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)
Halliburton Co., solvency ratios
Based on: 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), 10-K (reporting date: 2014-12-31).
- Debt to Equity Ratio
- The debt to equity ratio increased significantly from 0.48 in 2014 to a peak of 1.32 in 2016, indicating a growing reliance on debt relative to equity during that period. It slightly decreased thereafter to 1.1 by 2018, showing some reduction in financial leverage but still remaining elevated compared to 2014 levels.
- Debt to Capital Ratio
- There was a consistent upward trend from 0.33 in 2014 to 0.57 in 2016 and 2017, signaling an increase in the proportion of debt within the total capital structure. This ratio declined later to 0.52 in 2018, reflecting a modest improvement in capital composition with relatively less debt.
- Debt to Assets Ratio
- The ratio rose from 0.24 in 2014 to 0.46 in 2016, highlighting an increase in leverage and debt financing relative to the company's asset base. It decreased to 0.4 by 2018, indicating a slight deleveraging in terms of asset-backed debt burden towards the end of the period.
- Financial Leverage Ratio
- Financial leverage steadily increased from 1.98 in 2014 to a peak of 3.01 in 2017, signifying a growing use of debt relative to equity to finance the company's assets. This was followed by a decline to 2.73 in 2018, suggesting some reduction in overall leverage, though still elevated versus the start of the period.
- Interest Coverage Ratio
- The interest coverage ratio showed significant volatility and deterioration between 2014 and 2016, dropping from a strong coverage of 12.9 to deeply negative values (-1.02 in 2015 and -9.92 in 2016), indicating substantial difficulty in meeting interest obligations during those years. Improvement was seen in subsequent years, climbing to positive values of 1.97 in 2017 and 4.03 in 2018, implying a recovery in earnings relative to interest expenses.
- Fixed Charge Coverage Ratio
- This ratio followed a similar trend to interest coverage, decreasing sharply from 4.38 in 2014 down to -4.93 in 2016, reflecting challenges in covering fixed financial charges including interest and lease expenses. From 2017 onwards, the ratio improved gradually to 2.42 in 2018, demonstrating a partial restoration of the company's ability to meet its fixed financial commitments.
Debt Ratios
Coverage Ratios
Debt to Equity
Halliburton Co., debt to equity calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and current maturities of long-term debt | 36) | 512) | 170) | 659) | 14) | |
| Long-term debt, excluding current maturities | 10,421) | 10,430) | 12,214) | 14,687) | 7,840) | |
| Total debt | 10,457) | 10,942) | 12,384) | 15,346) | 7,854) | |
| Company shareholders’ equity | 9,522) | 8,322) | 9,409) | 15,462) | 16,267) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.10 | 1.31 | 1.32 | 0.99 | 0.48 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Debt to equity = Total debt ÷ Company shareholders’ equity
= 10,457 ÷ 9,522 = 1.10
2 Click competitor name to see calculations.
- Total Debt
- The total debt level exhibited a significant increase from 7,854 million USD in 2014 to a peak of 15,346 million USD in 2015. Following this peak, the debt level showed a decreasing trend over the subsequent years, gradually declining to 12,384 million USD in 2016, 10,942 million USD in 2017, and finally 10,457 million USD in 2018. This pattern indicates a possible strategic effort to reduce debt after a period of considerable leverage.
- Company Shareholders’ Equity
- Shareholders' equity decreased substantially from 16,267 million USD in 2014 to 9,409 million USD in 2016, marking a significant erosion of equity in just two years. The equity base further declined to 8,322 million USD in 2017 before showing a slight recovery to 9,522 million USD in 2018. This volatile movement in equity might suggest operational challenges or impacts from market conditions affecting retained earnings or asset valuations.
- Debt to Equity Ratio
- The debt to equity ratio nearly doubled from 0.48 in 2014 to 0.99 in 2015, consistent with the surge in total debt and reduction in equity during this period. It continued to rise, reaching 1.32 in 2016 and maintaining a similar level of 1.31 in 2017, reflecting heightened financial leverage and increased risk exposure. By 2018, the ratio improved to 1.1, coinciding with reductions in both debt and slight recovery in equity, indicating some deleveraging and potential strengthening of the financial structure.
- Overall Insights
- The period analyzed reflects a phase of increased financial leverage, especially between 2014 and 2016, driven primarily by a rapid increase in debt and significant equity declines. After 2016, there is evidence of strategic financial management aimed at reducing debt levels and stabilizing equity, leading to a moderate improvement in the debt to equity ratio by 2018. This overall trajectory suggests an initial period of financial strain followed by efforts towards balance sheet repair and risk mitigation.
Debt to Capital
Halliburton Co., debt to capital calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and current maturities of long-term debt | 36) | 512) | 170) | 659) | 14) | |
| Long-term debt, excluding current maturities | 10,421) | 10,430) | 12,214) | 14,687) | 7,840) | |
| Total debt | 10,457) | 10,942) | 12,384) | 15,346) | 7,854) | |
| Company shareholders’ equity | 9,522) | 8,322) | 9,409) | 15,462) | 16,267) | |
| Total capital | 19,979) | 19,264) | 21,793) | 30,808) | 24,121) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.52 | 0.57 | 0.57 | 0.50 | 0.33 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Debt to capital = Total debt ÷ Total capital
= 10,457 ÷ 19,979 = 0.52
2 Click competitor name to see calculations.
- Total Debt
- The total debt showed a notable increase from 2014 to 2015, rising from $7,854 million to $15,346 million. Following this peak, the debt level decreased steadily over the subsequent years, reaching $10,457 million by the end of 2018. This pattern indicates an initial period of significant leverage increase, followed by a period of debt reduction.
- Total Capital
- Total capital increased from $24,121 million in 2014 to a peak of $30,808 million in 2015, then sharply declined in 2016 to $21,793 million. The downward trend continued but at a slower pace, reaching $19,264 million in 2017. In 2018, a slight recovery was observed as total capital rose to $19,979 million. This reflects considerable fluctuations with a peak in 2015 followed by a contraction in subsequent years and modest stabilization thereafter.
- Debt to Capital Ratio
- The debt to capital ratio followed a rising trend from 0.33 in 2014 to 0.50 in 2015, indicating an increase in financial leverage. The ratio continued to climb, reaching 0.57 in both 2016 and 2017, suggesting a sustained higher reliance on debt financing during this period. In 2018, this ratio decreased to 0.52, implying a moderate reduction in leverage but still at an elevated level compared to the initial year.
- Overall Assessment
- The data reveals a period of increased financial leverage during 2015 to 2017, with both total debt and the debt to capital ratio rising significantly. Concurrently, total capital experienced considerable volatility, peaking in 2015 and then declining sharply. The subsequent years showed a reduction in total debt and a moderate decline in leverage ratio, accompanied by a slight rebound in total capital. This suggests a strategic adjustment in the capital structure aimed at reducing debt levels and stabilizing financial resources after a period of higher leverage.
Debt to Assets
Halliburton Co., debt to assets calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term borrowings and current maturities of long-term debt | 36) | 512) | 170) | 659) | 14) | |
| Long-term debt, excluding current maturities | 10,421) | 10,430) | 12,214) | 14,687) | 7,840) | |
| Total debt | 10,457) | 10,942) | 12,384) | 15,346) | 7,854) | |
| Total assets | 25,982) | 25,085) | 27,000) | 36,942) | 32,240) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.40 | 0.44 | 0.46 | 0.42 | 0.24 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Debt to assets = Total debt ÷ Total assets
= 10,457 ÷ 25,982 = 0.40
2 Click competitor name to see calculations.
- Total Debt
- The total debt shows a significant increase from 2014 through 2015, rising from 7,854 million USD to 15,346 million USD. Subsequently, it decreases steadily over the next three years, reaching 10,457 million USD by the end of 2018.
- Total Assets
- Total assets increase from 32,240 million USD in 2014 to a peak of 36,942 million USD in 2015. After 2015, there is a marked decline, with assets dropping to 27,000 million USD in 2016 and decreasing slightly further over the following years, ending at 25,982 million USD in 2018.
- Debt to Assets Ratio
- The debt to assets ratio increases substantially from 0.24 in 2014 to a high of 0.46 in 2016, reflecting the combined effect of rising debt and declining assets. Following this peak, the ratio gradually decreases to 0.40 by 2018, accompanying the reduction in total debt and the stabilization of asset levels.
Financial Leverage
Halliburton Co., financial leverage calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 25,982) | 25,085) | 27,000) | 36,942) | 32,240) | |
| Company shareholders’ equity | 9,522) | 8,322) | 9,409) | 15,462) | 16,267) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.73 | 3.01 | 2.87 | 2.39 | 1.98 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Financial leverage = Total assets ÷ Company shareholders’ equity
= 25,982 ÷ 9,522 = 2.73
2 Click competitor name to see calculations.
- Total assets
- The total assets exhibited a notable increase from 32,240 million USD in 2014 to a peak of 36,942 million USD in 2015. Subsequently, there was a sharp decline to 27,000 million USD in 2016 followed by further reductions to 25,085 million USD in 2017. In 2018, a slight recovery was observed with total assets rising marginally to 25,982 million USD. This trend indicates an initial expansion phase followed by a significant contraction and stabilization at a lower asset base.
- Company shareholders’ equity
- Shareholders’ equity decreased steadily over the period. Starting at 16,267 million USD in 2014, it fell to 15,462 million USD in 2015 and then experienced a pronounced drop to 9,409 million USD in 2016. The decline continued in 2017, reaching 8,322 million USD, before a minor uptick to 9,522 million USD in 2018. Overall, the equity base weakened considerably, suggesting possible losses, dividend distributions exceeding earnings, or other equity-reducing factors.
- Financial leverage
- Financial leverage, defined as the ratio of total assets to shareholders’ equity, rose from 1.98 in 2014 to 2.39 in 2015, indicating increased use of debt or liabilities relative to equity. The ratio continued to climb, reaching a high of 3.01 in 2017, reflecting heightened financial risk and greater reliance on external financing. In 2018, the leverage ratio decreased to 2.73, signaling a partial reduction in financial risk or improved equity position relative to assets.
Interest Coverage
Halliburton Co., interest coverage calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to company | 1,656) | (463) | (5,763) | (671) | 3,500) | |
| Add: Net income attributable to noncontrolling interest | 1) | (5) | (6) | 4) | 1) | |
| Less: Income (loss) from discontinued operations, net | —) | (19) | (2) | (5) | 64) | |
| Add: Income tax expense | 157) | 1,131) | (1,858) | (274) | 1,275) | |
| Add: Interest expense | 598) | 705) | 698) | 463) | 396) | |
| Earnings before interest and tax (EBIT) | 2,412) | 1,387) | (6,927) | (473) | 5,108) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 4.03 | 1.97 | -9.92 | -1.02 | 12.90 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,412 ÷ 598 = 4.03
2 Click competitor name to see calculations.
- Earnings before Interest and Tax (EBIT)
- The EBIT shows significant volatility over the analyzed period. Initially, there was a strong positive EBIT of 5108 million USD in 2014. However, this was followed by sharp declines, with negative EBIT values recorded in 2015 and 2016, reaching a low of -6927 million USD in 2016. Subsequently, there is a recovery trend in 2017 and 2018, with EBIT turning positive again, registering 1387 million USD and 2412 million USD respectively. Despite the recovery, EBIT has not returned to the high levels observed in 2014.
- Interest Expense
- The interest expense displays moderate fluctuations across the five years. It started at 396 million USD in 2014, increased to a peak of 705 million USD in 2017, and then decreased to 598 million USD in 2018. This suggests some variability in debt service costs, potentially related to changes in debt levels or interest rates.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the ability to meet interest obligations from EBIT, reflects the variations in EBIT and interest expenses. In 2014, the ratio was strong at 12.9, indicating healthy coverage. This was followed by negative coverage in 2015 and 2016 (-1.02 and -9.92 respectively), consistent with negative EBIT in these years. A gradual improvement is observed in 2017 and 2018, reaching 1.97 and 4.03 respectively, pointing to a partial restoration of the company's capacity to cover interest expenses from earnings. Nonetheless, the coverage remained below the initial robust level observed in 2014.
Fixed Charge Coverage
Halliburton Co., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to company | 1,656) | (463) | (5,763) | (671) | 3,500) | |
| Add: Net income attributable to noncontrolling interest | 1) | (5) | (6) | 4) | 1) | |
| Less: Income (loss) from discontinued operations, net | —) | (19) | (2) | (5) | 64) | |
| Add: Income tax expense | 157) | 1,131) | (1,858) | (274) | 1,275) | |
| Add: Interest expense | 598) | 705) | 698) | 463) | 396) | |
| Earnings before interest and tax (EBIT) | 2,412) | 1,387) | (6,927) | (473) | 5,108) | |
| Add: Rentals on operating leases, net of sublease rentals | 680) | 574) | 587) | 875) | 1,000) | |
| Earnings before fixed charges and tax | 3,092) | 1,961) | (6,340) | 402) | 6,108) | |
| Interest expense | 598) | 705) | 698) | 463) | 396) | |
| Rentals on operating leases, net of sublease rentals | 680) | 574) | 587) | 875) | 1,000) | |
| Fixed charges | 1,278) | 1,279) | 1,285) | 1,338) | 1,396) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 2.42 | 1.53 | -4.93 | 0.30 | 4.38 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Schlumberger Ltd. | — | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,092 ÷ 1,278 = 2.42
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
-
The earnings before fixed charges and tax exhibit significant volatility over the observed period. In 2014, the figure was strongly positive at 6,108 million US dollars, followed by a sharp decline to 402 million US dollars in 2015. The trend worsened considerably in 2016, resulting in a substantial loss of 6,340 million US dollars. However, recovery began in 2017, with earnings improving to 1,961 million US dollars, and continued further in 2018, reaching 3,092 million US dollars. This indicates a clear pattern of a trough in 2016 with gradual recovery thereafter.
- Fixed charges
-
Fixed charges demonstrate relative stability throughout the five-year period, remaining within a narrow range. The values slightly decreased from 1,396 million US dollars in 2014 to 1,278 million US dollars in 2018. This steady maintenance of fixed costs, despite fluctuations in earnings, suggests that the company’s fixed financial obligations have been consistently managed.
- Fixed charge coverage ratio
-
The fixed charge coverage ratio mirrors the volatility observed in earnings before fixed charges and tax. Starting at a robust 4.38 in 2014, the coverage ratio steeply declined to 0.3 in 2015, indicating weakened ability to cover fixed charges from earnings. The ratio turned negative in 2016 at -4.93, reflecting the severe earnings loss and inability to meet fixed charges from operating income. Subsequent years show improvement, with the ratio climbing to 1.53 in 2017 and 2.42 in 2018, demonstrating strengthening financial capacity to cover fixed charges but not yet reaching the pre-2015 levels.