Microsoft Excel LibreOffice Calc

Analysis of Debt

Difficulty: Advanced


Total Debt (Carrying Amount)

DowDuPont Inc., Statement of Financial Position, Debt

USD $ in millions

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Notes payable 1,948  272  454  551  443 
Long-term debt due within one year 2,067  635  541  394  697 
Long-term debt, excluding debt due within one year 30,056  20,456  16,215  18,838  16,820 
Total debt (carrying amount) 34,071  21,363  17,210  19,783  17,960 

Source: Based on data from DowDuPont Inc., Annual Reports

Item Description The company
Total debt (carrying amount) Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. DowDuPont Inc.'s total debt increased from 2015 to 2016 and from 2016 to 2017.

Total Debt (Fair Value)

Microsoft Excel LibreOffice Calc
Dec 31, 2017
Selected Financial Data (USD $ in millions)
Notes payable 1,948 
Long-term debt including debt due within one year 34,175 
Total debt (fair value) 36,123 
Ratio
Debt, fair value to carrying amount 1.06

Source: Based on data from DowDuPont Inc., Annual Reports


Weighted-average Interest Rate on Debt

Weighted average interest rate on debt: 3.88%

Interest Rate Debt Amount1 Interest Rate × Debt Amount Weighted-average Interest Rate2
5.78% 339  20 
8.55% 2,122  181 
4.46% 1,547  69 
4.71% 1,424  67 
3.50% 1,373  48 
6.00% 7,182  431 
2.44% 4,564  111 
3.00% 814  24 
3.20% 873  28 
5.66% 343  19 
1.59% 1,280  20 
2.23% 521  12 
1.79% 3,070  55 
2.07% 1,580  33 
3.32% 3,492  116 
2.37% 1,518  36 
2.85% 30 
1.22% 110 
4.42% 484  21 
1.95% 1,464  29 
Total 34,130  1,323  3.88%

Source: Based on data from DowDuPont Inc., Annual Reports

1 USD $ in millions

2 Weighted-average interest rate = 100 × 1,323 ÷ 34,130 = 3.88%


Interest Costs Incurred

DowDuPont Inc.

USD $ in millions

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12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Interest expense and amortization of debt discount 1,082  858  946  983  1,101 
Capitalized interest 247  243  218  125  78 
Interest costs incurred 1,329  1,101  1,164  1,108  1,179 

Source: Based on data from DowDuPont Inc., Annual Reports

Item Description The company
Interest expense and amortization of debt discount Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings. DowDuPont Inc.'s interest expense and amortization of debt discount declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.
Capitalized interest The amount of interest that was capitalized during the period. DowDuPont Inc.'s capitalized interest increased from 2015 to 2016 and from 2016 to 2017.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. DowDuPont Inc.'s interest costs incurred declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

Adjusted Interest Coverage Ratio

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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 DowDuPont Inc. 1,460  4,318  7,685  3,772  4,787 
Add: Net income attributable to noncontrolling interest 132  86  98  67  29 
Less: Loss from discontinued operations, net of tax (77)
Add: Income tax expense (476) 2,147  1,426  1,988 
Add: Interest expense and amortization of debt discount 1,082  858  946  983  1,101 
Earnings before interest and tax (EBIT) 2,275  5,271  10,876  6,248  7,905 
 
Interest costs incurred 1,329  1,101  1,164  1,108  1,179 
Ratio With and Without Capitalized Interest
Interest coverage ratio (excluding capitalized interest)1 2.10 6.14 11.50 6.36 7.18
Adjusted interest coverage ratio (including capitalized interest)2 1.71 4.79 9.34 5.64 6.70

2017 Calculations

1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense and amortization of debt discount
= 2,275 ÷ 1,082 = 2.10

2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= 2,275 ÷ 1,329 = 1.71

Ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). DowDuPont Inc.'s adjusted interest coverage ratio deteriorated from 2015 to 2016 and from 2016 to 2017.