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)
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).
- Debt to Equity Ratio
- The debt to equity ratio exhibits a generally fluctuating trend over the observed periods. Initially, it declines from 0.58 to 0.46, indicating a reduction in leverage relative to equity. Subsequently, it experiences an increase, peaking notably at 1.26 before gradually declining in the later quarters to 0.86. This pattern suggests phases of increased leverage followed by a strategic moderation in debt levels relative to equity.
- Debt to Capital Ratio
- This ratio mirrors the debt to equity ratio’s general movements but at lower magnitude values. It starts around 0.37 and declines to 0.32, followed by an uptick peaking at 0.56. After this peak, the ratio steadily decreases to 0.46. The elevated peak during the middle periods indicates a heightened leverage position within capital structure during that timeframe, with subsequent efforts to reduce reliance on debt.
- Debt to Assets Ratio
- The debt to assets ratio remains relatively low throughout the periods, ranging mostly between 0.11 and 0.14 initially. A marked increase occurs around the periods corresponding to March 2014 to March 2015, reaching as high as 0.21 before tapering off to about 0.14. This suggests a temporary increase in the proportion of debt financing relative to total assets, then a return to lower leverage levels.
- Financial Leverage Ratio
- Financial leverage shows an overall increasing trend over the periods. The ratio moves from 4.45-4.48 range in early periods to peaks above 6, nearing 6.73. With a high leverage sustained in later periods around 6.17, this indicates the company has progressively used more debt relative to its equity base or total assets to finance operations, reflecting increased reliance on creditors.
- Interest Coverage Ratio
- The interest coverage ratio displays variability but remains robust throughout the periods. Starting near 7.6, it moves upward to a peak of around 10.56 before declining to approximately 6.83 during mid-late 2014. Following this trough, coverage improves steadily to values around 10.64, suggesting enhanced ability to service interest expenses over time. The fluctuations point to variations in earnings before interest and taxes relative to interest obligations but maintaining comfortable coverage levels.
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 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Short-term borrowings | —) | —) | 7) | 7) | 142) | 144) | 135) | 407) | 525) | 507) | 346) | —) | —) | —) | —) | —) | —) | —) | 400) | —) | —) | —) | |||||||
| Current portion of long-term debt | 2,166) | 2,168) | 1,612) | 996) | 1,110) | 1,510) | 1,529) | 1,006) | 427) | 25) | 1,424) | 353) | 353) | 352) | 352) | 506) | 508) | 508) | 508) | 409) | 414) | 414) | |||||||
| Long-term debt, excluding current portion | 5,941) | 5,942) | 6,535) | 7,715) | 8,136) | 8,142) | 8,180) | 8,981) | 9,620) | 10,141) | 8,949) | 4,521) | 4,521) | 4,522) | 4,521) | 3,973) | 3,073) | 3,072) | 3,072) | 3,578) | 3,578) | 3,575) | |||||||
| Total debt | 8,107) | 8,110) | 8,154) | 8,718) | 9,388) | 9,796) | 9,844) | 10,394) | 10,572) | 10,673) | 10,719) | 4,874) | 4,874) | 4,874) | 4,873) | 4,479) | 3,581) | 3,580) | 3,980) | 3,987) | 3,992) | 3,989) | |||||||
| Total McKesson Corporation stockholders’ equity | 9,449) | 9,249) | 8,924) | 8,876) | 8,788) | 8,853) | 8,001) | 9,084) | 8,931) | 8,979) | 8,522) | 8,027) | 7,989) | 7,408) | 7,070) | 7,649) | 7,715) | 7,203) | 6,831) | 7,456) | 7,116) | 6,917) | |||||||
| Solvency Ratio | |||||||||||||||||||||||||||||
| Debt to equity1 | 0.86 | 0.88 | 0.91 | 0.98 | 1.07 | 1.11 | 1.23 | 1.14 | 1.18 | 1.19 | 1.26 | 0.61 | 0.61 | 0.66 | 0.69 | 0.59 | 0.46 | 0.50 | 0.58 | 0.53 | 0.56 | 0.58 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Debt to Equity, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| 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).
1 Q2 2017 Calculation
Debt to equity = Total debt ÷ Total McKesson Corporation stockholders’ equity
= 8,107 ÷ 9,449 = 0.86
2 Click competitor name to see calculations.
The financial data reveals several notable trends in the company’s capital structure over the observed quarterly periods. Total debt exhibits fluctuations, initially maintaining a relatively stable level around $3.9 billion until the first quarter of 2012, after which a significant increase occurs in the first quarter of 2014, peaking above $10.7 billion. Subsequently, total debt gradually decreases throughout 2015 and 2016, ending near $8.1 billion with a downward trend in the last quarters.
Equity shows a generally upward trajectory over the same period, starting at approximately $6.9 billion in mid-2011 and increasing consistently to reach around $9.4 billion by late 2016. There is a notable dip in the first quarter of 2015, but this appears to be temporary as the trend returns to growth afterward.
The debt-to-equity ratio highlights changes in the company’s leverage. Initially, the ratio hovers between 0.46 and 0.69, indicating moderate leverage. A marked increase occurs in the first quarter of 2014, with the ratio surging sharply to values above 1.1, peaking at 1.26. This reflects the substantial rise in total debt during this period relative to equity. Following this peak, the ratio declines steadily through 2015 and 2016, moving below 1.0 by the first quarter of 2016 and continuing down to around 0.86, evidencing a reduction in leverage and a strengthening equity base relative to debt.
- Total Debt
- Moderate and stable initially; sharp increase in early 2014; gradual decline through 2015 and 2016.
- Stockholders’ Equity
- Generally increasing over time with a brief dip in early 2015; returns to growth trend thereafter.
- Debt-to-Equity Ratio
- Relatively low and stable initially; substantial increase coinciding with debt spike in early 2014; followed by consistent decrease indicating deleveraging through 2015 and 2016.
Overall, the period reflects a phase of aggressive borrowing beginning around 2014, which substantially increased the company’s leverage before the company initiated a gradual deleveraging process. The increase in equity during most of the examined timeframe suggests strengthening financial resources, which, combined with the later reduction in debt levels, indicate a strategic effort to optimize the capital structure and reduce financial 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 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Short-term borrowings | —) | —) | 7) | 7) | 142) | 144) | 135) | 407) | 525) | 507) | 346) | —) | —) | —) | —) | —) | —) | —) | 400) | —) | —) | —) | |||||||
| Current portion of long-term debt | 2,166) | 2,168) | 1,612) | 996) | 1,110) | 1,510) | 1,529) | 1,006) | 427) | 25) | 1,424) | 353) | 353) | 352) | 352) | 506) | 508) | 508) | 508) | 409) | 414) | 414) | |||||||
| Long-term debt, excluding current portion | 5,941) | 5,942) | 6,535) | 7,715) | 8,136) | 8,142) | 8,180) | 8,981) | 9,620) | 10,141) | 8,949) | 4,521) | 4,521) | 4,522) | 4,521) | 3,973) | 3,073) | 3,072) | 3,072) | 3,578) | 3,578) | 3,575) | |||||||
| Total debt | 8,107) | 8,110) | 8,154) | 8,718) | 9,388) | 9,796) | 9,844) | 10,394) | 10,572) | 10,673) | 10,719) | 4,874) | 4,874) | 4,874) | 4,873) | 4,479) | 3,581) | 3,580) | 3,980) | 3,987) | 3,992) | 3,989) | |||||||
| Total McKesson Corporation stockholders’ equity | 9,449) | 9,249) | 8,924) | 8,876) | 8,788) | 8,853) | 8,001) | 9,084) | 8,931) | 8,979) | 8,522) | 8,027) | 7,989) | 7,408) | 7,070) | 7,649) | 7,715) | 7,203) | 6,831) | 7,456) | 7,116) | 6,917) | |||||||
| Total capital | 17,556) | 17,359) | 17,078) | 17,594) | 18,176) | 18,649) | 17,845) | 19,478) | 19,503) | 19,652) | 19,241) | 12,901) | 12,863) | 12,282) | 11,943) | 12,128) | 11,296) | 10,783) | 10,811) | 11,443) | 11,108) | 10,906) | |||||||
| Solvency Ratio | |||||||||||||||||||||||||||||
| Debt to capital1 | 0.46 | 0.47 | 0.48 | 0.50 | 0.52 | 0.53 | 0.55 | 0.53 | 0.54 | 0.54 | 0.56 | 0.38 | 0.38 | 0.40 | 0.41 | 0.37 | 0.32 | 0.33 | 0.37 | 0.35 | 0.36 | 0.37 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Debt to Capital, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| 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).
1 Q2 2017 Calculation
Debt to capital = Total debt ÷ Total capital
= 8,107 ÷ 17,556 = 0.46
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's debt and capital structure over the observed periods.
- Total Debt
- The total debt remained relatively stable from mid-2011 through early 2012, fluctuating slightly around the 3,980 to 4,000 million US$ mark. A decrease was observed in mid-2012, dropping to approximately 3,580 million US$. Subsequently, debt levels increased significantly during the latter part of 2012 and early 2013, peaking around 10,700 million US$ in the first quarter of 2014. From this peak, debt levels trended downward over the next two years, declining steadily to approximately 8,100 million US$ by the third quarter of 2016. This pattern suggests a major increase in borrowing or debt assumption in late 2013 and early 2014, followed by a deliberate reduction of debt thereafter.
- Total Capital
- Total capital demonstrated a gradual upward trend with some fluctuations from mid-2011 through early 2014, increasing from just over 10,900 million US$ to nearly 19,700 million US$ by the third quarter of 2014. After this period, capital levels showed some variability but generally remained within the 17,000 to 19,000 million US$ range through mid-2016. The marked increase in total capital observed around early 2014 corresponds with the spike in total debt, indicating possible capital infusion or asset acquisitions financed through debt at that time.
- Debt to Capital Ratio
- The debt to capital ratio was relatively steady around 0.35 to 0.37 from mid-2011 to mid-2012, indicating a moderate leverage level. It increased sharply to around 0.56 in early 2014, aligned with the surge in total debt and capital mentioned earlier. Following this peak, the ratio exhibited a consistent decline, decreasing gradually to about 0.46 by the third quarter of 2016. This steady reduction in leverage ratio suggests an improvement in the company’s capital structure, reducing financial risk by lowering dependence on debt relative to overall capital.
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 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Short-term borrowings | —) | —) | 7) | 7) | 142) | 144) | 135) | 407) | 525) | 507) | 346) | —) | —) | —) | —) | —) | —) | —) | 400) | —) | —) | —) | |||||||
| Current portion of long-term debt | 2,166) | 2,168) | 1,612) | 996) | 1,110) | 1,510) | 1,529) | 1,006) | 427) | 25) | 1,424) | 353) | 353) | 352) | 352) | 506) | 508) | 508) | 508) | 409) | 414) | 414) | |||||||
| Long-term debt, excluding current portion | 5,941) | 5,942) | 6,535) | 7,715) | 8,136) | 8,142) | 8,180) | 8,981) | 9,620) | 10,141) | 8,949) | 4,521) | 4,521) | 4,522) | 4,521) | 3,973) | 3,073) | 3,072) | 3,072) | 3,578) | 3,578) | 3,575) | |||||||
| Total debt | 8,107) | 8,110) | 8,154) | 8,718) | 9,388) | 9,796) | 9,844) | 10,394) | 10,572) | 10,673) | 10,719) | 4,874) | 4,874) | 4,874) | 4,873) | 4,479) | 3,581) | 3,580) | 3,980) | 3,987) | 3,992) | 3,989) | |||||||
| Total assets | 58,315) | 57,904) | 56,563) | 55,087) | 55,819) | 55,925) | 53,870) | 55,110) | 52,232) | 53,006) | 51,759) | 36,479) | 35,947) | 35,491) | 34,786) | 33,433) | 32,968) | 31,748) | 33,093) | 33,157) | 31,907) | 31,017) | |||||||
| Solvency Ratio | |||||||||||||||||||||||||||||
| Debt to assets1 | 0.14 | 0.14 | 0.14 | 0.16 | 0.17 | 0.18 | 0.18 | 0.19 | 0.20 | 0.20 | 0.21 | 0.13 | 0.14 | 0.14 | 0.14 | 0.13 | 0.11 | 0.11 | 0.12 | 0.12 | 0.13 | 0.13 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Debt to Assets, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| 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).
1 Q2 2017 Calculation
Debt to assets = Total debt ÷ Total assets
= 8,107 ÷ 58,315 = 0.14
2 Click competitor name to see calculations.
The financial analysis of the quarterly data reveals several notable trends in the company's balance sheet over the observed periods.
- Total Debt
- The total debt remained relatively stable in the early periods, fluctuating slightly around the range of approximately 3,980 to 4,874 million US dollars. Starting from the March 31, 2014, period, there was a marked increase, with total debt more than doubling to over 10,700 million US dollars. This elevated level of debt persisted with minor decreases through subsequent quarters, ultimately showing a gradual decline from 2015 onwards but still remaining significantly higher than in the initial periods. The reduction continued progressively, reaching close to 8,100 million US dollars by the final quarter of analysis.
- Total Assets
- Total assets exhibited a steady upward trend throughout the majority of the periods. Beginning at approximately 31,000 million US dollars, assets increased incrementally, crossing 35,000 million US dollars by early 2013. A more substantial jump occurred around March 31, 2014, where total assets surged to over 51,700 million US dollars. From this point, assets continued to grow consistently, fluctuating slightly but maintaining a generally increasing trajectory to reach over 58,300 million US dollars by the September 30, 2016, period.
- Debt to Assets Ratio
- The debt to assets ratio was relatively low and stable in the early quarters, generally hovering between 0.11 and 0.14. With the sharp increase in debt and assets observed around early 2014, the ratio temporarily increased, peaking at 0.21, reflecting a higher proportion of debt relative to assets. Following this peak, there was a gradual decline in the ratio through subsequent quarters, indicating an improvement in leverage and a more conservative capital structure. By the end of the data series, the ratio decreased to approximately 0.14, suggesting the company reduced its relative debt burden while continuing to grow its asset base.
Overall, the data indicates a significant capital structure adjustment around early 2014, characterized by increased leverage coinciding with a substantial expansion in assets. Subsequent quarters show a trend towards deleveraging and asset growth, contributing to a more balanced financial position. This pattern suggests deliberate management actions aimed at supporting growth while addressing risk through gradual debt reduction.
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 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Total assets | 58,315) | 57,904) | 56,563) | 55,087) | 55,819) | 55,925) | 53,870) | 55,110) | 52,232) | 53,006) | 51,759) | 36,479) | 35,947) | 35,491) | 34,786) | 33,433) | 32,968) | 31,748) | 33,093) | 33,157) | 31,907) | 31,017) | |||||||
| Total McKesson Corporation stockholders’ equity | 9,449) | 9,249) | 8,924) | 8,876) | 8,788) | 8,853) | 8,001) | 9,084) | 8,931) | 8,979) | 8,522) | 8,027) | 7,989) | 7,408) | 7,070) | 7,649) | 7,715) | 7,203) | 6,831) | 7,456) | 7,116) | 6,917) | |||||||
| Solvency Ratio | |||||||||||||||||||||||||||||
| Financial leverage1 | 6.17 | 6.26 | 6.34 | 6.21 | 6.35 | 6.32 | 6.73 | 6.07 | 5.85 | 5.90 | 6.07 | 4.54 | 4.50 | 4.79 | 4.92 | 4.37 | 4.27 | 4.41 | 4.84 | 4.45 | 4.48 | 4.48 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Financial Leverage, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| 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).
1 Q2 2017 Calculation
Financial leverage = Total assets ÷ Total McKesson Corporation stockholders’ equity
= 58,315 ÷ 9,449 = 6.17
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several key trends in the company's balance sheet over the reported periods.
- Total assets (US$ in millions)
- Total assets showed a generally increasing trend from 31,017 million in June 2011 to 58,315 million by September 2016. The asset base remained relatively stable with modest increases initially through 2012 and 2013, followed by a marked jump between March 2014 and June 2014, where total assets increased significantly from approximately 36,479 million to 51,759 million. This elevated asset level was maintained with minor fluctuations through 2015 and 2016.
- Total McKesson Corporation stockholders’ equity (US$ in millions)
- Stockholders’ equity demonstrated moderate growth over the period but with higher volatility compared to the total assets. Starting at 6,917 million in June 2011, it increased steadily with some fluctuations, reaching a peak around 9,084 million in December 2014. However, following that peak, equity declined to around 8,001 million by March 2015 before gradually increasing again, ending at 9,449 million by September 2016. This reflects periods of equity strengthening as well as temporary declines.
- Financial leverage (ratio)
- The financial leverage ratio, which indicates the degree of debt financing relative to equity, initially hovered around 4.4 to 4.9 from 2011 through early 2013. A significant increase occurred in 2014, with the ratio jumping to around 6.07 in March 2014 and remaining elevated around 6.0 to 6.7 during 2014 and through 2016. This increase in leverage corresponds with the substantial rise in total assets seen in 2014, suggesting an increase in debt or liabilities relative to equity financing during that time frame.
In summary, the company's total asset base experienced strong growth, particularly beginning in early 2014, accompanied by a rise in financial leverage, indicating higher reliance on debt financing despite equity growth. The fluctuations in stockholders’ equity suggest periods of variable profitability or capital adjustments. The elevated leverage ratio in recent years denotes a strategic or necessary shift towards greater debt utilization to finance asset growth.
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 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Net income attributable to McKesson Corporation | 307) | 542) | 431) | 634) | 617) | 576) | 132) | 472) | 469) | 403) | 371) | 64) | 404) | 424) | 259) | 298) | 401) | 380) | 521) | 300) | 296) | 286) | |||||||
| Add: Net income attributable to noncontrolling interest | 17) | 18) | 13) | 13) | 13) | 13) | 12) | 39) | 8) | 8) | (5) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | —) | |||||||
| Less: Income (loss) from discontinued operations, net of tax | (1) | (113) | (21) | 5) | (6) | (10) | (267) | (10) | (14) | (8) | 4) | (92) | (12) | 4) | —) | —) | —) | —) | —) | —) | —) | —) | |||||||
| Add: Income tax expense | 200) | 239) | 204) | 204) | 244) | 256) | 209) | 198) | 223) | 185) | 103) | 252) | 213) | 174) | 127) | 138) | 165) | 151) | 136) | 126) | 124) | 130) | |||||||
| Add: Interest expense | 78) | 79) | 86) | 87) | 91) | 89) | 90) | 93) | 95) | 96) | 116) | 69) | 59) | 59) | 70) | 59) | 55) | 56) | 59) | 64) | 64) | 64) | |||||||
| Earnings before interest and tax (EBIT) | 603) | 991) | 755) | 933) | 971) | 944) | 710) | 812) | 809) | 700) | 581) | 477) | 688) | 653) | 456) | 495) | 621) | 587) | 716) | 490) | 484) | 480) | |||||||
| Solvency Ratio | |||||||||||||||||||||||||||||
| Interest coverage1 | 9.95 | 10.64 | 10.21 | 9.97 | 9.47 | 8.92 | 8.10 | 7.26 | 6.83 | 7.19 | 7.92 | 8.85 | 9.28 | 9.16 | 9.00 | 10.56 | 10.32 | 9.37 | 8.65 | 7.64 | 7.29 | 7.63 | |||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Interest Coverage, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| 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).
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)
= (603 + 991 + 755 + 933)
÷ (78 + 79 + 86 + 87)
= 9.95
2 Click competitor name to see calculations.
- EBIT Trends
- The Earnings Before Interest and Tax (EBIT) demonstrates fluctuation over the observed periods. Initially, EBIT shows moderate values around the 480-490 million range in 2011, increases significantly to a peak of 716 million in early 2012, then decreases again to lower levels between 456 and 495 million by early 2013. From mid-2013 onward, EBIT exhibits a generally upward trend, reaching several peaks with the highest recorded at 991 million in mid-2016. Overall, EBIT shows recovery and growth following some volatility in earlier years.
- Interest Expense Patterns
- Interest expense stays relatively stable between 55 and 70 million until the beginning of 2013. However, starting in early 2013, there is a noticeable increase, with values peaking at 116 million in the first quarter of 2014. Subsequently, interest expenses gradually decline but remain elevated compared to earlier years, fluctuating mainly between 78 and 96 million through to late 2016.
- Interest Coverage Ratio Analysis
- The interest coverage ratio, reflecting the company’s ability to service interest through EBIT, shows variability but mostly stable performance. From 2011 to early 2012, the ratio improves from about 7.3 to over 10, indicating stronger coverage due to rising EBIT and controlled interest expense. There is a decrease in 2014, reaching a low near 6.8, coinciding with the spike in interest expenses and fluctuating EBIT. Afterward, the ratio steadily increases again, peaking near 10.6 in late 2016, suggesting improved financial health and better capacity to cover interest obligations despite fluctuations in expenses.
- Overall Financial Insight
- The data indicate a company experiencing cyclical EBIT performance with periods of both growth and contraction. Interest expenses demonstrate a spike around 2013-2014, potentially impacting profitability temporarily. The interest coverage ratio reflects this dynamic, with decreased coverage during periods of rising interest expense but general improvement over the long term. By the end of the observed timeframe, financial metrics suggest a resilient position with strong EBIT performance and sufficient ability to meet interest obligations.