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)

Colgate-Palmolive Co., debt and solvency ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Debt to equity 5.37 2.45
Debt to capital 1.01 1.04 1.05 0.84 0.71
Interest coverage 23.79 26.09 21.77 28.18 31.73

Source: Based on data from Colgate-Palmolive Co. Annual Reports

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

Debt to Equity

Colgate-Palmolive Co., debt to equity calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Notes and loans payable 11  13  16  13 
Current portion of long-term debt 298  488  895 
Long-term debt, excluding current portion 6,566  6,520  6,269  5,644  4,749 
Total debt 6,577  6,533  6,571  6,148  5,657 
Total Colgate-Palmolive Company shareholders' equity (60) (243) (299) 1,145  2,305 
Ratio
Debt to equity1 5.37 2.45
Benchmarks
Debt to Equity, Competitors
Kimberly-Clark Corp. 11.80 9.54 1.19
Nike Inc. 0.31 0.17 0.10 0.13 0.12
Debt to Equity, Sector
Personal Goods 1.37 1.36 1.28 1.14 0.70
Debt to Equity, Industry
Consumer Goods 2.30 2.06 1.90 1.66 1.33

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Debt to equity = Total debt ÷ Total Colgate-Palmolive Company shareholders' equity
= 6,577 ÷ -60 =

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity.

Debt to Capital

Colgate-Palmolive Co., debt to capital calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Notes and loans payable 11  13  16  13 
Current portion of long-term debt 298  488  895 
Long-term debt, excluding current portion 6,566  6,520  6,269  5,644  4,749 
Total debt 6,577  6,533  6,571  6,148  5,657 
Total Colgate-Palmolive Company shareholders' equity (60) (243) (299) 1,145  2,305 
Total capital 6,517  6,290  6,272  7,293  7,962 
Ratio
Debt to capital1 1.01 1.04 1.05 0.84 0.71
Benchmarks
Debt to Capital, Competitors
Kimberly-Clark Corp. 0.92 1.01 1.02 0.91 0.54
Nike Inc. 0.23 0.14 0.09 0.11 0.11
Debt to Capital, Sector
Personal Goods 0.58 0.58 0.56 0.53 0.41
Debt to Capital, Industry
Consumer Goods 0.70 0.67 0.65 0.62 0.57

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 6,577 ÷ 6,517 = 1.01

Ratio Description The company
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Colgate-Palmolive Co.'s debt-to-capital ratio improved from 2015 to 2016 and from 2016 to 2017.

Interest Coverage

Colgate-Palmolive Co., interest coverage calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Net income attributable to Colgate-Palmolive Company 2,024  2,441  1,384  2,180  2,241 
Add: Net income attributable to noncontrolling interest 150  145  164  159  169 
Add: Income tax expense 1,313  1,152  1,215  1,194  1,155 
Add: Interest expense 153  149  133  130  116 
Earnings before interest and tax (EBIT) 3,640  3,887  2,896  3,663  3,681 
Ratio
Interest coverage1 23.79 26.09 21.77 28.18 31.73
Benchmarks
Interest Coverage, Competitors
Kimberly-Clark Corp. 10.73 10.85 6.03 9.45 12.13
Nike Inc. 57.81 150.13 124.68 94.26 143.26
Interest Coverage, Sector
Personal Goods 21.59 24.05 19.29 21.97 24.67
Interest Coverage, Industry
Consumer Goods 13.09 14.23 12.82 11.89 12.80

Source: Based on data from Colgate-Palmolive Co. Annual Reports

2017 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 3,640 ÷ 153 = 23.79

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Colgate-Palmolive Co.'s interest coverage ratio improved from 2015 to 2016 but then slightly deteriorated from 2016 to 2017 not reaching 2015 level.