Analysis of Solvency Ratios
Quarterly Data
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 (quarterly data)
Based on: 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31).
The financial data reveals significant fluctuations and trends in leverage and coverage ratios over the analyzed periods. The analysis primarily focuses on debt-related metrics and the company’s ability to service its debt through interest coverage.
- Debt to Equity Ratio
- This ratio was relatively stable around 0.5 during early 2015, followed by a sharp increase in the last quarter of 2015 to nearly 1.0. It peaked at approximately 1.33 mid-2016 before gradually decreasing to 1.1 by the first quarter of 2019. This trend indicates a marked increase in the company’s reliance on debt financing through 2015 and 2016, with a gradual deleveraging phase thereafter.
- Debt to Capital Ratio
- The debt to capital ratio exhibited a similar pattern, starting near 0.33 early in 2015, rising sharply to around 0.57 in late 2016, and then modestly declining to about 0.52 by early 2019. This confirms the increase in debt levels relative to total capital employed, though with some reduction following the peak.
- Debt to Assets Ratio
- This ratio remained stable at about 0.26 through the first three quarters of 2015, then increased to roughly 0.46 by late 2016, with a slight downward trend to approximately 0.40 by early 2019. This suggests that the company's total assets grew more slowly than debt during the peak leverage period, followed by a modest improvement in asset coverage over time.
- Financial Leverage
- Financial leverage rose from just below 2.0 in early 2015 to over 2.8 during the peak periods in 2016 and 2017, reaching a maximum of 3.01 in late 2017 and early 2018. Thereafter, it declined slightly to around 2.73 by early 2019. This pattern highlights increased use of debt relative to equity, followed by a marginal decrease in leverage in recent periods.
- Interest Coverage Ratio
- Interest coverage exhibited significant volatility. Initially strong at 8.31 times in early 2015, it plummeted to negative values by the end of 2015 and remained negative through 2016. This indicates operating earnings were insufficient to cover interest expenses during this period. Recovery began in 2017, with positive but low coverage ratios, improving steadily to about 4.03 by early 2019. While improved, this level remains below the initial strength, suggesting a cautious recovery in operational earnings relative to interest obligations.
In summary, the company experienced a pronounced increase in leverage ratios from 2015 through 2016, indicative of greater debt usage. Correspondingly, interest coverage suffered, reflecting challenges in servicing debt during the height of leverage. Since late 2017, there has been a gradual deleveraging trend accompanied by improvement in interest coverage, signaling progress towards stabilizing financial health. However, leverage remains elevated compared to the early 2015 baseline, and interest coverage has not yet returned to its prior strength.
Debt Ratios
Coverage Ratios
Debt to Equity
Halliburton Co., debt to equity calculation (quarterly data)
| Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Short-term borrowings and current maturities of long-term debt | 36) | 35) | 444) | 466) | 512) | 515) | 336) | 97) | 170) | 152) | 763) | 3,186) | 659) | 648) | —) | —) | |||||
| Long-term debt, excluding current maturities | 10,421) | 10,424) | 10,427) | 10,428) | 10,430) | 10,423) | 10,816) | 10,812) | 12,214) | 12,163) | 12,158) | 12,207) | 14,687) | 7,243) | 7,838) | 7,841) | |||||
| Total debt | 10,457) | 10,459) | 10,871) | 10,894) | 10,942) | 10,938) | 11,152) | 10,909) | 12,384) | 12,315) | 12,921) | 15,393) | 15,346) | 7,891) | 7,838) | 7,841) | |||||
| Company shareholders’ equity | 9,522) | 8,998) | 8,823) | 8,365) | 8,322) | 9,217) | 8,917) | 8,951) | 9,409) | 9,682) | 9,734) | 13,015) | 15,462) | 15,448) | 15,685) | 15,591) | |||||
| Solvency Ratio | |||||||||||||||||||||
| Debt to equity1 | 1.10 | 1.16 | 1.23 | 1.30 | 1.31 | 1.19 | 1.25 | 1.22 | 1.32 | 1.27 | 1.33 | 1.18 | 0.99 | 0.51 | 0.50 | 0.50 | |||||
| Benchmarks | |||||||||||||||||||||
| Debt to Equity, Competitors2 | |||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31).
1 Q4 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 experienced a significant increase in the fourth quarter of 2015, nearly doubling from approximately $7.9 billion to over $15.3 billion. Following this peak, the total debt began a gradual decline, decreasing consistently from early 2016 through the end of 2018, reaching approximately $10.5 billion. This suggests a strategic effort to deleverage after a period of substantial borrowing.
- Company Shareholders’ Equity
- Shareholders’ equity showed a steady decline from early 2015 through 2017, dropping from around $15.6 billion to about $8.3 billion by the end of 2017. Starting in 2018, equity began to recover marginally, climbing to approximately $9.5 billion by the close of 2018. The initial decline could indicate accumulated losses or share buybacks, while the later increase suggests improving financial performance or capital injections.
- Debt to Equity Ratio
- The debt to equity ratio nearly doubled in late 2015, rising from approximately 0.5 to nearly 1.0 due to the spike in debt and simultaneous decrease in equity. In 2016, this ratio peaked around 1.3 indicating higher leverage and financial risk. From 2017 onward, the ratio exhibited a gradual decline, moving closer to 1.1 by the end of 2018. This trend reflects a reduction in debt relative to equity, pointing to strengthened balance sheet stability.
Debt to Capital
Halliburton Co., debt to capital calculation (quarterly data)
| Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Short-term borrowings and current maturities of long-term debt | 36) | 35) | 444) | 466) | 512) | 515) | 336) | 97) | 170) | 152) | 763) | 3,186) | 659) | 648) | —) | —) | |||||
| Long-term debt, excluding current maturities | 10,421) | 10,424) | 10,427) | 10,428) | 10,430) | 10,423) | 10,816) | 10,812) | 12,214) | 12,163) | 12,158) | 12,207) | 14,687) | 7,243) | 7,838) | 7,841) | |||||
| Total debt | 10,457) | 10,459) | 10,871) | 10,894) | 10,942) | 10,938) | 11,152) | 10,909) | 12,384) | 12,315) | 12,921) | 15,393) | 15,346) | 7,891) | 7,838) | 7,841) | |||||
| Company shareholders’ equity | 9,522) | 8,998) | 8,823) | 8,365) | 8,322) | 9,217) | 8,917) | 8,951) | 9,409) | 9,682) | 9,734) | 13,015) | 15,462) | 15,448) | 15,685) | 15,591) | |||||
| Total capital | 19,979) | 19,457) | 19,694) | 19,259) | 19,264) | 20,155) | 20,069) | 19,860) | 21,793) | 21,997) | 22,655) | 28,408) | 30,808) | 23,339) | 23,523) | 23,432) | |||||
| Solvency Ratio | |||||||||||||||||||||
| Debt to capital1 | 0.52 | 0.54 | 0.55 | 0.57 | 0.57 | 0.54 | 0.56 | 0.55 | 0.57 | 0.56 | 0.57 | 0.54 | 0.50 | 0.34 | 0.33 | 0.33 | |||||
| Benchmarks | |||||||||||||||||||||
| Debt to Capital, Competitors2 | |||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31).
1 Q4 2018 Calculation
Debt to capital = Total debt ÷ Total capital
= 10,457 ÷ 19,979 = 0.52
2 Click competitor name to see calculations.
The financial data shows the quarterly evolution of total debt, total capital, and the debt to capital ratio over a period spanning from the first quarter of 2015 through the last quarter of 2018.
- Total Debt
- Total debt remained relatively stable around approximately $7.8 billion from the first quarter through the third quarter of 2015, before experiencing a substantial increase in the fourth quarter of 2015 to about $15.3 billion. This elevated level was generally maintained throughout 2016, peaking at nearly $15.4 billion in the first quarter of 2016. From 2017 onward, total debt showed a declining trend, descending gradually from around $10.9 billion in the first quarter of 2017 to approximately $10.5 billion by the end of 2018, indicating a gradual reduction in debt levels over this later period.
- Total Capital
- Total capital fluctuated modestly over the review period. It increased significantly from approximately $23.3 billion in the third quarter of 2015 to over $30.8 billion in the fourth quarter of 2015. However, from the first quarter of 2016, total capital declined steadily throughout 2016 and into 2017, dipping below $20 billion by the first quarter of 2017. Thereafter, total capital remained largely stable, oscillating slightly around the $19.5 to $20 billion range through the end of 2018.
- Debt to Capital Ratio
- The debt to capital ratio exhibited notable volatility, closely mirroring the changes in total debt and total capital. Initially, this ratio was steady near 0.33 in the first three quarters of 2015. It then sharply escalated to 0.50 in the final quarter of 2015 as total debt surged. This upward trend continued into the first half of 2016, reaching a peak ratio of approximately 0.57. Despite a moderate decline beginning in late 2016, the ratio remained relatively stable and elevated, fluctuating between approximately 0.52 and 0.57 through the end of 2018. This indicates that debt consistently accounted for slightly more than half of the total capital during this latter period.
Overall, the data suggests that the company significantly increased its leverage position in the latter part of 2015 and the first half of 2016, followed by a gradual deleveraging phase from 2017 through 2018. Despite this reduction in absolute debt levels, the debt to capital ratio remained moderately high, pointing to a sustained reliance on debt financing relative to capital structure in the most recent years under review.
Debt to Assets
Halliburton Co., debt to assets calculation (quarterly data)
| Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Short-term borrowings and current maturities of long-term debt | 36) | 35) | 444) | 466) | 512) | 515) | 336) | 97) | 170) | 152) | 763) | 3,186) | 659) | 648) | —) | —) | |||||
| Long-term debt, excluding current maturities | 10,421) | 10,424) | 10,427) | 10,428) | 10,430) | 10,423) | 10,816) | 10,812) | 12,214) | 12,163) | 12,158) | 12,207) | 14,687) | 7,243) | 7,838) | 7,841) | |||||
| Total debt | 10,457) | 10,459) | 10,871) | 10,894) | 10,942) | 10,938) | 11,152) | 10,909) | 12,384) | 12,315) | 12,921) | 15,393) | 15,346) | 7,891) | 7,838) | 7,841) | |||||
| Total assets | 25,982) | 25,751) | 25,765) | 25,191) | 25,085) | 25,790) | 25,325) | 24,885) | 27,000) | 26,755) | 27,737) | 33,932) | 36,942) | 30,248) | 30,606) | 30,587) | |||||
| Solvency Ratio | |||||||||||||||||||||
| Debt to assets1 | 0.40 | 0.41 | 0.42 | 0.43 | 0.44 | 0.42 | 0.44 | 0.44 | 0.46 | 0.46 | 0.47 | 0.45 | 0.42 | 0.26 | 0.26 | 0.26 | |||||
| Benchmarks | |||||||||||||||||||||
| Debt to Assets, Competitors2 | |||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31).
1 Q4 2018 Calculation
Debt to assets = Total debt ÷ Total assets
= 10,457 ÷ 25,982 = 0.40
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several trends in the company's debt and asset structure over the four-year period.
- Total Debt
- Total debt experienced a notable increase by the end of 2015, nearly doubling from approximately $7.8 billion to over $15 billion. Following that peak, total debt gradually declined throughout 2016 and stabilized around $10.4 billion by the end of 2018. This indicates a significant deleveraging phase after the spike in late 2015.
- Total Assets
- Total assets showed a fluctuating but generally downward trend from the beginning of the period to the end. Assets peaked at nearly $37 billion at the end of 2015, then decreased sharply through 2016 to roughly $25 billion. From 2017 through 2018, total assets showed relative stability, maintaining levels close to $25–26 billion.
- Debt to Assets Ratio
- The debt to assets ratio reflected the changes in debt and assets, rising from around 0.26 in early 2015 to a high of approximately 0.47 in mid-2016, indicating increased leverage. Subsequently, the ratio decreased steadily, reaching about 0.40 by the end of 2018, which suggests a reduction in leverage and possibly an improvement in the capital structure.
Overall, the company underwent a period of increased leverage through late 2015 and early 2016, likely reflecting strategic borrowing or financial adjustments. Following this, the company focused on reducing debt and stabilizing assets, which improved the debt to assets ratio towards the end of the observed period. These patterns might indicate measures to strengthen financial stability after a phase of higher risk or investment activity.
Financial Leverage
Halliburton Co., financial leverage calculation (quarterly data)
| Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Total assets | 25,982) | 25,751) | 25,765) | 25,191) | 25,085) | 25,790) | 25,325) | 24,885) | 27,000) | 26,755) | 27,737) | 33,932) | 36,942) | 30,248) | 30,606) | 30,587) | |||||
| Company shareholders’ equity | 9,522) | 8,998) | 8,823) | 8,365) | 8,322) | 9,217) | 8,917) | 8,951) | 9,409) | 9,682) | 9,734) | 13,015) | 15,462) | 15,448) | 15,685) | 15,591) | |||||
| Solvency Ratio | |||||||||||||||||||||
| Financial leverage1 | 2.73 | 2.86 | 2.92 | 3.01 | 3.01 | 2.80 | 2.84 | 2.78 | 2.87 | 2.76 | 2.85 | 2.61 | 2.39 | 1.96 | 1.95 | 1.96 | |||||
| Benchmarks | |||||||||||||||||||||
| Financial Leverage, Competitors2 | |||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31).
1 Q4 2018 Calculation
Financial leverage = Total assets ÷ Company shareholders’ equity
= 25,982 ÷ 9,522 = 2.73
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the analyzed periods. Total assets initially increased from March 2015 to December 2015, reaching a peak before experiencing a steady decline through most of 2016 and continuing downward into 2017. From early 2018 onwards, total assets generally stabilized with minor fluctuations but did not return to the previous peak levels.
Company shareholders’ equity displayed a declining pattern starting in early 2016, after a relatively stable period throughout 2015. The equity continued to decrease substantially through 2016 and 2017, hitting the lowest point in December 2017. In 2018, shareholders’ equity showed gradual improvement, indicating some recovery but remaining below the levels observed at the beginning of the timeframe.
Financial leverage exhibited an increasing trend from 2015 through 2017, rising from just under 2.0 to above 3.0. The highest financial leverage was recorded in December 2017, suggesting a higher reliance on debt relative to equity during this period. Starting in 2018, financial leverage showed a downward trajectory, reducing to approximately 2.73 by the end of the year, indicating a partial deleveraging or improvement in capital structure.
- Total Assets
- Peaked at the end of 2015, followed by a decline through 2016 and 2017, with stabilization in 2018.
- Shareholders’ Equity
- Remained relatively stable in 2015, declined significantly through 2016 and 2017, and began to recover moderately in 2018.
- Financial Leverage
- Increased steadily over 2015 to 2017, reflecting higher indebtedness, then decreased in 2018, suggesting improved debt management or equity strengthening.
Interest Coverage
Halliburton Co., interest coverage calculation (quarterly data)
| Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Net income (loss) attributable to company | 664) | 435) | 511) | 46) | (824) | 365) | 28) | (32) | (149) | 6) | (3,208) | (2,412) | (28) | (54) | 54) | (643) | |||||
| Add: Net income attributable to noncontrolling interest | 4) | (1) | (3) | 1) | (1) | (4) | —) | —) | (4) | 1) | 3) | (6) | 2) | 1) | (1) | 2) | |||||
| Less: Income (loss) from discontinued operations, net | —) | —) | —) | —) | (19) | —) | —) | —) | —) | —) | —) | (2) | —) | —) | (1) | (4) | |||||
| Add: Income tax expense | (210) | 100) | 125) | 142) | 1,050) | 135) | (29) | (25) | (22) | (59) | (902) | (875) | (67) | (37) | 71) | (241) | |||||
| Add: Interest expense | 148) | 150) | 150) | 150) | 146) | 145) | 149) | 265) | 158) | 159) | 206) | 175) | 142) | 102) | 110) | 109) | |||||
| Earnings before interest and tax (EBIT) | 606) | 684) | 783) | 339) | 390) | 641) | 148) | 208) | (17) | 107) | (3,901) | (3,116) | 49) | 12) | 235) | (769) | |||||
| Solvency Ratio | |||||||||||||||||||||
| Interest coverage1 | 4.03 | 3.68 | 3.64 | 2.57 | 1.97 | 1.37 | 0.61 | -4.57 | -9.92 | -10.06 | -11.13 | -5.33 | -1.02 | 1.94 | 5.84 | 8.31 | |||||
| Benchmarks | |||||||||||||||||||||
| Interest Coverage, Competitors2 | |||||||||||||||||||||
| SLB N.V. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31).
1 Q4 2018 Calculation
Interest coverage
= (EBITQ4 2018
+ EBITQ3 2018
+ EBITQ2 2018
+ EBITQ1 2018)
÷ (Interest expenseQ4 2018
+ Interest expenseQ3 2018
+ Interest expenseQ2 2018
+ Interest expenseQ1 2018)
= (606 + 684 + 783 + 339)
÷ (148 + 150 + 150 + 150)
= 4.03
2 Click competitor name to see calculations.
- Earnings Before Interest and Tax (EBIT)
- The EBIT values demonstrate significant volatility across the observed periods. Initially, EBIT was negative in the first quarter of 2015 but improved to positive values during the middle of 2015. However, a sharp decline occurred in early 2016, reaching large negative values, indicating operational challenges or one-off expenses during that period. From late 2016 onward, EBIT generally recovered, with consistent positive results through 2017 and 2018, signaling a gradual improvement in operational profitability. The highest EBIT values are observed in mid to late 2018, indicating strengthening business performance.
- Interest Expense
- Interest expense steadily increased from the first quarter of 2015 through mid-2016, peaking in early 2017. After this peak, interest expense stabilized and remained relatively consistent around 145 to 150 million US dollars per quarter through 2017 and 2018. This pattern suggests that while borrowing or financing costs increased initially, the company managed to maintain these expenses within a stable range in the later periods.
- Interest Coverage Ratio
- The interest coverage ratio displayed a wide range of values, reflecting the fluctuations in EBIT relative to interest costs. The ratio started strong at above 8 in early 2015 but decreased sharply through 2015 and reached negative territory in 2015 and 2016, correlating with the negative EBIT during those periods. This indicates that earnings were insufficient to cover interest expenses, implying financial stress. From early 2017, the ratio rose steadily from below 1 up to above 4 by the end of 2018, signifying improved earnings capacity to cover interest payments and enhanced financial stability.
- Overall Trends and Insights
- The financial data reveal that the company experienced a difficult phase in 2016, characterized by negative EBIT and interest coverage ratios below zero, suggesting operational losses and inadequate earnings relative to interest burdens. The subsequent quarters display a recovery trend, with improving EBIT and interest coverage ratios, indicating better operational efficiency and financial health. Interest expenses rose initially but remained stable afterward, which may imply effective management of debt levels or refinancing activities. The upward trend in the interest coverage ratio in 2017 and 2018 suggests an enhanced ability to service debt through operating earnings.