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
National Oilwell Varco Inc., solvency ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
The solvency profile of the entity exhibits a progressive increase in leverage coupled with a significant deterioration in its ability to service debt obligations between 2011 and 2015.
- Debt-to-Equity and Capitalization Ratios
- A consistent upward trend is observed across all debt-related proportions. The debt-to-equity ratio increased from 0.03 in 2011 to 0.24 by 2015. Similarly, the debt-to-capital ratio rose from 0.03 to 0.19, and the debt-to-assets ratio grew from 0.02 to 0.15 over the same period. These movements indicate a shift toward a higher reliance on borrowed funds relative to equity and total assets.
- Financial Leverage
- Financial leverage showed a steady and marginal increase, rising from 1.45 in 2011 to 1.63 in 2015. This gradual climb suggests a consistent expansion of the asset base funded by a combination of debt and equity, though the more pronounced acceleration in the debt-specific ratios suggests that debt contributed more significantly to this leverage in the latter years.
- Interest Coverage Capacity
- A critical decline is evident in the interest coverage ratio. After maintaining strong levels above 70.00 in 2011 and 2012, the ratio dropped to 31.14 in 2013 and further collapsed to -4.72 by 2015. The transition to a negative value indicates that operating earnings became insufficient to cover interest expenses, signaling a severe decline in solvency and an increased risk regarding the entity's financial stability.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Debt to Equity
National Oilwell Varco Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt and short-term borrowings | 2) | 152) | 1) | 1) | 351) | |
| Long-term debt, excluding current portion | 3,928) | 3,014) | 3,149) | 3,148) | 159) | |
| Total debt | 3,930) | 3,166) | 3,150) | 3,149) | 510) | |
| Total Company stockholders’ equity | 16,383) | 20,692) | 22,230) | 20,239) | 17,619) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.24 | 0.15 | 0.14 | 0.16 | 0.03 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to equity = Total debt ÷ Total Company stockholders’ equity
= 3,930 ÷ 16,383 = 0.24
2 Click competitor name to see calculations.
Between 2011 and 2015, the solvency profile of the organization shifted from a position of minimal leverage to an increasing reliance on debt financing, coupled with a contraction in total stockholders' equity toward the end of the period.
- Total Debt Trends
- A substantial increase in total debt occurred between 2011 and 2012, rising from US$ 510 million to US$ 3,149 million. This level remained relatively stable through 2014, before further increasing to US$ 3,930 million by December 31, 2015.
- Stockholders' Equity Fluctuations
- Equity grew steadily from US$ 17,619 million in 2011 to a peak of US$ 22,230 million in 2013. However, a downward trend followed, with equity declining to US$ 20,692 million in 2014 and further dropping to US$ 16,383 million in 2015.
- Debt to Equity Ratio Interpretation
- The debt to equity ratio reflects the combined impact of rising liabilities and declining equity. The ratio increased from 0.03 in 2011 to 0.16 in 2012. After a period of relative stability between 2012 and 2014, where the ratio fluctuated between 0.14 and 0.15, it climbed to 0.24 in 2015. This final increase represents the highest level of leverage observed within the analyzed period, driven by the simultaneous rise in total debt and the reduction in stockholders' equity.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Debt to Capital
National Oilwell Varco Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt and short-term borrowings | 2) | 152) | 1) | 1) | 351) | |
| Long-term debt, excluding current portion | 3,928) | 3,014) | 3,149) | 3,148) | 159) | |
| Total debt | 3,930) | 3,166) | 3,150) | 3,149) | 510) | |
| Total Company stockholders’ equity | 16,383) | 20,692) | 22,230) | 20,239) | 17,619) | |
| Total capital | 20,313) | 23,858) | 25,380) | 23,388) | 18,129) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.19 | 0.13 | 0.12 | 0.13 | 0.03 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to capital = Total debt ÷ Total capital
= 3,930 ÷ 20,313 = 0.19
2 Click competitor name to see calculations.
The solvency profile of the entity underwent significant shifts between 2011 and 2015, characterized by a substantial increase in total debt and a fluctuating capital base, which resulted in a progressively higher debt-to-capital ratio.
- Total Debt Trends
- A sharp increase in total debt is observed between 2011 and 2012, where obligations rose from US$ 510 million to US$ 3,149 million. Following this initial surge, debt levels remained relatively stable from 2012 through 2014, before increasing further to US$ 3,930 million by the end of 2015.
- Total Capital Fluctuations
- Total capital exhibited growth in the first three years of the analyzed period, peaking at US$ 25,380 million in 2013. However, a contraction occurred starting in 2014 and continued into 2015, with the total capital base decreasing to US$ 20,313 million.
- Debt to Capital Ratio Analysis
- The debt to capital ratio reflects the combined impact of rising debt and shifting capital. The ratio increased from 0.03 in 2011 to 0.13 in 2012, signaling a transition toward higher leverage. Although the ratio remained consistent between 0.12 and 0.13 from 2012 to 2014, it climbed to 0.19 in 2015. This final increase is driven by the convergence of rising total debt and a declining total capital base, indicating a weakening of the solvency position over the five-year period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Debt to Assets
National Oilwell Varco Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of long-term debt and short-term borrowings | 2) | 152) | 1) | 1) | 351) | |
| Long-term debt, excluding current portion | 3,928) | 3,014) | 3,149) | 3,148) | 159) | |
| Total debt | 3,930) | 3,166) | 3,150) | 3,149) | 510) | |
| Total assets | 26,725) | 33,562) | 34,812) | 31,484) | 25,515) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.15 | 0.09 | 0.09 | 0.10 | 0.02 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to assets = Total debt ÷ Total assets
= 3,930 ÷ 26,725 = 0.15
2 Click competitor name to see calculations.
The solvency profile from 2011 to 2015 is characterized by a substantial increase in leverage and a significant contraction of the asset base in the final year of the period. While the company maintained a conservative debt position in 2011, a strategic shift or capital requirement led to a sharp rise in total debt that remained elevated through 2015.
- Total Debt Evolution
- Total debt experienced a significant surge between 2011 and 2012, rising from 510 million US$ to 3,149 million US$. Following this initial spike, debt levels remained relatively stable through 2014, before increasing further to 3,930 million US$ by December 31, 2015.
- Total Asset Trajectory
- Total assets exhibited growth in the early part of the period, increasing from 25,515 million US$ in 2011 to a peak of 34,812 million US$ in 2013. However, a downward trend emerged thereafter, with a notable decline to 26,725 million US$ by the end of 2015, representing a substantial reduction in the total asset base compared to the 2013 peak.
- Debt to Assets Ratio Analysis
- The debt to assets ratio reflects the combined impact of increasing liabilities and fluctuating asset values. The ratio rose from a minimal 0.02 in 2011 to 0.10 in 2012, then stabilized at 0.09 during 2013 and 2014. By 2015, the ratio climbed to 0.15, driven by the simultaneous increase in total debt and the sharp decrease in total assets, indicating a higher proportion of assets being financed through debt.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Financial Leverage
National Oilwell Varco Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 26,725) | 33,562) | 34,812) | 31,484) | 25,515) | |
| Total Company stockholders’ equity | 16,383) | 20,692) | 22,230) | 20,239) | 17,619) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.63 | 1.62 | 1.57 | 1.56 | 1.45 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Financial leverage = Total assets ÷ Total Company stockholders’ equity
= 26,725 ÷ 16,383 = 1.63
2 Click competitor name to see calculations.
The financial position between 2011 and 2015 demonstrates a steady increase in financial leverage, reflecting a strategic or circumstantial shift in the capital structure toward a higher proportion of liabilities relative to equity.
- Asset and Equity Trends
- Total assets and stockholders' equity followed a similar trajectory, characterized by growth through 2013 followed by a contraction. Total assets rose from 25,515 million US$ in 2011 to a peak of 34,812 million US$ in 2013, before declining to 26,725 million US$ by 2015. During the same period, stockholders' equity increased from 17,619 million US$ to a peak of 22,230 million US$ in 2013, then decreased to 16,383 million US$ in 2015. The sharp decline in both metrics between 2014 and 2015 indicates a significant reduction in the company's balance sheet size.
- Financial Leverage Analysis
- The financial leverage ratio exhibited a consistent upward trend, increasing every year from 1.45 in 2011 to 1.63 in 2015. This persistent rise occurred regardless of whether the total asset base was expanding or contracting. The increase in the ratio suggests that the growth in assets from 2011 to 2013 was financed more heavily by debt than by equity, and that during the contraction phase from 2014 to 2015, equity declined at a faster rate than total assets.
- Solvency Implications
- The progression of the leverage ratio from 1.45 to 1.63 indicates a heightened reliance on external financing over the observed period. This trend points to an increase in financial risk, as a larger share of the company's assets is supported by obligations to creditors rather than by shareholder investments, thereby altering the solvency profile of the organization by the end of 2015.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Interest Coverage
National Oilwell Varco Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Company | (769) | 2,502) | 2,327) | 2,491) | 1,994) | |
| Add: Net income attributable to noncontrolling interest | 2) | 5) | 1) | (8) | (9) | |
| Less: Income from discontinued operations | —) | 52) | —) | —) | —) | |
| Add: Income tax expense | 178) | 1,039) | 1,018) | 1,022) | 937) | |
| Add: Interest and financial costs | 103) | 105) | 111) | 49) | 40) | |
| Earnings before interest and tax (EBIT) | (486) | 3,599) | 3,457) | 3,554) | 2,962) | |
| Solvency Ratio | ||||||
| Interest coverage1 | -4.72 | 34.28 | 31.14 | 72.53 | 74.05 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| SLB N.V. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Interest coverage = EBIT ÷ Interest expense
= -486 ÷ 103 = -4.72
2 Click competitor name to see calculations.
The analysis of solvency from 2011 to 2015 reveals a period of substantial financial strength followed by a precipitous decline in the capacity to service debt obligations from operational earnings.
- Earnings before Interest and Tax (EBIT) Trends
- Operating profitability demonstrated growth and stability from 2011 through 2014, reaching a peak of US$ 3,599 million. However, 2015 marked a critical inflection point, with EBIT shifting from a strong positive position to a loss of US$ 486 million.
- Interest and Financial Costs
- Financial costs remained relatively low in 2011 and 2012, staying below US$ 50 million. A significant increase occurred in 2013, where costs rose to US$ 111 million, and remained elevated at approximately US$ 103 million to US$ 105 million through 2015.
- Interest Coverage Ratio Performance
- The interest coverage ratio exhibited a severe downward trend over the five-year period. From an exceptionally strong position of 74.05 in 2011, the ratio declined to 31.14 by 2013, primarily due to the increase in interest expenses. Despite a marginal recovery to 34.28 in 2014, the ratio collapsed to -4.72 in 2015. This negative ratio indicates that the company's operating losses left it unable to cover its interest obligations, signaling a significant deterioration in solvency and financial risk.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?