Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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).
Between 2015 and 2019, solvency metrics exhibited a period of volatility characterized by a peak in leverage in 2016, followed by a general deleveraging trend. While capital structure ratios stabilized or decreased over the long term, the capacity to service debt obligations deteriorated significantly by the end of the analyzed period.
- Capital Structure and Leverage Ratios
- Debt to equity and debt to capital ratios peaked in 2016 at 0.82 and 0.45, respectively, before experiencing a sharp decline in 2017. By 2019, these ratios stabilized at 0.43 for debt to equity and 0.30 for debt to capital, remaining notably lower than their 2016 levels.
- Debt to assets fluctuated between a high of 0.27 in 2016 and a low of 0.18 in 2017, eventually returning to its 2015 level of 0.25 by the end of 2019.
- Financial leverage followed a similar trajectory, peaking at 3.06 in 2016 and trending downward to a period low of 1.69 in 2019, suggesting a reduction in the use of debt to finance assets.
- The impact of operating lease liabilities on these ratios remained negligible throughout the period, with only marginal increases observed in 2019.
- Debt Serviceability and Coverage
- A severe downward trend is observed in the company's ability to meet its financial obligations. Interest coverage declined from a robust 11.50 in 2015 to a critical 0.29 in 2019.
- Fixed charge coverage mirrored this decline, falling from 5.55 in 2015 to 0.44 in 2019. Although both coverage ratios showed a temporary recovery in 2018, the precipitous drop in 2019 indicates that earnings were insufficient to cover interest and fixed charges during that fiscal year.
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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 | 3,830) | 2,802) | 4,015) | 907) | 995) | |
| Long-term debt, excluding debt within one year | 13,617) | 37,662) | 30,056) | 20,456) | 16,215) | |
| Total debt | 17,447) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Total DuPont stockholders’ equity | 40,987) | 94,571) | 100,330) | 25,987) | 25,374) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.43 | 0.43 | 0.34 | 0.82 | 0.68 | |
| 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
= 17,447 ÷ 40,987 = 0.43
2 Click competitor name to see calculations.
The solvency profile between 2015 and 2019 is characterized by significant volatility in both total debt and stockholders' equity, resulting in substantial shifts in the leverage position. While absolute debt obligations increased steadily until 2018, a massive expansion of the equity base in 2017 fundamentally altered the solvency trajectory, leading to a more conservative debt-to-equity relationship in the latter half of the period.
- Total Debt Evolution
- A consistent upward trend in total debt was observed from 2015 to 2018, with obligations rising from 17,210 million USD to a peak of 40,464 million USD. This growth was followed by a sharp contraction in 2019, where total debt decreased to 17,447 million USD, effectively returning to 2015 levels.
- Stockholders' Equity Dynamics
- Equity levels remained relatively stagnant between 2015 and 2016 before experiencing a substantial surge in 2017, increasing from 25,987 million USD to 100,330 million USD. This peak was followed by a moderate decline in 2018 and a significant reduction to 40,987 million USD by the end of 2019.
- Debt to Equity Ratio Interpretation
- The debt-to-equity ratio peaked at 0.82 in 2016, marking the period of highest relative leverage. A dramatic reduction to 0.34 occurred in 2017, driven primarily by the surge in stockholders' equity rather than a reduction in debt. For the final two years of the analysis, the ratio stabilized at 0.43, indicating that the proportionate relationship between debt and equity remained constant despite large-scale fluctuations in the absolute values of both components.
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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 | 3,830) | 2,802) | 4,015) | 907) | 995) | |
| Long-term debt, excluding debt within one year | 13,617) | 37,662) | 30,056) | 20,456) | 16,215) | |
| Total debt | 17,447) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Current operating lease liabilities (included in Accrued and other current liabilities) | 138) | —) | —) | —) | —) | |
| Noncurrent operating lease liabilities (included in Other noncurrent obligations) | 416) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 18,001) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Total DuPont stockholders’ equity | 40,987) | 94,571) | 100,330) | 25,987) | 25,374) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.44 | 0.43 | 0.34 | 0.82 | 0.68 | |
| 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
= 18,001 ÷ 40,987 = 0.44
2 Click competitor name to see calculations.
The analysis of solvency metrics from 2015 to 2019 reveals significant volatility in both leverage and capital structure, characterized by sharp fluctuations in total debt and stockholders' equity.
- Total Debt Trends
- Total debt, including operating lease liabilities, followed a consistent upward trajectory from 2015 to 2018, increasing from US$ 17,210 million to a peak of US$ 40,464 million. This growth was abruptly reversed in 2019, with total debt declining to US$ 18,001 million, nearly returning to the 2015 baseline.
- Stockholders' Equity Volatility
- Equity remained relatively stable between 2015 and 2016 but experienced a substantial surge in 2017, rising from US$ 25,987 million to US$ 100,330 million. This peak was followed by a slight decline in 2018 to US$ 94,571 million and a significant contraction in 2019, ending the period at US$ 40,987 million.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio increased from 0.68 in 2015 to 0.82 in 2016, indicating an increase in financial leverage. A sharp reversal occurred in 2017, where the ratio dropped to 0.34, primarily due to the massive expansion of stockholders' equity. In the final two years, the ratio stabilized, recording 0.43 in 2018 and 0.44 in 2019, suggesting a maintained balance between debt and equity despite the overall reduction in both nominal values.
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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 | 3,830) | 2,802) | 4,015) | 907) | 995) | |
| Long-term debt, excluding debt within one year | 13,617) | 37,662) | 30,056) | 20,456) | 16,215) | |
| Total debt | 17,447) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Total DuPont stockholders’ equity | 40,987) | 94,571) | 100,330) | 25,987) | 25,374) | |
| Total capital | 58,434) | 135,035) | 134,401) | 47,350) | 42,584) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.30 | 0.30 | 0.25 | 0.45 | 0.40 | |
| 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
= 17,447 ÷ 58,434 = 0.30
2 Click competitor name to see calculations.
The analysis of solvency metrics from 2015 to 2019 reveals significant volatility in the capital structure, indicating substantial corporate restructuring activities during this period.
- Total Debt Trajectory
- Total debt exhibited a consistent upward trend from 2015 to 2018, rising from 17,210 million USD to a peak of 40,464 million USD. This growth was followed by a sharp contraction in 2019, where total debt decreased to 17,447 million USD, effectively reverting to levels seen at the start of the analyzed period.
- Total Capital Dynamics
- Total capital remained relatively stable between 2015 and 2016 before experiencing a massive expansion in 2017, jumping from 47,350 million USD to 134,401 million USD. After maintaining this elevated level through 2018, total capital saw a significant reduction in 2019, falling to 58,434 million USD.
- Debt to Capital Ratio Analysis
- The debt to capital ratio peaked in 2016 at 0.45. A notable divergence occurred in 2017; although total debt increased, the ratio dropped to its period low of 0.25 because the growth in total capital disproportionately outweighed the increase in debt. From 2018 to 2019, the ratio stabilized at 0.30, suggesting a maintained equilibrium in the leverage profile despite the overall contraction of the balance sheet in the final year.
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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 | 3,830) | 2,802) | 4,015) | 907) | 995) | |
| Long-term debt, excluding debt within one year | 13,617) | 37,662) | 30,056) | 20,456) | 16,215) | |
| Total debt | 17,447) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Current operating lease liabilities (included in Accrued and other current liabilities) | 138) | —) | —) | —) | —) | |
| Noncurrent operating lease liabilities (included in Other noncurrent obligations) | 416) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 18,001) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Total DuPont stockholders’ equity | 40,987) | 94,571) | 100,330) | 25,987) | 25,374) | |
| Total capital (including operating lease liability) | 58,988) | 135,035) | 134,401) | 47,350) | 42,584) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.31 | 0.30 | 0.25 | 0.45 | 0.40 | |
| 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)
= 18,001 ÷ 58,988 = 0.31
2 Click competitor name to see calculations.
An analysis of solvency metrics from 2015 to 2019 indicates substantial volatility in the capital structure, characterized by periods of rapid expansion and subsequent contraction. The balance sheet underwent significant transformations, particularly between 2017 and 2019, impacting the overall debt-to-capital profile.
- Debt to Capital Ratio Dynamics
- The debt to capital ratio increased from 0.40 in 2015 to 0.45 in 2016 before experiencing a sharp decline to 0.25 in 2017. Following this low, the ratio trended slightly upward, settling at 0.30 in 2018 and 0.31 in 2019. This suggests a strategic shift in the financing mix, moving from a more leveraged position in 2016 to a more conservative structure by 2017, and remaining relatively stable thereafter.
- Total Debt Trajectory
- A steady increase in total debt, including operating lease liabilities, is observed from 2015 through 2018, rising from US$ 17,210 million to a peak of US$ 40,464 million. This upward trend was abruptly reversed in 2019, with total debt falling to US$ 18,001 million, representing a reduction of more than 55% within a single fiscal year.
- Total Capital Base Shifts
- The total capital base showed a massive spike in 2017, increasing from US$ 47,350 million in 2016 to US$ 134,401 million. This elevated level was maintained through 2018 but was significantly reduced to US$ 58,988 million by the end of 2019. The disproportionate growth of capital relative to debt in 2017 was the primary driver behind the temporary compression of the debt-to-capital ratio during that year.
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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 | 3,830) | 2,802) | 4,015) | 907) | 995) | |
| Long-term debt, excluding debt within one year | 13,617) | 37,662) | 30,056) | 20,456) | 16,215) | |
| Total debt | 17,447) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Total assets | 69,396) | 188,030) | 192,164) | 79,511) | 68,026) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.25 | 0.22 | 0.18 | 0.27 | 0.25 | |
| 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
= 17,447 ÷ 69,396 = 0.25
2 Click competitor name to see calculations.
The company experienced significant balance sheet volatility between 2015 and 2019, characterized by a period of aggressive expansion followed by a sharp contraction. Despite these extreme fluctuations in absolute values, the debt-to-assets ratio remained within a relatively stable range of 0.18 to 0.27, indicating a consistent strategy for managing leverage relative to the asset base.
- Total Debt Trends
- Total debt followed a steady upward trajectory from 2015 to 2018, increasing from US$ 17,210 million to a peak of US$ 40,464 million. This trend was abruptly reversed in 2019, with total debt decreasing significantly to US$ 17,447 million, nearly returning to 2015 levels.
- Total Asset Movements
- Asset growth was most pronounced between 2016 and 2017, where total assets surged from US$ 79,511 million to US$ 192,164 million. This expansion remained largely intact through 2018 before a substantial reduction occurred in 2019, with total assets falling to US$ 69,396 million.
- Debt to Assets Ratio Interpretation
- The solvency ratio peaked at 0.27 in 2016 and reached its lowest point of 0.18 in 2017. The 2017 decrease is notable as it occurred despite an increase in total debt, driven by the disproportionate growth of total assets. By 2019, the ratio stabilized at 0.25, mirroring the starting position in 2015, suggesting that the contraction of the balance sheet was proportional across both liabilities and assets.
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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 | 3,830) | 2,802) | 4,015) | 907) | 995) | |
| Long-term debt, excluding debt within one year | 13,617) | 37,662) | 30,056) | 20,456) | 16,215) | |
| Total debt | 17,447) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Current operating lease liabilities (included in Accrued and other current liabilities) | 138) | —) | —) | —) | —) | |
| Noncurrent operating lease liabilities (included in Other noncurrent obligations) | 416) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 18,001) | 40,464) | 34,071) | 21,363) | 17,210) | |
| Total assets | 69,396) | 188,030) | 192,164) | 79,511) | 68,026) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.26 | 0.22 | 0.18 | 0.27 | 0.25 | |
| 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
= 18,001 ÷ 69,396 = 0.26
2 Click competitor name to see calculations.
The solvency profile between 2015 and 2019 is characterized by significant volatility in both total debt and total assets, reflecting a period of substantial corporate restructuring. Despite the large fluctuations in absolute values, the debt-to-assets ratio remained within a relatively stable range, fluctuating between 0.18 and 0.27.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trajectory from 2015 through 2018, increasing from US$ 17,210 million to a peak of US$ 40,464 million. This growth represents a more than twofold increase in total obligations over a four-year period. A sharp contraction followed in 2019, with debt falling to US$ 18,001 million, returning the debt load to levels comparable to those seen in 2015.
- Asset Base Fluctuations
- Total assets showed a dramatic increase in 2017, rising from US$ 79,511 million in 2016 to US$ 192,164 million. Assets remained elevated through 2018 before experiencing a severe decline by December 31, 2019, dropping to US$ 69,396 million. The scale of these movements suggests significant corporate actions, such as a large-scale merger followed by a subsequent divestiture or spin-off.
- Debt-to-Assets Ratio Analysis
- The debt-to-assets ratio initially rose from 0.25 in 2015 to 0.27 in 2016. In 2017, the ratio declined to its period low of 0.18; this occurred because the expansion of the asset base significantly outpaced the increase in total debt. The ratio subsequently climbed to 0.22 in 2018 and reached 0.26 by the end of 2019. The fact that the ratio ended 2019 near its 2015 starting point, despite the interim volatility, indicates that the company maintained a consistent target for leverage relative to its total asset size throughout the restructuring process.
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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 | 69,396) | 188,030) | 192,164) | 79,511) | 68,026) | |
| Total DuPont stockholders’ equity | 40,987) | 94,571) | 100,330) | 25,987) | 25,374) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.69 | 1.99 | 1.92 | 3.06 | 2.68 | |
| 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
= 69,396 ÷ 40,987 = 1.69
2 Click competitor name to see calculations.
The company's balance sheet experienced significant volatility between 2015 and 2019, characterized by a massive expansion in assets and equity followed by a sharp contraction. Total assets grew from US$ 68,026 million in 2015 to a peak of US$ 192,164 million in 2017, before declining to US$ 69,396 million by the end of 2019. Similarly, stockholders' equity rose from US$ 25,374 million in 2015 to a peak of US$ 100,330 million in 2017, ending the period at US$ 40,987 million.
- Financial Leverage Trend
- The financial leverage ratio exhibited a non-linear trajectory over the five-year period. An initial increase is observed from 2.68 in 2015 to a peak of 3.06 in 2016. This was followed by a substantial reduction to 1.92 in 2017, maintaining a relatively stable level of 1.99 in 2018, and reaching a period low of 1.69 by December 31, 2019.
- Capital Structure Analysis
- The sharp decline in the leverage ratio starting in 2017 indicates a fundamental shift toward a more conservative capital structure. While the absolute values of assets and equity fluctuated aggressively—suggesting major corporate restructuring events—the proportion of assets funded by equity increased relative to debt, thereby lowering the overall financial risk profile.
- Solvency Implications
- A downward trend in financial leverage from 3.06 to 1.69 suggests an improved solvency position over the analyzed timeframe. The reduction in the ratio implies that the company became less dependent on borrowed funds to finance its asset base, resulting in a strengthened equity cushion by the end of 2019.
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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 | 498) | 3,844) | 1,460) | 4,318) | 7,685) | |
| Add: Net income attributable to noncontrolling interest | 102) | 155) | 132) | 86) | 98) | |
| Less: Income (loss) from discontinued operations, net of tax | 1,214) | (5) | (77) | —) | —) | |
| Add: Income tax expense | 140) | 1,489) | (476) | 9) | 2,147) | |
| Add: Interest expense | 668) | 1,504) | 1,082) | 858) | 946) | |
| Earnings before interest and tax (EBIT) | 194) | 6,997) | 2,275) | 5,271) | 10,876) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 0.29 | 4.65 | 2.10 | 6.14 | 11.50 | |
| 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
= 194 ÷ 668 = 0.29
2 Click competitor name to see calculations.
The solvency profile from 2015 to 2019 reveals a severe deterioration in the capacity to meet interest obligations. The interest coverage ratio transitioned from a position of high stability in 2015 to a critical deficit by 2019, characterized by extreme volatility in operating earnings.
- Earnings Before Interest and Tax (EBIT) Trends
- Operating earnings exhibited significant instability over the analyzed period. EBIT started at 10,876 million USD in 2015 and declined sharply to 2,275 million USD by 2017. Although a substantial recovery occurred in 2018, with earnings rising to 6,997 million USD, a near-total collapse followed in 2019, where EBIT fell to 194 million USD.
- Interest Expense Dynamics
- Interest obligations fluctuated throughout the five-year window, reaching a peak of 1,504 million USD in 2018. A notable reduction in these costs was observed in 2019, with expenses dropping to 668 million USD; however, this reduction was insufficient to compensate for the precipitous drop in operating income.
- Interest Coverage Ratio Analysis
- The coverage ratio experienced a steep decline from 11.50 in 2015 to 2.10 in 2017, reflecting a rapidly weakening solvency margin. While the ratio improved to 4.65 in 2018 driven by a spike in EBIT, it plummeted to 0.29 by the end of 2019. This final value indicates that operating profits were no longer sufficient to cover interest expenses, representing a critical risk to financial stability.
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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 | 21.00% | 21.00% | 35.00% | 35.00% | 35.00% | |
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to DuPont | 498) | 3,844) | 1,460) | 4,318) | 7,685) | |
| Add: Net income attributable to noncontrolling interest | 102) | 155) | 132) | 86) | 98) | |
| Less: Income (loss) from discontinued operations, net of tax | 1,214) | (5) | (77) | —) | —) | |
| Add: Income tax expense | 140) | 1,489) | (476) | 9) | 2,147) | |
| Add: Interest expense | 668) | 1,504) | 1,082) | 858) | 946) | |
| Earnings before interest and tax (EBIT) | 194) | 6,997) | 2,275) | 5,271) | 10,876) | |
| Add: Operating lease cost | 182) | 1,042) | 862) | 661) | 600) | |
| Earnings before fixed charges and tax | 376) | 8,039) | 3,137) | 5,932) | 11,476) | |
| Interest expense | 668) | 1,504) | 1,082) | 858) | 946) | |
| Operating lease cost | 182) | 1,042) | 862) | 661) | 600) | |
| Preferred stock dividends | —) | —) | —) | 340) | 340) | |
| Preferred stock dividends, tax adjustment1 | —) | —) | —) | 183) | 183) | |
| Preferred stock dividends, after tax adjustment | —) | —) | —) | 523) | 523) | |
| Fixed charges | 850) | 2,546) | 1,944) | 2,042) | 2,069) | |
| Solvency Ratio | ||||||
| Fixed charge coverage2 | 0.44 | 3.16 | 1.61 | 2.90 | 5.55 | |
| 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)
= (0 × 21.00%) ÷ (1 − 21.00%) = 0
2 2019 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 376 ÷ 850 = 0.44
3 Click competitor name to see calculations.
The fixed charge coverage ratio exhibited significant volatility between 2015 and 2019, characterized by a general downward trajectory interrupted by a temporary recovery in 2018. The overall solvency profile shifted from a position of substantial strength to a state of critical deficiency by the end of the analyzed period.
- Earnings Before Fixed Charges and Tax
- A severe and inconsistent trend in earnings is observed. From a peak of US$ 11,476 million in 2015, earnings declined sharply to US$ 3,137 million by 2017. Despite a robust recovery to US$ 8,039 million in 2018, earnings collapsed to US$ 376 million in 2019, representing a near-total erosion of the earnings base used to service fixed obligations.
- Fixed Charge Obligations
- Fixed charges remained relatively stable between 2015 and 2017, fluctuating slightly around the US$ 2 billion mark. An increase to US$ 2,546 million occurred in 2018, followed by a significant reduction to US$ 850 million in 2019. While the reduction in charges in the final year provided some relief, it was insufficient to offset the simultaneous collapse in earnings.
- Fixed Charge Coverage Ratio Trends
- The coverage ratio declined from 5.55 in 2015 to 1.61 in 2017, signaling a narrowing margin of safety. A temporary rebound to 3.16 was achieved in 2018, driven by the surge in earnings. However, the ratio fell to 0.44 in 2019. A ratio below 1.0 indicates that earnings before fixed charges and tax were insufficient to cover the company's fixed obligations, pointing to a severe liquidity and solvency challenge during that fiscal year.
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