry
Industrials 1.36 1.31 1.30 1.50

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 Debt to equity = Total debt ÷ Equity attributable to common stockholders
= 36,553 ÷ 14,039 = 2.60

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 improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

Debt to Capital

Caterpillar Inc., debt to capital calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Short-term borrowings 5,723  4,837  7,303  6,967  4,708 
Long-term debt due within one year 5,830  6,194  6,662  5,879  6,793 
Long-term debt due after one year 25,000  23,847  22,818  25,247  27,784 
Total debt 36,553  34,878  36,783  38,093  39,285 
Equity attributable to common stockholders 14,039  13,697  13,137  14,809  16,746 
Total capital 50,592  48,575  49,920  52,902  56,031 
Ratio
Debt to capital1 0.72 0.72 0.74 0.72 0.70
Benchmarks
Debt to Capital, Competitors
Illinois Tool Works Inc. 0.69 0.64 0.65 0.59 0.52
Debt to Capital, Sector
Industrial Engineering 0.70 0.72 0.69 0.66
Debt to Capital, Industry
Industrials 0.58 0.57 0.56 0.60

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 36,553 ÷ 50,592 = 0.72

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 improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018.

Interest Coverage

Caterpillar Inc., interest coverage calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Profit (loss) attributable to common stockholders 6,147  754  (67) 2,102  3,695 
Add: Net income attributable to noncontrolling interest 11  16 
Add: Income tax expense 1,698  3,339  192  742  1,380 
Add: Interest expense excluding Financial Products 404  531  505  507  484 
Earnings before interest and tax (EBIT) 8,250  4,629  638  3,362  5,575 
Ratio
Interest coverage1 20.42 8.72 1.26 6.63 11.52
Benchmarks
Interest Coverage, Competitors
Illinois Tool Works Inc. 14.21 13.58 13.27 13.03 11.80
Interest Coverage, Sector
Industrial Engineering 10.31 5.10 8.60 11.61
Interest Coverage, Industry
Industrials 7.95 8.24 10.83 7.76

Based on: 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-15), 10-K (filing date: 2016-02-16), 10-K (filing date: 2015-02-17).

2018 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 8,250 ÷ 404 = 20.42

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Caterpillar Inc.’s interest coverage ratio improved from 2016 to 2017 and from 2017 to 2018.