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)
Debt Ratios
Coverage Ratios
Kinder Morgan 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, a consistent trend of deleveraging and improved solvency is observed. All primary debt-related metrics show a steady decline, indicating a systematic reduction in the company's reliance on borrowed funds relative to its equity, capital, and total assets.
- Debt-to-Equity and Capital Ratios
- The debt-to-equity ratio decreased steadily from 1.23 in 2015 to 1.02 in 2019. A similar downward trajectory is noted in the debt-to-capital ratio, which declined from 0.55 to 0.50 over the same period. The inclusion of operating lease liabilities had a negligible impact on these figures, suggesting that lease obligations do not significantly alter the overall solvency profile.
- Asset-Based Leverage
- The debt-to-assets ratio shifted from 0.51 in 2015 to 0.46 by the end of 2019. This indicates that a smaller proportion of the company's asset base is financed through debt, reflecting a strengthening of the balance sheet.
- Financial Leverage and Risk
- Financial leverage experienced an overall decline from 2.39 in 2015 to 2.20 in 2019. While the ratio remained relatively stable between 2016 and 2018, the notable drop in 2019 suggests an acceleration in the reduction of financial risk.
- Debt Servicing Capacity
- The most significant improvement is observed in the interest coverage ratio, which rose consistently from 1.38 in 2015 to 2.76 in 2019. This doubling of the ratio indicates a substantially increased capacity to service interest obligations from operating earnings, further reducing the risk of insolvency.
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Debt to Equity
Kinder Morgan 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) | ||||||
| Current portion of debt | 2,477) | 3,388) | 2,828) | 2,696) | 821) | |
| Long-term debt, excluding current portion | 31,915) | 33,936) | 35,015) | 37,354) | 42,406) | |
| Total debt | 34,392) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Total Kinder Morgan, Inc.’s stockholders’ equity | 33,742) | 33,678) | 33,636) | 34,431) | 35,119) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 1.02 | 1.11 | 1.13 | 1.16 | 1.23 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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 ÷ Total Kinder Morgan, Inc.’s stockholders’ equity
= 34,392 ÷ 33,742 = 1.02
2 Click competitor name to see calculations.
An analysis of the solvency position between 2015 and 2019 reveals a consistent improvement in the capital structure. The overall trend is characterized by a steady reduction in leverage, driven primarily by a systematic decrease in total debt while stockholders' equity remained relatively stable.
- Total Debt Reduction
- A continuous downward trend in total debt is observed, falling from US$ 43,227 million in 2015 to US$ 34,392 million in 2019. This represents a total reduction of approximately 20% over the five-year period, indicating a concerted effort to deleverage the balance sheet.
- Equity Stability
- Total stockholders' equity exhibited minimal volatility, starting at US$ 35,119 million in 2015 and ending at US$ 33,742 million in 2019. The stability of the equity base confirms that the improvement in solvency ratios resulted from debt repayment rather than an increase in contributed capital.
- Debt to Equity Ratio Progression
- The debt to equity ratio declined every year throughout the period, moving from 1.23 in 2015 to 1.02 in 2019. This progression signifies a reduction in financial risk and a shift toward a more balanced funding mix, where total liabilities are nearly equal to the total equity held by shareholders.
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Debt to Equity (including Operating Lease Liability)
Kinder Morgan 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) | ||||||
| Current portion of debt | 2,477) | 3,388) | 2,828) | 2,696) | 821) | |
| Long-term debt, excluding current portion | 31,915) | 33,936) | 35,015) | 37,354) | 42,406) | |
| Total debt | 34,392) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Short-term operating lease liability (located in Other current liabilities) | 40) | —) | —) | —) | —) | |
| Long-term operating lease liability (located in Other long-term liabilities and deferred credits) | 289) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 34,721) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Total Kinder Morgan, Inc.’s stockholders’ equity | 33,742) | 33,678) | 33,636) | 34,431) | 35,119) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 1.03 | 1.11 | 1.13 | 1.16 | 1.23 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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) ÷ Total Kinder Morgan, Inc.’s stockholders’ equity
= 34,721 ÷ 33,742 = 1.03
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent strengthening of the solvency position is observed. The primary driver of this improvement was a systematic reduction in total liabilities, which led to a steady decline in the debt-to-equity ratio over the five-year period.
- Total Debt Reduction
- Total debt, including operating lease liabilities, decreased annually from 43,227 million US dollars in 2015 to 34,721 million US dollars in 2019. This represents a total reduction of approximately 19.7% over the period analyzed.
- Stockholders' Equity Stability
- Total stockholders' equity remained relatively stable throughout the period. After a slight decline from 35,119 million US dollars in 2015 to a low of 33,636 million US dollars in 2017, the equity balance stabilized and showed a marginal increase to 33,742 million US dollars by the end of 2019.
- Debt to Equity Ratio Trend
- The debt to equity ratio exhibited a continuous downward trajectory, moving from 1.23 in 2015 to 1.03 in 2019. The convergence toward a 1.00 ratio indicates a significant reduction in financial leverage and a decreased reliance on borrowed capital relative to shareholder investment.
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Debt to Capital
Kinder Morgan 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) | ||||||
| Current portion of debt | 2,477) | 3,388) | 2,828) | 2,696) | 821) | |
| Long-term debt, excluding current portion | 31,915) | 33,936) | 35,015) | 37,354) | 42,406) | |
| Total debt | 34,392) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Total Kinder Morgan, Inc.’s stockholders’ equity | 33,742) | 33,678) | 33,636) | 34,431) | 35,119) | |
| Total capital | 68,134) | 71,002) | 71,479) | 74,481) | 78,346) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.50 | 0.53 | 0.53 | 0.54 | 0.55 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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
= 34,392 ÷ 68,134 = 0.50
2 Click competitor name to see calculations.
A consistent deleveraging trend is evident between 2015 and 2019, characterized by a steady reduction in both total debt and total capital. The reduction in total debt occurred at a faster pace than the decrease in total capital, resulting in a strengthened solvency profile over the five-year period.
- Total Debt
- A continuous downward trajectory is observed, with total debt decreasing from 43,227 million US dollars in 2015 to 34,392 million US dollars by 2019. This represents a cumulative reduction of approximately 20.4% over the analyzed timeframe, indicating a sustained effort to reduce outstanding liabilities.
- Total Capital
- Total capital also declined throughout the period, moving from 78,346 million US dollars in 2015 to 68,134 million US dollars in 2019. While the decline is consistent, the rate of decrease in total capital was less aggressive than that of the total debt.
- Debt to Capital Ratio
- The debt to capital ratio demonstrates a gradual improvement, decreasing from 0.55 in 2015 to 0.50 in 2019. The stability of the ratio at 0.53 during 2017 and 2018 was followed by a more pronounced decline in 2019, signaling a reduction in the proportion of debt used to fund the capital structure and a corresponding decrease in financial leverage.
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Debt to Capital (including Operating Lease Liability)
Kinder Morgan 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) | ||||||
| Current portion of debt | 2,477) | 3,388) | 2,828) | 2,696) | 821) | |
| Long-term debt, excluding current portion | 31,915) | 33,936) | 35,015) | 37,354) | 42,406) | |
| Total debt | 34,392) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Short-term operating lease liability (located in Other current liabilities) | 40) | —) | —) | —) | —) | |
| Long-term operating lease liability (located in Other long-term liabilities and deferred credits) | 289) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 34,721) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Total Kinder Morgan, Inc.’s stockholders’ equity | 33,742) | 33,678) | 33,636) | 34,431) | 35,119) | |
| Total capital (including operating lease liability) | 68,463) | 71,002) | 71,479) | 74,481) | 78,346) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.51 | 0.53 | 0.53 | 0.54 | 0.55 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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)
= 34,721 ÷ 68,463 = 0.51
2 Click competitor name to see calculations.
A consistent reduction in financial leverage is evident across the five-year period ending December 31, 2019. Both total debt and total capital experienced steady declines, though the contraction in total debt occurred at a faster rate than the reduction in total capital, resulting in a strengthened solvency profile.
- Total Debt Trends
- Total debt, including operating lease liabilities, decreased monotonically from US$ 43,227 million in 2015 to US$ 34,721 million in 2019. This represents a cumulative reduction of approximately 19.7% over the period, indicating a sustained effort to reduce total liabilities.
- Total Capital Trends
- Total capital followed a downward trajectory, moving from US$ 78,346 million in 2015 to US$ 68,463 million in 2019. The decline in total capital was less aggressive than the decline in debt, with a total reduction of approximately 12.6%.
- Debt to Capital Ratio Analysis
- The debt to capital ratio reflects a gradual deleveraging process, declining from 0.55 in 2015 to 0.51 in 2019. While the ratio remained stable at 0.53 during 2017 and 2018, a more pronounced improvement was observed in 2019. The downward trend in this ratio confirms that the company reduced its reliance on debt relative to its total capital base.
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Debt to Assets
Kinder Morgan 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) | ||||||
| Current portion of debt | 2,477) | 3,388) | 2,828) | 2,696) | 821) | |
| Long-term debt, excluding current portion | 31,915) | 33,936) | 35,015) | 37,354) | 42,406) | |
| Total debt | 34,392) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Total assets | 74,157) | 78,866) | 79,055) | 80,305) | 84,104) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.46 | 0.47 | 0.48 | 0.50 | 0.51 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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
= 34,392 ÷ 74,157 = 0.46
2 Click competitor name to see calculations.
A consistent improvement in the solvency profile is evident between 2015 and 2019, characterized by a steady reduction in the proportion of total assets financed through debt.
- Total Debt Trend
- Total debt decreased monotonically over the five-year period, falling from US$ 43,227 million in 2015 to US$ 34,392 million in 2019. This represents a cumulative reduction of approximately 20.4%, indicating a sustained strategy of deleveraging.
- Total Assets Trajectory
- Total assets experienced a general contraction, moving from US$ 84,104 million in 2015 to US$ 74,157 million in 2019. While assets declined by approximately 11.9% over the period, the contraction was less pronounced than the reduction in total debt.
- Debt to Assets Ratio Analysis
- The debt to assets ratio exhibited a continuous annual decline, starting at 0.51 in 2015 and ending at 0.46 in 2019. Because total debt decreased at a faster rate than total assets, the overall financial leverage decreased, resulting in a strengthened solvency position and a lower reliance on borrowed capital to fund the asset base.
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Debt to Assets (including Operating Lease Liability)
Kinder Morgan 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) | ||||||
| Current portion of debt | 2,477) | 3,388) | 2,828) | 2,696) | 821) | |
| Long-term debt, excluding current portion | 31,915) | 33,936) | 35,015) | 37,354) | 42,406) | |
| Total debt | 34,392) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Short-term operating lease liability (located in Other current liabilities) | 40) | —) | —) | —) | —) | |
| Long-term operating lease liability (located in Other long-term liabilities and deferred credits) | 289) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 34,721) | 37,324) | 37,843) | 40,050) | 43,227) | |
| Total assets | 74,157) | 78,866) | 79,055) | 80,305) | 84,104) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.47 | 0.47 | 0.48 | 0.50 | 0.51 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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
= 34,721 ÷ 74,157 = 0.47
2 Click competitor name to see calculations.
An analysis of the solvency position between 2015 and 2019 reveals a consistent reduction in overall leverage. Both total debt and total assets experienced a downward trajectory throughout the period, though the reduction in debt occurred at a more rapid pace, resulting in a gradual improvement of the debt-to-assets ratio.
- Total Debt Trend
- Total debt, including operating lease liabilities, demonstrated a steady decline from US$ 43,227 million in 2015 to US$ 34,721 million by the end of 2019. This represents an absolute reduction of US$ 8,506 million over the five-year period, indicating a sustained effort to reduce financial obligations.
- Total Assets Trend
- Total assets also decreased over the analyzed period, falling from US$ 84,104 million in 2015 to US$ 74,157 million in 2019. This overall contraction of US$ 9,947 million suggests a reduction in the company's asset base, which may be attributed to asset divestitures or depreciation.
- Debt to Assets Ratio Interpretation
- The debt-to-assets ratio improved from 0.51 in 2015 to 0.47 in 2019. Although the asset base declined, the concurrent and significant reduction in total debt led to a decrease in the proportion of assets financed by debt. The stability of the ratio at 0.47 between 2018 and 2019 indicates a period of stabilization in the company's solvency structure.
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Financial Leverage
Kinder Morgan 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 | 74,157) | 78,866) | 79,055) | 80,305) | 84,104) | |
| Total Kinder Morgan, Inc.’s stockholders’ equity | 33,742) | 33,678) | 33,636) | 34,431) | 35,119) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.20 | 2.34 | 2.35 | 2.33 | 2.39 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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 ÷ Total Kinder Morgan, Inc.’s stockholders’ equity
= 74,157 ÷ 33,742 = 2.20
2 Click competitor name to see calculations.
Between 2015 and 2019, a general contraction in the balance sheet is observed, characterized by a steady decrease in total assets and a relatively stable stockholders' equity position. This combination has led to a gradual reduction in overall financial leverage.
- Total Asset Trend
- Total assets exhibited a consistent downward trajectory, decreasing from 84,104 million US dollars in 2015 to 74,157 million US dollars by the end of 2019. This represents a total reduction of approximately 11.8% over the five-year period, indicating a shrinking asset base.
- Stockholders' Equity Stability
- Stockholders' equity remained comparatively stable. After a slight decline from 35,119 million US dollars in 2015 to a low of 33,636 million US dollars in 2017, the equity level plateaued and showed marginal growth, ending the period at 33,742 million US dollars in 2019.
- Financial Leverage Evolution
- The financial leverage ratio decreased from 2.39 in 2015 to 2.20 in 2019. While the ratio remained relatively stagnant between 2016 and 2018, fluctuating within a narrow range of 2.33 to 2.35, a more pronounced decline occurred in 2019. This downward trend indicates that the reduction in total assets occurred at a faster rate than the change in equity, effectively lowering the company's reliance on debt to finance its asset base and improving its solvency position.
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Interest Coverage
Kinder Morgan 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 Kinder Morgan, Inc. | 2,190) | 1,609) | 183) | 708) | 253) | |
| Add: Net income attributable to noncontrolling interest | 49) | 310) | 40) | 13) | (45) | |
| Add: Income tax expense | 926) | 587) | 1,938) | 917) | 564) | |
| Add: Interest, net | 1,801) | 1,917) | 1,832) | 1,806) | 2,051) | |
| Earnings before interest and tax (EBIT) | 4,966) | 4,423) | 3,993) | 3,444) | 2,823) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 2.76 | 2.31 | 2.18 | 1.91 | 1.38 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| ExxonMobil Holdings 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
= 4,966 ÷ 1,801 = 2.76
2 Click competitor name to see calculations.
A consistent strengthening of solvency is evident between 2015 and 2019, characterized by a steady rise in the capacity to meet interest obligations. This upward trajectory is driven by a combination of significant growth in operating earnings and a general reduction in net interest expenses.
- Earnings Before Interest and Tax (EBIT)
- A sustained growth pattern is observed in EBIT, which increased from 2,823 million US dollars in 2015 to 4,966 million US dollars in 2019. This represents a continuous year-over-year expansion of operating profitability over the five-year period.
- Net Interest Expenses
- Interest costs exhibited a general downward trend, decreasing from 2,051 million US dollars in 2015 to 1,801 million US dollars by 2019. While there were minor fluctuations between 2016 and 2018, the overall trend indicates a reduction in the cost of servicing debt.
- Interest Coverage Ratio
- The interest coverage ratio improved linearly, rising from 1.38 in 2015 to 2.76 in 2019. This indicates that the margin of safety for debt servicing has effectively doubled, moving from a relatively tight coverage position to a more robust solvency profile.
The convergence of rising EBIT and declining interest costs has resulted in a significant improvement in the company's financial risk profile. The steady increase in the coverage ratio suggests an enhanced ability to sustain debt levels and a reduced risk of default on interest payments.
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