Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Dividend Discount Model (DDM)
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Solvency Ratios (Summary)
McKesson Corp., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-K (reporting date: 2011-03-31), 10-Q (reporting date: 2010-12-31), 10-Q (reporting date: 2010-09-30), 10-Q (reporting date: 2010-06-30).
The analysis of the quarterly financial ratios over the examined period reveals several key trends in the company's leverage and coverage metrics.
- Debt to Equity
- This ratio exhibits a general upward trend from mid-2010 through early 2015, increasing from approximately 0.33 to a peak of 1.26 in March 2014. Following this peak, a gradual decline is observed, with the ratio decreasing to 0.86 by September 2016. The initial rise indicates increasing reliance on debt relative to equity, while the subsequent decline suggests improvements in capital structure or equity growth.
- Debt to Capital
- Similar to the debt to equity trend, debt to capital ratios rise from 0.25 in mid-2010 to about 0.56 in early 2014, peaking around the same timeframe. After this peak, there is a moderate steady decline to 0.46 by the last reported quarter. This pattern confirms increasing leverage before moderation, indicating potential strategic debt management to optimize capital structure.
- Debt to Assets
- This ratio shows an increase from 0.08-0.09 in 2010 to approximately 0.21 by March 2014, marking the highest leverage on asset base during the period. Following this, it decreases back to 0.14 by late 2016, demonstrating a similar pattern of rising then stabilizing or reducing leverage relative to total assets.
- Financial Leverage
- Financial leverage rises from roughly 3.9 in mid-2010 to peak values over 6.0 after early 2014. This indicates that the company increased its use of debt financing in relation to equity over the period, reaching heightened levels of leverage. Although some variations occur, the leverage remains generally elevated above 6.0 through the last reported quarter, suggesting a sustained higher leverage posture.
- Interest Coverage
- Available data from late 2010 onward shows that interest coverage ratios have generally trended favorably. From 8.36 in late 2010, coverage improves to above 10.0 multiple times from 2012 through 2016, peaking around 10.64, and maintains levels close to or above 9 in most periods. This reflects strong earnings capacity to cover interest expenses, even as leverage increased.
In summary, the company demonstrated a period of increasing leverage across multiple metrics until early 2014, followed by a phase of stabilization and gradual deleveraging. Despite the increased debt levels during the earlier period, interest coverage remained robust throughout, indicating solid operational income relative to interest obligations. The trends suggest active balance sheet management with increasing reliance on debt up to 2014 and a cautious reduction thereafter.
Debt Ratios
Coverage Ratios
Debt to Equity
McKesson Corp., debt to equity calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Sep 30, 2010 | Jun 30, 2010 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||||||||
| Current portion of long-term debt | ||||||||||||||||||||||||||||||||||
| Long-term debt, excluding current portion | ||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||
| Total McKesson Corporation stockholders’ equity | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||||||
| CVS Health Corp. | ||||||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-K (reporting date: 2011-03-31), 10-Q (reporting date: 2010-12-31), 10-Q (reporting date: 2010-09-30), 10-Q (reporting date: 2010-06-30).
1 Q2 2017 Calculation
Debt to equity = Total debt ÷ Total McKesson Corporation stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals evolving patterns in the company’s capital structure and leverage from mid-2010 through late 2016. Both indebtedness and equity have exhibited fluctuations that influenced the debt-to-equity ratio over the observed periods.
- Total Debt
-
Total debt showed a general upward trend from mid-2010 until early 2014, increasing from approximately $2.3 billion to a peak above $10.7 billion by March 2014. This notable increase more than quadrupled the initial debt value within this period, indicating a significant rise in borrowings or debt financing activities.
From March 2014 onwards, total debt began a gradual decline, retreating to about $8.1 billion by September 2016. This reduction suggests progressive deleveraging or repayment of debt, contributing to a lower leverage position towards the end of the analyzed timeframe.
- Total Stockholders’ Equity
-
Stockholders’ equity demonstrated steady growth over the period with some fluctuations. Starting near $6.9 billion in June 2010, equity increased consistently and reached above $9.4 billion by September 2016.
Notable increments occurred particularly around 2013 and 2014, followed by some stabilization and continuous moderate rises thereafter. This trend reflects improving retained earnings, possible capital infusions, or overall growth in net assets supporting the shareholders’ equity base.
- Debt to Equity Ratio
-
The debt-to-equity ratio followed a distinctive pattern closely aligned with debt and equity changes. Initially, the ratio was relatively low (around 0.33 in mid-2010) indicating conservative leverage. It increased substantially, peaking in early 2014 at approximately 1.26, which corresponds with the large increase in total debt and modest growth in equity seen in that interval.
After peaking, the ratio steadily declined through to late 2016, ending near 0.86. This decline was driven by decreasing total debt and continued growth in equity, suggesting an improvement in the company’s leverage position and a shift towards less financial risk over the latter part of the period.
In summary, the financial data captured a phase of aggressive debt accumulation leading up to early 2014, accompanied by rising equity, followed by a phase of debt reduction while equity continued to grow. These movements resulted in a dynamic but ultimately more balanced capital structure by the end of the examined period. The reduction in debt-to-equity ratio towards 2016 indicates strengthening financial stability and lower leverage risk.
Debt to Capital
McKesson Corp., debt to capital calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Sep 30, 2010 | Jun 30, 2010 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||||||||
| Current portion of long-term debt | ||||||||||||||||||||||||||||||||||
| Long-term debt, excluding current portion | ||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||
| Total McKesson Corporation stockholders’ equity | ||||||||||||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||||||
| CVS Health Corp. | ||||||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-K (reporting date: 2011-03-31), 10-Q (reporting date: 2010-12-31), 10-Q (reporting date: 2010-09-30), 10-Q (reporting date: 2010-06-30).
1 Q2 2017 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several noteworthy trends in the company's leverage and capital structure over the examined periods.
- Total Debt
- The total debt levels initially fluctuated moderately, starting at approximately 2.3 billion US dollars in mid-2010 before rising sharply to a peak near 4.9 billion US dollars by early 2013. After maintaining this elevated level for approximately one year, the debt experienced significant growth beginning in the first quarter of 2014, surging to over 10.7 billion US dollars by mid-2014. Subsequently, total debt gradually decreased over the following two years, declining to approximately 8.1 billion US dollars by late 2016.
- Total Capital
- Total capital exhibited a generally increasing trend throughout the period. Initial capital was around 9.2 billion US dollars in mid-2010, which increased steadily, reaching a peak of approximately 12.9 billion US dollars by early 2014. A pronounced increase occurred starting in the first quarter of 2014, with total capital almost doubling to around 19.6 billion US dollars by late 2014. Following this peak, total capital saw a modest gradual decline to roughly 17.6 billion US dollars near the end of the observation period in 2016.
- Debt to Capital Ratio
- The debt to capital ratio started relatively low around 0.25 in mid-2010 and remained stable until the end of 2011, hovering between 0.25 and 0.37. From 2012 through early 2013, the ratio increased to approximately 0.41, reflecting heightened leverage. A significant escalation is observed in early 2014 when the ratio jumped sharply to around 0.56, coinciding with the substantial rise in total debt and capital noted earlier. Post-2014, this ratio gradually decreased, falling to about 0.46 by late 2016, indicating a moderate reduction in leverage over the final periods under review.
In summary, the data indicates a phase of moderate leverage followed by a rapid increase both in debt and capital around early 2014. This was succeeded by a stabilizing and slight deleveraging trend. The substantial changes in capital structure around 2014 suggest major financing activities or strategic shifts, while the subsequent gradual deleveraging implies management focus on stabilizing financial risk levels.
Debt to Assets
McKesson Corp., debt to assets calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Sep 30, 2010 | Jun 30, 2010 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||||||||||||
| Current portion of long-term debt | ||||||||||||||||||||||||||||||||||
| Long-term debt, excluding current portion | ||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||||||
| CVS Health Corp. | ||||||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-K (reporting date: 2011-03-31), 10-Q (reporting date: 2010-12-31), 10-Q (reporting date: 2010-09-30), 10-Q (reporting date: 2010-06-30).
1 Q2 2017 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
-
The total debt exhibited moderate fluctuations from mid-2010 through early 2013, ranging approximately between 2,200 and 4,900 million US dollars. A significant increase in total debt is observed starting in the first quarter of 2014, where the debt level rose sharply to over 10,000 million US dollars, maintaining a similar range through 2016. Notably, after the spike, total debt gradually declined, reaching slightly above 8,000 million US dollars by the third quarter of 2016.
- Total Assets
-
Total assets showed a generally increasing trend throughout the entire period. Beginning around 27,400 million US dollars in mid-2010, assets experienced steady growth with some minor fluctuations, reaching approximately 36,500 million US dollars by early 2014. Beginning in 2014, a marked escalation in total assets occurred, paralleling the increase in total debt, rising to a range between 51,000 and 58,000 million US dollars from 2014 through 2016, indicating an expansion in the company’s asset base.
- Debt to Assets Ratio
-
The debt to assets ratio remained relatively low and stable from 2010 to early 2014, fluctuating between 0.08 and 0.14. This stability suggests controlled leverage during this period. However, a notable jump in the ratio took place in early 2014, coinciding with the significant increases in both debt and assets. The ratio peaked at around 0.21 and then gradually decreased over the following quarters, moving down to approximately 0.14 by the third quarter of 2016, reflecting a modest deleveraging phase after the initial increase.
- Summary of Trends
-
Overall, financial data indicates a period of considerable growth and expansion beginning in early 2014, characterized by large increases in both total debt and total assets. Prior to this expansion phase, the company maintained relatively stable and low leverage. The post-expansion period shows some efforts toward debt reduction or stabilization, as evidenced by the gradual decline in total debt and the debt to assets ratio. The asset base, however, remained substantially higher than the pre-2014 levels, suggesting sustained growth or acquisition activities contributing to asset accumulation.
Financial Leverage
McKesson Corp., financial leverage calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Sep 30, 2010 | Jun 30, 2010 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||||||||||||
| Total McKesson Corporation stockholders’ equity | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||||||
| CVS Health Corp. | ||||||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | ||||||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-K (reporting date: 2011-03-31), 10-Q (reporting date: 2010-12-31), 10-Q (reporting date: 2010-09-30), 10-Q (reporting date: 2010-06-30).
1 Q2 2017 Calculation
Financial leverage = Total assets ÷ Total McKesson Corporation stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The total assets demonstrate a general upward trend over the observed periods with notable variability. Starting at approximately 27.4 billion USD in mid-2010, assets increased steadily with some fluctuations, reaching a significant jump around the first quarter of 2014, where they surpassed 51.7 billion USD. Following this peak, the assets maintained an upward trajectory, ending near 58.3 billion USD by late 2016. This indicates overall asset growth nearly doubling over the six-year span with some intermittent declines and stabilization periods.
Stockholders’ equity, representing ownership interest, exhibits moderate volatility but a generally positive trajectory up to early 2014, fluctuating between roughly 6.8 billion and 8.0 billion USD. A marked increase occurs starting in early 2014, aligned with the asset increase trend, with equity values rising to almost 9.5 billion USD by the third quarter of 2016. This suggests enhancements in net worth and capital base over time, with equity growth outpacing earlier periods post-2014.
The financial leverage ratio, defined as the ratio of total assets to stockholders’ equity, reflects increasing reliance on debt or liabilities over equity to finance the company’s assets. Initially, the leverage ratio hovers around 4.0 to 4.5 through 2010 to 2012. A distinct upward shift begins around 2013, where the ratio rises from about 4.5 to above 6.0 by early 2014 and remains elevated near this level through to late 2016. This indicates a higher risk profile as the company leverages more debt in financing its operations or acquisitions. The peak leverage ratio reaching over 6.7 in early 2015 highlights the greatest relative use of debt financing within the period examined.
In summary, the data reveals a significant expansion in total assets and stockholders’ equity starting in early 2014, coinciding with a substantial increase in financial leverage. The increase in leverage ratio suggests the company has been aggressively employing debt financing, likely to support its asset growth. The rising equity values provide partial mitigation to the risk implied by higher leverage, but the sustained elevated leverage ratio highlights increased financial risk exposure in later periods.
- Total Assets
- General increase from approximately $27.4 billion to $58.3 billion (2010-2016), with a major jump in early 2014.
- Stockholders’ Equity
- Moderate growth with fluctuations, rising from around $6.8 billion to about $9.5 billion, notably increasing post-2014.
- Financial Leverage
- Rising from about 4.0 to above 6.0 post-2013 indicating increased debt reliance, peaking at 6.73 in early 2015.
Interest Coverage
McKesson Corp., interest coverage calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | Dec 31, 2010 | Sep 30, 2010 | Jun 30, 2010 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||||||
| Net income attributable to McKesson Corporation | ||||||||||||||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||||||||||||
| Less: Income (loss) from discontinued operations, net of tax | ||||||||||||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||||||||||||
| Add: Interest expense | ||||||||||||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||||||||||||
| Abbott Laboratories | ||||||||||||||||||||||||||||||||||
| CVS Health Corp. | ||||||||||||||||||||||||||||||||||
| Elevance Health Inc. | ||||||||||||||||||||||||||||||||||
| Medtronic PLC | ||||||||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | ||||||||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-K (reporting date: 2011-03-31), 10-Q (reporting date: 2010-12-31), 10-Q (reporting date: 2010-09-30), 10-Q (reporting date: 2010-06-30).
1 Q2 2017 Calculation
Interest coverage
= (EBITQ2 2017
+ EBITQ1 2017
+ EBITQ4 2016
+ EBITQ3 2016)
÷ (Interest expenseQ2 2017
+ Interest expenseQ1 2017
+ Interest expenseQ4 2016
+ Interest expenseQ3 2016)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The analysis of the earnings before interest and tax (EBIT) over the examined quarters demonstrates considerable volatility. Starting from a moderate level of 483 million US dollars in June 2010, EBIT experienced a decline reaching a low point of 314 million in December 2010. Subsequently, a notable recovery occurred with peaks observed at 716 million in March 2012 and an even higher figure of 971 million in December 2015. Despite fluctuations, the general trend from mid-2010 to late 2016 indicates growth in EBIT, although with significant interim declines.
Interest expense shows less pronounced variability than EBIT but presents an increasing trend until early 2014. Beginning at 43 million US dollars in June 2010, interest expense rose to a peak of 116 million in March 2014, followed by a gradual decrease stabilizing around the high seventies by late 2016. This pattern suggests periods of increased borrowing costs or higher debt levels until early 2014, with subsequent improvement in interest obligations.
The interest coverage ratio, which reflects the company's ability to meet interest payments from EBIT, exhibits a generally stable and robust profile throughout the period. From an approximate ratio of 7.63 in late 2010, it improved, reaching levels above 10 in several quarters such as December 2012 and December 2015, indicating strong earnings relative to interest expenses. There is a slight dip in mid-2014 but recovery follows, maintaining levels mostly above 7, reflecting sustained capacity to cover interest obligations comfortably.
- Summary of Key Trends
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- EBIT shows volatility with an overall upward trend, peaking towards the end of the period.
- Interest expenses increased to a peak in early 2014, then steadily declined.
- Interest coverage ratio remained strong and mostly above 7, signaling a solid ability to service debt.
- Fluctuations in EBIT and interest expense impacted interest coverage, but the company managed to maintain healthy coverage ratios.