Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
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Solvency Ratios (Summary)
DuPont de Nemours Inc., solvency ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Debt to Equity Ratio
- The debt to equity ratio exhibited a fluctuating trend over the five-year period. It increased from 0.68 in 2015 to 0.82 in 2016, indicating higher leverage. Subsequently, it decreased substantially to 0.34 in 2017, before rising slightly to 0.43 in 2018 and stabilizing at the same level in 2019. Including operating lease liabilities yields similar values, suggesting leases have minimal impact on leverage ratios.
- Debt to Capital Ratio
- Similar to the debt to equity ratio, the debt to capital ratio rose from 0.40 in 2015 to 0.45 in 2016, then fell to 0.25 in 2017. It increased again slightly to 0.30 in both 2018 and 2019. The inclusion of operating lease liabilities marginally increased the ratio in 2019 from 0.30 to 0.31, indicating limited influence of lease obligations on the capital structure.
- Debt to Assets Ratio
- The debt to assets ratio showed a generally stable pattern with minor fluctuations. It increased from 0.25 in 2015 to 0.27 in 2016, declined notably to 0.18 in 2017, and then rose steadily to 0.22 in 2018 and 0.25 in 2019. Adjusting for operating lease liabilities produces a slight upward effect in 2019, indicating some lease-related debt recognition.
- Financial Leverage
- Financial leverage decreased significantly from a high level of 3.06 in 2016 to 1.92 in 2017, indicating reduced reliance on debt financing. After a slight increase to 1.99 in 2018, it declined further to 1.69 in 2019, reflecting a continuing trend toward lower leverage over the period.
- Interest Coverage Ratio
- The interest coverage ratio demonstrated a sharp decline over the period. Starting at 11.5 in 2015, it almost halved to 6.14 in 2016 and dropped steeply to 2.1 in 2017. While there was an improvement to 4.65 in 2018, the ratio plummeted to a critically low 0.29 in 2019, suggesting significant challenges in meeting interest obligations from operating income in the most recent year.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio followed a similar trajectory to the interest coverage ratio. It decreased from 5.55 in 2015 to 2.9 in 2016 and 1.61 in 2017, then improved to 3.16 in 2018. However, it fell sharply to 0.44 in 2019, highlighting increased difficulty in covering fixed charges such as lease payments and interest, indicative of financial strain in the latest year.
Debt Ratios
Coverage Ratios
Debt to Equity
DuPont de Nemours Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and finance lease obligations | ||||||
| Long-term debt, excluding debt within one year | ||||||
| Total debt | ||||||
| Total DuPont stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity1 | ||||||
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to equity = Total debt ÷ Total DuPont stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the company's capital structure over the five-year period ending December 31, 2019. Notably, total debt and stockholders' equity exhibit pronounced changes, impacting the company's leverage ratios and financial balance.
- Total Debt
- Total debt increased substantially from 2015 to 2018, rising from $17.21 billion to $40.46 billion. This upward trend plateaued and then sharply reversed in 2019, when total debt dropped to $17.45 billion, almost returning to the 2015 level. This pattern indicates a period of aggressive borrowing followed by significant debt reduction in the final year reported.
- Total Stockholders' Equity
- Stockholders’ equity remained relatively stable from 2015 through 2016, with a slight increase from $25.37 billion to $25.99 billion. However, it surged dramatically in 2017 to $100.33 billion, then decreased to $94.57 billion in 2018, before declining further to $40.99 billion in 2019. The sharp increase in equity in 2017 followed by a marked decline indicates major capital changes, possibly related to asset revaluation, equity issuance, or merger and acquisition activity during this period.
- Debt to Equity Ratio
- The debt to equity ratio showed considerable variability consistent with the movements in debt and equity. Starting at 0.68 in 2015, it increased to 0.82 in 2016, reflecting a relatively higher increase in debt compared to equity. The ratio then decreased significantly in 2017 to 0.34, correlating with the large growth in equity relative to debt. Subsequently, the ratio stabilized at around 0.43 in both 2018 and 2019, suggesting a more balanced capital structure following the volatility of previous years.
In summary, the period from 2015 to 2019 is characterized by major capital structure shifts, with dramatic increases and decreases in total debt and equity. The debt to equity ratio's decline and stabilization indicate a move towards lower leverage after a phase of leverage expansion and equity growth. These trends suggest strategic financial management decisions likely aimed at optimizing capital structure and risk profile.
Debt to Equity (including Operating Lease Liability)
DuPont de Nemours Inc., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and finance lease obligations | ||||||
| Long-term debt, excluding debt within one year | ||||||
| Total debt | ||||||
| Current operating lease liabilities (included in Accrued and other current liabilities) | ||||||
| Noncurrent operating lease liabilities (included in Other noncurrent obligations) | ||||||
| Total debt (including operating lease liability) | ||||||
| Total DuPont stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total DuPont stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the company's leverage and equity base over the five-year period.
- Total Debt (including operating lease liability)
- The total debt experienced a significant rise from 17,210 million US dollars at the end of 2015 to a peak of 40,464 million by the end of 2018. However, this was followed by a substantial reduction to 18,001 million in 2019, indicating a considerable deleveraging effort or repayment of obligations in the latest year.
- Total Stockholders’ Equity
- The equity base remained relatively stable between 2015 and 2016, rising slightly from 25,374 million to 25,987 million. Thereafter, the data shows a dramatic increase to 100,330 million in 2017, followed by a slight decline to 94,571 million in 2018, and then a sharp decrease to 40,987 million in 2019. This volatility suggests a material event or series of accounting adjustments occurred around 2017, significantly impacting equity values.
- Debt to Equity Ratio (including operating lease liability)
- The debt-to-equity ratio was relatively moderate at 0.68 in 2015 and increased to 0.82 in 2016, consistent with the increase in debt and stable equity. The ratio then sharply declined to 0.34 in 2017, reflecting the surge in equity compared to debt. In 2018, the ratio rose slightly to 0.43 and further edged up to 0.44 in 2019, despite the sharp fall in debt and equity, indicating a more balanced leverage position compared to prior years.
Overall, the period saw a significant restructuring of the company's capital structure, with a pronounced increase and then a steep reduction in both debt and equity levels. The changes in equity and debt suggest possible transactions such as asset sales, acquisitions, or reclassifications that majorly affected the balance sheet composition. The fluctuation of the debt-to-equity ratio illustrates shifts between leveraged and more equity-heavy financing structures, with the 2019 figures indicating a more conservative financial stance compared to the peak levels observed in 2017-2018.
Debt to Capital
DuPont de Nemours Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and finance lease obligations | ||||||
| Long-term debt, excluding debt within one year | ||||||
| Total debt | ||||||
| Total DuPont stockholders’ equity | ||||||
| Total capital | ||||||
| Solvency Ratio | ||||||
| Debt to capital1 | ||||||
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals noteworthy trends in the company's debt and capital structure over the five-year period ending December 31, 2019.
- Total Debt
- The total debt exhibited a significant rise from US$ 17,210 million in 2015 to a peak of US$ 40,464 million in 2018, indicating a substantial increase in leverage. However, this was followed by a notable reduction to US$ 17,447 million in 2019, returning the debt level close to the initial figure in 2015.
- Total Capital
- Total capital followed an overall increasing trend from US$ 42,584 million in 2015 to a marked peak of US$ 135,035 million in 2018, which more than tripled the 2015 figure. In 2019, total capital declined sharply to US$ 58,434 million, which still remained above the 2015 and 2016 levels.
- Debt to Capital Ratio
- The debt to capital ratio initially increased from 0.40 in 2015 to 0.45 in 2016, indicating a higher proportion of debt within the capital structure. This ratio then dropped significantly to 0.25 in 2017 and modestly rose to 0.30 in both 2018 and 2019. Despite fluctuations in absolute debt and capital values, the leverage ratio ultimately decreased from its 2016 peak, signifying a relative reduction in reliance on debt financing compared to the company's capital base.
Overall, the data suggests a phase of aggressive debt accumulation and capital expansion between 2016 and 2018, followed by a period of deleveraging and consolidation in 2019. The disparity between the absolute levels of debt and capital and their ratios portrays shifting strategic financial management, possibly responding to market conditions or corporate restructuring efforts during the period examined.
Debt to Capital (including Operating Lease Liability)
DuPont de Nemours Inc., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and finance lease obligations | ||||||
| Long-term debt, excluding debt within one year | ||||||
| Total debt | ||||||
| Current operating lease liabilities (included in Accrued and other current liabilities) | ||||||
| Noncurrent operating lease liabilities (included in Other noncurrent obligations) | ||||||
| Total debt (including operating lease liability) | ||||||
| Total DuPont stockholders’ equity | ||||||
| Total capital (including operating lease liability) | ||||||
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals several significant trends regarding the company's leverage and capital structure.
- Total debt (including operating lease liability)
- The total debt experienced a notable increase from 17,210 million USD in 2015 to a peak of 40,464 million USD in 2018. This represents more than a doubling of the debt level over three years. However, in 2019, the total debt sharply declined to 18,001 million USD, nearly reverting to the initial 2015 level. This pattern suggests a period of aggressive borrowing or acquisition financing followed by considerable deleveraging or repayment activities.
- Total capital (including operating lease liability)
- Total capital also showed substantial volatility. It increased marginally from 42,584 million USD in 2015 to 47,350 million USD in 2016, then surged dramatically to 134,401 million USD in 2017 and slightly more to 135,035 million USD in 2018. By 2019, it decreased significantly to 58,988 million USD. The surge in 2017 and 2018 corresponds with the peak in total debt, indicating a large expansion in the asset base or capital investment during this period, followed by a reduction in 2019.
- Debt to capital ratio (including operating lease liability)
- The debt to capital ratio started at 0.4 in 2015 and increased to 0.45 in 2016, reflecting a higher proportion of debt in the capital structure. Despite the sharp increases in absolute debt and capital values in the following years, this ratio decreased significantly to 0.25 in 2017 before rising slightly to 0.3 in 2018 and 0.31 in 2019. This decline in the ratio during the high-debt years suggests that total capital grew even more substantially than debt, reducing leverage proportionally. The slight increase thereafter indicates modestly higher leverage relative to total capital in the last two years.
In summary, the company showed a marked increase in both total debt and capital between 2016 and 2018, likely indicating expansion or acquisition activities financed partly through debt. The debt to capital ratio's reduction during this time indicates a stronger capital base relative to debt. The subsequent decline in both debt and capital in 2019 suggests a period of consolidation or divestiture, with leverage marginally increasing relative to the downsized capital base.
Debt to Assets
DuPont de Nemours Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and finance lease obligations | ||||||
| Long-term debt, excluding debt within one year | ||||||
| Total debt | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets1 | ||||||
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data analysis reveals several notable trends over the five-year period ending in 2019. Total debt exhibited a significant increase from 2015 to 2018, rising from $17,210 million to a peak of $40,464 million. However, in 2019, total debt sharply declined back to $17,447 million, nearly reverting to its 2015 level. This fluctuation suggests a period of increased borrowing or financing activity followed by a substantial reduction or repayment of debt in the final year observed.
Total assets underwent a considerable transformation during the same timeframe. The assets increased steadily from $68,026 million in 2015 to a pronounced peak of $192,164 million in 2017. After this peak, total assets slightly decreased to $188,030 million in 2018 and more sharply dropped to $69,396 million in 2019, ultimately aligning closely with the asset level from 2015. This pattern indicates a substantial expansion and subsequent contraction in the asset base, possibly reflecting acquisitions, disposals, or revaluations.
The debt-to-assets ratio provides insight into the company's leverage dynamics. The ratio climbed modestly from 0.25 in 2015 to 0.27 in 2016, dropped notably to 0.18 in 2017, increased to 0.22 in 2018, and then returned to 0.25 in 2019. These movements suggest that although absolute levels of debt and assets varied significantly over the period, the relative leverage maintained within a narrow band around 0.25. The lower ratio in 2017 aligns with the peak in total assets, implying stronger asset backing for the debt at that time.
In summary, the data reflects a phase of substantial balance sheet growth and increased indebtedness from 2015 through 2018, followed by a sizeable retrenchment of both assets and debt in 2019, with overall leverage remaining relatively stable throughout the period.
Debt to Assets (including Operating Lease Liability)
DuPont de Nemours Inc., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and finance lease obligations | ||||||
| Long-term debt, excluding debt within one year | ||||||
| Total debt | ||||||
| Current operating lease liabilities (included in Accrued and other current liabilities) | ||||||
| Noncurrent operating lease liabilities (included in Other noncurrent obligations) | ||||||
| Total debt (including operating lease liability) | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | ||||||
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt exhibited significant fluctuations over the observed periods. Starting at $17,210 million in 2015, it increased substantially in 2016 and 2017, peaking at $40,464 million in 2018 before sharply declining to $18,001 million in 2019. This pattern indicates a considerable borrowing increase followed by a rapid debt reduction.
- Total Assets
- Total assets showed a similar volatile pattern. The value rose from $68,026 million in 2015 to a high point of $192,164 million in 2017, with a slight decline to $188,030 million in 2018, and then a steep decrease to $69,396 million in 2019. This suggests significant asset growth over the middle period, followed by a reversion to levels close to the initial value.
- Debt to Assets Ratio (including operating lease liability)
- The ratio of total debt to total assets remained relatively stable but exhibited moderate variation. It increased slightly from 0.25 in 2015 to 0.27 in 2016, decreased to 0.18 in 2017, rose again to 0.22 in 2018, and returned near the initial level at 0.26 in 2019. This indicates that although total debt and assets values fluctuated widely, their relative proportion remained around one quarter of total assets throughout most of the period.
Financial Leverage
DuPont de Nemours Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | ||||||
| Total DuPont stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Financial leverage1 | ||||||
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Financial leverage = Total assets ÷ Total DuPont stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the annual financial data reveals significant changes in the company's financial position over the five-year period from 2015 to 2019. Various key metrics demonstrate distinct trends which may provide insights into the company's operational and financial strategies.
- Total assets
- The total assets showed a marked increase from 68,026 million US dollars in 2015 to a peak of 192,164 million in 2017. This substantial growth suggests a major expansion or acquisition occurred during that period. However, total assets slightly decreased in 2018 to 188,030 million and then sharply declined in 2019 to 69,396 million, indicating a significant divestiture or restructuring effort took place following 2017.
- Total DuPont stockholders’ equity
- Stockholders’ equity followed a similar pattern to total assets, increasing from 25,374 million US dollars in 2015 to a peak of 100,330 million in 2017. The equity then decreased to 94,571 million in 2018 and further dropped substantially to 40,987 million in 2019. This trajectory may reflect changes in retained earnings, stock issuances, repurchases, dividends, or other equity-related transactions coinciding with asset fluctuations.
- Financial leverage
- The financial leverage ratio decreased overall from 2.68 in 2015 to 1.69 in 2019. After rising to 3.06 in 2016, it dropped significantly in 2017 to 1.92 and remained relatively stable in 2018 at 1.99 before falling further in 2019. This decreasing trend implies a reduction in the proportion of debt relative to equity, suggesting a possible deleveraging strategy to reduce financial risk following the asset growth and subsequent contractions.
Overall, the financial data indicates a period of rapid growth culminating in 2017, followed by a phase of downsizing or restructuring marked by decreases in both assets and equity through 2019. The reduction in financial leverage suggests an effort to strengthen the capital structure and lower risk exposure during this latter period.
Interest Coverage
DuPont de Nemours Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to DuPont | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Income (loss) from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Solvency Ratio | ||||||
| Interest coverage1 | ||||||
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT shows a significant declining trend from 2015 to 2019. It started at 10,876 million US dollars in 2015, dropped sharply to 2,275 million by the end of 2017, then experienced a brief recovery in 2018 to 6,997 million, followed by another steep decline to 194 million in 2019. This pattern indicates considerable volatility and a general downward trajectory in operating profitability over the period.
- Interest expense
- Interest expense fluctuated over the analyzed years, starting at 946 million US dollars in 2015, slightly decreasing in 2016, then rising to a peak of 1,504 million in 2018 before falling again to 668 million in 2019. These changes suggest varying debt levels or changes in borrowing costs during the timeframe.
- Interest coverage ratio
- The interest coverage ratio exhibited a sharp decline from a strong position of 11.5 times in 2015 to a very weak coverage of 0.29 times by 2019. This ratio decreased steadily with some fluctuation: it dropped to 6.14 in 2016, then further to 2.1 in 2017, temporarily recovered to 4.65 in 2018, and then severely declined in 2019. The ratio below 1 in 2019 implies that EBIT was not sufficient to cover interest expenses, indicating potential financial distress or heightened risk from interest obligations.
Fixed Charge Coverage
DuPont de Nemours Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Statutory U.S. federal income tax rate | ||||||
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to DuPont | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Income (loss) from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Add: Operating lease cost | ||||||
| Earnings before fixed charges and tax | ||||||
| Interest expense | ||||||
| Operating lease cost | ||||||
| Preferred stock dividends | ||||||
| Preferred stock dividends, tax adjustment1 | ||||||
| Preferred stock dividends, after tax adjustment | ||||||
| Fixed charges | ||||||
| Solvency Ratio | ||||||
| Fixed charge coverage2 | ||||||
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors3 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Preferred stock dividends, tax adjustment = (Preferred stock dividends × Statutory U.S. federal income tax rate) ÷ (1 − Statutory U.S. federal income tax rate)
= ( × ) ÷ (1 − ) =
2 2019 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
3 Click competitor name to see calculations.
The financial data reveals significant fluctuations in key variables over the five-year period ending December 31, 2019.
- Earnings before fixed charges and tax
- This metric exhibits a downward trend from 2015 to 2017, decreasing from 11,476 million US dollars to 3,137 million US dollars. In 2018, there is a substantial recovery to 8,039 million US dollars, followed by a sharp decline in 2019 to 376 million US dollars, indicating pronounced volatility and a markedly weakened profitability position by the end of the period.
- Fixed charges
- Fixed charges show relatively minor fluctuation, ranging from 1,944 million US dollars in 2017 to 2,546 million US dollars in 2018. After a peak in 2018, fixed charges drop significantly in 2019 to 850 million US dollars, suggesting a possible reduction in financing costs or obligations during the final year analyzed.
- Fixed charge coverage ratio
- The fixed charge coverage ratio follows a similar pattern to earnings before fixed charges and tax but reflects worsening coverage over time. From a ratio of 5.55 in 2015, it declines to 1.61 by the end of 2017, improves to 3.16 in 2018, and then sharply deteriorates to 0.44 in 2019. This indicates that by 2019, the company was generating less than half of the earnings required to cover its fixed charges, signaling increased financial risk and potential stress in meeting fixed financial obligations.
Overall, the data suggests considerable instability in earnings and coverage capacity over the period, with the poorest performance observed in the final year. The sharp decrease in earnings combined with reduced fixed charges may reflect operational challenges and changes in financial structure, warranting further investigation into underlying causes and potential impacts on financial health.