Microsoft Excel LibreOffice Calc

Eli Lilly & Co. (LLY)

Analysis of Debt

Difficulty: Advanced

Total Debt (Carrying Amount)

Eli Lilly & Co., Statement of Financial Position, Debt

USD $ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Short-term borrowings and current maturities of long-term debt 3,706,600  1,937,400  6,100  2,688,700  1,012,600 
Long-term debt, excluding current maturities 9,940,500  8,367,800  7,972,400  5,367,700  4,200,300 
Total debt (carrying amount) 13,647,100  10,305,200  7,978,500  8,056,400  5,212,900 

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-19).

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. Eli Lilly & Co.'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 thousands)
Short-term commercial paper borrowings 2,690,600 
Long-term debt, including current portion 11,529,900 
Total debt (fair value) 14,220,500 
Ratio
Debt, fair value to carrying amount 1.04

Based on: 10-K (filing date: 2018-02-20).

Weighted-average Interest Rate on Debt

Weighted-average effective borrowing rate, including the effects of interest rate swaps for hedged debt obligations: 2.39%

Interest Rate Debt Amount1 Interest Rate × Debt Amount Weighted-average Interest Rate2
2.65% 10,950,300  290,183 
1.34% 2,696,800  36,137 
Total 13,647,100  326,320  2.39%

Based on: 10-K (filing date: 2018-02-20).

1 USD $ in thousands

2 Weighted-average interest rate = 100 × 326,320 ÷ 13,647,100 = 2.39%

Interest Costs Incurred

Eli Lilly & Co.

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Interest expense 225,000  185,200  161,200  148,800  160,100 
Interest costs capitalized –  –  –  –  24,100 
Interest costs incurred 225,000  185,200  161,200  148,800  184,200 

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-19).

Item Description The company
Interest expense Represents the portion of interest incurred in the period on debt arrangements that was charged against earnings. Eli Lilly & Co.'s interest expense increased from 2015 to 2016 and from 2016 to 2017.
Interest costs capitalized The amount of interest that was capitalized during the period.
Interest costs incurred Total interest costs incurred during the period and either capitalized or charged against earnings. Eli Lilly & Co.'s interest costs incurred increased from 2015 to 2016 and from 2016 to 2017.

Adjusted Interest Coverage Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in thousands)
Net income (loss) (204,100) 2,737,600  2,408,400  2,390,500  4,684,800 
Add: Income tax expense 2,401,500  636,400  381,600  609,800  1,204,500 
Add: Interest expense 225,000  185,200  161,200  148,800  160,100 
Earnings before interest and tax (EBIT) 2,422,400  3,559,200  2,951,200  3,149,100  6,049,400 
 
Interest costs incurred 225,000  185,200  161,200  148,800  184,200 
Ratio With and Without Capitalized Interest
Interest coverage ratio (excluding capitalized interest)1 10.77 19.22 18.31 21.16 37.79
Adjusted interest coverage ratio (including capitalized interest)2 10.77 19.22 18.31 21.16 32.84

Based on: 10-K (filing date: 2018-02-20), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-19), 10-K (filing date: 2014-02-19).

2017 Calculations

1 Interest coverage ratio (excluding capitalized interest) = EBIT ÷ Interest expense
= 2,422,400 ÷ 225,000 = 10.77

2 Adjusted interest coverage ratio (including capitalized interest) = EBIT ÷ Interest costs incurred
= 2,422,400 ÷ 225,000 = 10.77

Ratio Description The company
Adjusted interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). Eli Lilly & Co.'s adjusted interest coverage ratio improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.