Chevron Corp. (CVX)

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.

Chevron Corp., debt and solvency ratios

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Debt to equity	0.26	0.32	0.25	0.18	0.14
Debt to capital	0.21	0.24	0.20	0.15	0.12
Interest coverage	31.04	-9.75	–	–	–

Source: Based on data from Chevron Corp. Annual Reports

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Chevron Corp.'s debt-to-equity ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Chevron Corp.'s debt-to-capital ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Chevron Corp.'s interest coverage ratio improved from 2015 to 2016 and from 2016 to 2017.

Chevron Corp., 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 debt, net of unamortized discount and debt issuance costs	5,192	10,840	4,928	3,790	374
Long-term debt, net of unamortized discount and debt issuance costs	33,477	35,193	33,584	23,960	19,960
Capital lease obligations	94	93	80	68	97
Total debt	38,763	46,126	38,592	27,818	20,431
Total Chevron Corporation stockholders' equity	148,124	145,556	152,716	155,028	149,113
Ratio
Debt to equity¹	0.26	0.32	0.25	0.18	0.14
Benchmarks
Debt to Equity, Competitors
ConocoPhillips	0.64	0.78	0.63	0.43	0.42
EOG Resources Inc.	0.39	0.50	0.51	0.33	0.38
Exxon Mobil Corp.	0.23	0.26	0.23	0.17	0.13
Occidental Petroleum Corp.	0.48	0.46	0.34	0.20	0.16
Phillips 66	0.40	0.45	0.38	0.40	0.28
Debt to Equity, Sector
Oil & Gas Producers	0.30	0.35	0.30	0.22	0.18
Debt to Equity, Industry
Oil & Gas	0.38	0.44	0.40	0.30	0.27

Source: Based on data from Chevron Corp. Annual Reports

2017 Calculations

¹ Debt to equity = Total debt ÷ Total Chevron Corporation stockholders' equity
= 38,763 ÷ 148,124 = 0.26

Ratio	Description	The company
Debt-to-equity ratio	A solvency ratio calculated as total debt divided by total shareholders' equity.	Chevron Corp.'s debt-to-equity ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.

Chevron Corp., 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 debt, net of unamortized discount and debt issuance costs	5,192	10,840	4,928	3,790	374
Long-term debt, net of unamortized discount and debt issuance costs	33,477	35,193	33,584	23,960	19,960
Capital lease obligations	94	93	80	68	97
Total debt	38,763	46,126	38,592	27,818	20,431
Total Chevron Corporation stockholders' equity	148,124	145,556	152,716	155,028	149,113
Total capital	186,887	191,682	191,308	182,846	169,544
Ratio
Debt to capital¹	0.21	0.24	0.20	0.15	0.12
Benchmarks
Debt to Capital, Competitors
ConocoPhillips	0.39	0.44	0.38	0.30	0.29
EOG Resources Inc.	0.28	0.33	0.34	0.25	0.28
Exxon Mobil Corp.	0.18	0.20	0.18	0.14	0.12
Occidental Petroleum Corp.	0.32	0.31	0.25	0.16	0.14
Phillips 66	0.29	0.31	0.28	0.29	0.22
Debt to Capital, Sector
Oil & Gas Producers	0.23	0.26	0.23	0.18	0.16
Debt to Capital, Industry
Oil & Gas	0.28	0.30	0.29	0.23	0.21

Source: Based on data from Chevron Corp. Annual Reports

2017 Calculations

¹ Debt to capital = Total debt ÷ Total capital
= 38,763 ÷ 186,887 = 0.21

Ratio	Description	The company
Debt-to-capital ratio	A solvency ratio calculated as total debt divided by total debt plus shareholders' equity.	Chevron Corp.'s debt-to-capital ratio deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.

Chevron Corp., 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)
Net income (loss) attributable to Chevron Corporation	9,195	(497)	4,587	19,241	21,423
Add: Net income attributable to noncontrolling interest	74	66	123	69	174
Add: Income tax expense	(48)	(1,729)	132	11,892	14,308
Add: Interest and debt expense	307	201	–	–	–
Earnings before interest and tax (EBIT)	9,528	(1,959)	4,842	31,202	35,905
Ratio
Interest coverage¹	31.04	-9.75	–	–	–
Benchmarks
Interest Coverage, Competitors
ConocoPhillips	-1.38	-3.44	-6.87	15.49	24.60
EOG Resources Inc.	3.41	-4.53	-28.16	25.80	15.60
Exxon Mobil Corp.	32.07	18.59	71.63	181.52	6,413.33
Occidental Petroleum Corp.	4.85	-4.70	-63.46	21.19	83.01
Phillips 66	9.12	7.48	20.50	22.52	21.09
Interest Coverage, Sector
Oil & Gas Producers	11.06	0.73	5.79	71.65	102.41
Interest Coverage, Industry
Oil & Gas	6.27	-0.47	3.49	30.67	39.75

Source: Based on data from Chevron Corp. Annual Reports

2017 Calculations

¹ Interest coverage = EBIT ÷ Interest expense
= 9,528 ÷ 307 = 31.04

Ratio	Description	The company
Interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments.	Chevron Corp.'s interest coverage ratio improved from 2015 to 2016 and from 2016 to 2017.