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)
EOG Resources 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).
The solvency profile exhibits a consistent and significant improvement over the five-year period ending December 31, 2019. A clear trajectory of deleveraging and enhanced financial stability is evident, characterized by a steady reduction in debt relative to equity, capital, and assets, combined with a dramatic recovery in earnings-based coverage ratios.
- Leverage and Capital Structure
- A sustained downward trend is observed across all primary leverage metrics. The debt-to-equity ratio decreased from 0.51 in 2015 to 0.24 in 2019. Similarly, the debt-to-assets ratio declined from 0.25 to 0.14 over the same interval, and the debt-to-capital ratio fell from 0.34 to 0.19. These movements indicate a systematic reduction in long-term liabilities and a shift toward a more equity-heavy capital structure. Financial leverage also decreased from 2.08 in 2015 to 1.72 in 2019, further reflecting a reduction in the use of borrowed funds to finance assets.
- Debt Service Coverage
- A profound reversal in the ability to service obligations occurred between 2015 and 2019. Interest coverage moved from a deeply negative -28.16 in 2015 to a strong positive 20.15 by 2019, signaling a transition from severe earnings shortfalls to a position of substantial surplus. Fixed charge coverage followed a similar recovery path, rising from -13.84 in 2015 to 6.20 in 2019, which confirms a significantly diminished risk of default on fixed financial commitments.
- Impact of Operating Lease Liabilities
- The inclusion of operating lease liabilities resulted in a slight elevation of solvency ratios, particularly in the latter years of the period. By 2019, the debt-to-equity ratio increased from 0.24 to 0.28 and the debt-to-assets ratio rose from 0.14 to 0.16 when lease liabilities were accounted for. Despite this adjustment, the overall trend of improving solvency remained consistent regardless of whether leases were included in the calculation.
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Debt Ratios
Coverage Ratios
Debt to Equity
EOG Resources 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 thousands) | ||||||
| Current portion of long-term debt | 1,014,524) | 913,093) | 356,235) | 6,579) | 6,579) | |
| Long-term debt, excluding current portion | 4,160,919) | 5,170,169) | 6,030,836) | 6,979,779) | 6,653,685) | |
| Total debt | 5,175,443) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Stockholders’ equity | 21,640,716) | 19,364,188) | 16,283,273) | 13,981,581) | 12,943,035) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.24 | 0.31 | 0.39 | 0.50 | 0.51 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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 ÷ Stockholders’ equity
= 5,175,443 ÷ 21,640,716 = 0.24
2 Click competitor name to see calculations.
A consistent strengthening of the solvency position is observed between 2015 and 2019. This improvement is driven by a simultaneous reduction in total debt and a steady increase in stockholders' equity, resulting in a significant and sustained decline in the debt-to-equity ratio.
- Total Debt Trends
- Total debt levels exhibited a slight increase between 2015 and 2016, peaking at 6,986,358 thousand US dollars. Following this peak, a consistent downward trajectory was maintained through 2019, where total debt reached its lowest point in the period at 5,175,443 thousand US dollars.
- Stockholders' Equity Growth
- A strong upward trend is evident in stockholders' equity, which grew uninterruptedly from 12,943,035 thousand US dollars in 2015 to 21,640,716 thousand US dollars in 2019. This growth represents a substantial expansion of the equity base, enhancing the financial cushion available to creditors.
- Debt to Equity Ratio Interpretation
- The debt-to-equity ratio declined from 0.51 in 2015 to 0.24 by the end of 2019. The most pronounced reduction occurred after 2016, signaling a strategic shift toward a more conservative capital structure. The halving of this ratio over the five-year period indicates a diminished reliance on external leverage and an increased reliance on internal financing.
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Debt to Equity (including Operating Lease Liability)
EOG Resources 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 thousands) | ||||||
| Current portion of long-term debt | 1,014,524) | 913,093) | 356,235) | 6,579) | 6,579) | |
| Long-term debt, excluding current portion | 4,160,919) | 5,170,169) | 6,030,836) | 6,979,779) | 6,653,685) | |
| Total debt | 5,175,443) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Current portion of operating lease liabilities | 369,365) | —) | —) | —) | —) | |
| Operating lease liabilities, excluding current portion (located in Other liabilities) | 430,000) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 5,974,808) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Stockholders’ equity | 21,640,716) | 19,364,188) | 16,283,273) | 13,981,581) | 12,943,035) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.28 | 0.31 | 0.39 | 0.50 | 0.51 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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) ÷ Stockholders’ equity
= 5,974,808 ÷ 21,640,716 = 0.28
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent improvement in the solvency position was observed, characterized by a significant reduction in financial leverage and a substantial increase in the equity base.
- Total Debt Trend
- Total debt, including operating lease liabilities, experienced a slight increase from US$ 6,660,264 thousand in 2015 to a peak of US$ 6,986,358 thousand in 2016. Following this peak, a steady downward trajectory was maintained, with liabilities decreasing to US$ 5,974,808 thousand by December 31, 2019. This represents an overall reduction in total debt obligations over the five-year period.
- Stockholders' Equity Growth
- A robust and uninterrupted increase in stockholders' equity occurred throughout the analyzed period. Equity grew from US$ 12,943,035 thousand in 2015 to US$ 21,640,716 thousand in 2019. This growth indicates strong internal capital accumulation or capital contributions, significantly strengthening the company's financial cushion.
- Debt to Equity Ratio Analysis
- The debt to equity ratio exhibited a sharp and consistent decline, falling from 0.51 in 2015 to 0.28 in 2019. This trend is the result of the dual impact of decreasing total debt and expanding equity. The reduction of the ratio by nearly half suggests a strategic shift toward a more conservative capital structure and a reduced reliance on borrowed funds to finance operations and assets.
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Debt to Capital
EOG Resources 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 thousands) | ||||||
| Current portion of long-term debt | 1,014,524) | 913,093) | 356,235) | 6,579) | 6,579) | |
| Long-term debt, excluding current portion | 4,160,919) | 5,170,169) | 6,030,836) | 6,979,779) | 6,653,685) | |
| Total debt | 5,175,443) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Stockholders’ equity | 21,640,716) | 19,364,188) | 16,283,273) | 13,981,581) | 12,943,035) | |
| Total capital | 26,816,159) | 25,447,450) | 22,670,344) | 20,967,939) | 19,603,299) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.19 | 0.24 | 0.28 | 0.33 | 0.34 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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
= 5,175,443 ÷ 26,816,159 = 0.19
2 Click competitor name to see calculations.
A consistent strengthening of the solvency position is evident between December 31, 2015, and December 31, 2019. The period is characterized by a simultaneous reduction in total debt and a steady expansion of the total capital base, resulting in a significant decline in the debt-to-capital ratio.
- Total Debt Trajectory
- Total debt experienced a brief increase in 2016, reaching a peak of approximately 6.99 billion USD. Following this peak, a sustained downward trend occurred, with debt levels falling to 5.18 billion USD by the end of 2019. This represents a notable reduction in absolute liabilities over the five-year period.
- Total Capital Expansion
- Total capital demonstrated uninterrupted growth throughout the analyzed period. Starting at 19.60 billion USD in 2015, the capital base grew to 26.82 billion USD by 2019. This upward trajectory indicates an increase in the overall funding available to the organization, contributing to a more robust financial foundation.
- Debt to Capital Ratio Analysis
- The debt-to-capital ratio declined steadily from 0.34 in 2015 to 0.19 in 2019. This contraction suggests a strategic shift toward a less leveraged capital structure. The reduction of the ratio by 15 percentage points over the five-year window reflects a diminished reliance on debt financing and an improved ability to sustain long-term obligations.
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Debt to Capital (including Operating Lease Liability)
EOG Resources 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 thousands) | ||||||
| Current portion of long-term debt | 1,014,524) | 913,093) | 356,235) | 6,579) | 6,579) | |
| Long-term debt, excluding current portion | 4,160,919) | 5,170,169) | 6,030,836) | 6,979,779) | 6,653,685) | |
| Total debt | 5,175,443) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Current portion of operating lease liabilities | 369,365) | —) | —) | —) | —) | |
| Operating lease liabilities, excluding current portion (located in Other liabilities) | 430,000) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 5,974,808) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Stockholders’ equity | 21,640,716) | 19,364,188) | 16,283,273) | 13,981,581) | 12,943,035) | |
| Total capital (including operating lease liability) | 27,615,524) | 25,447,450) | 22,670,344) | 20,967,939) | 19,603,299) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.22 | 0.24 | 0.28 | 0.33 | 0.34 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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)
= 5,974,808 ÷ 27,615,524 = 0.22
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent strengthening of the solvency position is evident. The entity has successfully reduced its leverage while expanding its overall capital base, resulting in a progressively lower risk profile regarding long-term financial obligations.
- Total Debt Trends
- Total debt, inclusive of operating lease liabilities, peaked in 2016 at approximately 6.99 billion US dollars. Following this peak, a sustained downward trajectory was observed, with total debt decreasing each subsequent year to reach approximately 5.97 billion US dollars by December 31, 2019.
- Total Capital Expansion
- A steady and uninterrupted increase in total capital is observed over the five-year period. Total capital grew from 19.60 billion US dollars in 2015 to 27.62 billion US dollars in 2019, indicating a significant expansion of the organization's financial resources.
- Debt to Capital Ratio Analysis
- The debt to capital ratio exhibits a continuous decline, moving from 0.34 in 2015 to 0.22 in 2019. This trend highlights a strategic reduction in the reliance on debt to fund operations and growth, as the proportion of debt relative to total capital decreased by 12 percentage points over the analyzed timeframe.
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Debt to Assets
EOG Resources 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 thousands) | ||||||
| Current portion of long-term debt | 1,014,524) | 913,093) | 356,235) | 6,579) | 6,579) | |
| Long-term debt, excluding current portion | 4,160,919) | 5,170,169) | 6,030,836) | 6,979,779) | 6,653,685) | |
| Total debt | 5,175,443) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Total assets | 37,124,608) | 33,934,474) | 29,833,078) | 29,459,433) | 26,975,244) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.14 | 0.18 | 0.21 | 0.24 | 0.25 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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
= 5,175,443 ÷ 37,124,608 = 0.14
2 Click competitor name to see calculations.
An analysis of solvency indicators from 2015 to 2019 reveals a consistent improvement in the financial leverage position. The concurrent reduction in total liabilities and the expansion of the asset base have resulted in a strengthened balance sheet and a reduced reliance on borrowed capital.
- Total Debt Trajectory
- Total debt exhibited a marginal increase between 2015 and 2016, rising from 6.66 billion to 6.99 billion. Following this peak, a sustained downward trend was observed, with total debt decreasing annually to 5.18 billion by the end of 2019. This represents a significant contraction in total debt obligations over the five-year period.
- Total Asset Growth
- Total assets demonstrated uninterrupted growth throughout the analyzed timeframe. Assets increased steadily from 26.98 billion in 2015 to 37.12 billion in 2019. This consistent expansion indicates a substantial growth in the overall resource base of the entity.
- Debt to Assets Ratio Interpretation
- The debt to assets ratio shows a steady and continuous decline, moving from 0.25 in 2015 to 0.14 in 2019. This downward trajectory is the result of the dual impact of decreasing debt and increasing assets. The shift indicates that a progressively smaller proportion of assets is financed through debt, reflecting an enhanced solvency profile and a reduction in financial risk.
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Debt to Assets (including Operating Lease Liability)
EOG Resources 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 thousands) | ||||||
| Current portion of long-term debt | 1,014,524) | 913,093) | 356,235) | 6,579) | 6,579) | |
| Long-term debt, excluding current portion | 4,160,919) | 5,170,169) | 6,030,836) | 6,979,779) | 6,653,685) | |
| Total debt | 5,175,443) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Current portion of operating lease liabilities | 369,365) | —) | —) | —) | —) | |
| Operating lease liabilities, excluding current portion (located in Other liabilities) | 430,000) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 5,974,808) | 6,083,262) | 6,387,071) | 6,986,358) | 6,660,264) | |
| Total assets | 37,124,608) | 33,934,474) | 29,833,078) | 29,459,433) | 26,975,244) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.16 | 0.18 | 0.21 | 0.24 | 0.25 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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
= 5,974,808 ÷ 37,124,608 = 0.16
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent improvement in the solvency position is observed. The company successfully reduced its reliance on leveraged financing while simultaneously expanding its asset base, resulting in a strengthened balance sheet and a lower financial risk profile.
- Total Debt Trends
- Total debt, including operating lease liabilities, peaked in 2016 at 6,986,358 thousand US$. Following this peak, a steady downward trend occurred over the subsequent three years, with debt levels falling to 5,974,808 thousand US$ by December 31, 2019. This represents a total reduction of approximately 14.4% from the 2016 high.
- Asset Base Expansion
- Total assets exhibited uninterrupted growth throughout the five-year period. Assets increased from 26,975,244 thousand US$ in 2015 to 37,124,608 thousand US$ in 2019. This sustained growth indicates a significant expansion of the company's operational capacity or investment in long-term resources.
- Debt to Assets Ratio Analysis
- The debt to assets ratio declined linearly from 0.25 in 2015 to 0.16 in 2019. This contraction is the result of the dual effect of decreasing absolute debt levels and increasing total assets. The reduction in this ratio suggests an enhanced ability to cover liabilities with existing assets and a strategic shift toward more conservative capital structuring.
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Financial Leverage
EOG Resources 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 thousands) | ||||||
| Total assets | 37,124,608) | 33,934,474) | 29,833,078) | 29,459,433) | 26,975,244) | |
| Stockholders’ equity | 21,640,716) | 19,364,188) | 16,283,273) | 13,981,581) | 12,943,035) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.72 | 1.75 | 1.83 | 2.11 | 2.08 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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 ÷ Stockholders’ equity
= 37,124,608 ÷ 21,640,716 = 1.72
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent expansion of the balance sheet is observed, characterized by steady growth in both total assets and stockholders' equity. This growth pattern coincides with a gradual reduction in financial leverage, indicating a strategic shift toward a more conservative capital structure and a strengthened solvency position.
- Asset and Equity Expansion
- Total assets grew steadily from US$ 26.98 billion in 2015 to US$ 37.12 billion by 2019. Over the same period, stockholders' equity experienced a more pronounced increase, rising from US$ 12.94 billion to US$ 21.64 billion. The rate of equity growth exceeded the rate of asset growth, suggesting that the company increased its net worth more rapidly than its total resource base.
- Financial Leverage Trends
- The financial leverage ratio peaked at 2.11 in 2016, following a value of 2.08 in 2015. Subsequently, a consistent downward trend occurred, with the ratio falling to 1.83 in 2017, 1.75 in 2018, and finally 1.72 by the end of 2019. This decline demonstrates a reduced reliance on borrowed funds to finance the growth of assets.
- Solvency and Risk Analysis
- The reduction in the financial leverage ratio, coupled with the substantial increase in stockholders' equity, indicates a decrease in financial risk. The transition from a ratio of 2.11 to 1.72 reflects an improvement in the company's ability to cover its obligations and a lower overall debt burden relative to its equity base.
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Interest Coverage
EOG Resources 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 thousands) | ||||||
| Net income (loss) | 2,734,910) | 3,419,040) | 2,582,579) | (1,096,686) | (4,524,515) | |
| Add: Income tax expense | 810,357) | 821,958) | (1,921,397) | (460,819) | (2,397,041) | |
| Add: Net interest expense | 185,129) | 245,052) | 274,372) | 281,681) | 237,393) | |
| Earnings before interest and tax (EBIT) | 3,730,396) | 4,486,050) | 935,554) | (1,275,824) | (6,684,163) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 20.15 | 18.31 | 3.41 | -4.53 | -28.16 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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
= 3,730,396 ÷ 185,129 = 20.15
2 Click competitor name to see calculations.
The financial period between 2015 and 2019 is characterized by a significant turnaround in operational profitability and solvency. A transition from substantial operating losses to strong positive earnings has radically improved the capacity to service debt obligations.
- Earnings Before Interest and Tax (EBIT)
- A strong recovery trend is observed in operating performance. EBIT moved from a deficit of US$ 6.68 billion in 2015 to a surplus of US$ 3.73 billion by 2019. The most substantial growth occurred between 2017 and 2018, where earnings increased from US$ 935.6 million to US$ 4.49 billion, representing a pivot toward significant profitability.
- Net Interest Expense
- Interest obligations remained relatively stable compared to the volatility of earnings. After reaching a peak of US$ 281.7 million in 2016, net interest expenses trended downward, reaching a period low of US$ 185.1 million in 2019.
- Interest Coverage Ratio
- The interest coverage ratio reflects a sharp reversal in financial risk. Starting from a negative position of -28.16 in 2015, the ratio entered positive territory in 2017 at 3.41 and expanded rapidly to 20.15 by 2019. This progression indicates a shift from an inability to cover interest payments from operating profits to a highly secure solvency position where EBIT exceeds interest obligations by more than twenty times.
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Fixed Charge Coverage
EOG Resources Inc., fixed charge 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 thousands) | ||||||
| Net income (loss) | 2,734,910) | 3,419,040) | 2,582,579) | (1,096,686) | (4,524,515) | |
| Add: Income tax expense | 810,357) | 821,958) | (1,921,397) | (460,819) | (2,397,041) | |
| Add: Net interest expense | 185,129) | 245,052) | 274,372) | 281,681) | 237,393) | |
| Earnings before interest and tax (EBIT) | 3,730,396) | 4,486,050) | 935,554) | (1,275,824) | (6,684,163) | |
| Add: Operating lease cost | 497,000) | 233,000) | 200,000) | 204,000) | 229,000) | |
| Earnings before fixed charges and tax | 4,227,396) | 4,719,050) | 1,135,554) | (1,071,824) | (6,455,163) | |
| Net interest expense | 185,129) | 245,052) | 274,372) | 281,681) | 237,393) | |
| Operating lease cost | 497,000) | 233,000) | 200,000) | 204,000) | 229,000) | |
| Fixed charges | 682,129) | 478,052) | 474,372) | 485,681) | 466,393) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 6.20 | 9.87 | 2.39 | -2.21 | -13.84 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
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
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 4,227,396 ÷ 682,129 = 6.20
2 Click competitor name to see calculations.