Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
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Solvency Ratios (Summary)
National Oilwell Varco Inc., solvency ratios
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Debt Ratios | ||||||
| Debt to equity | ||||||
| Debt to capital | ||||||
| Debt to assets | ||||||
| Financial leverage | ||||||
| Coverage Ratios | ||||||
| Interest coverage | ||||||
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).
- Debt to equity
- The debt-to-equity ratio exhibited an overall increasing trend from 0.03 in 2011 to 0.24 in 2015. The ratio remained relatively steady between 2012 and 2014, fluctuating slightly around 0.14-0.16, before rising more noticeably in 2015.
- Debt to capital
- The debt-to-capital ratio followed a similar pattern as the debt-to-equity ratio, increasing from 0.03 in 2011 to 0.19 in 2015. There was a gradual rise over the years with minor variations, showing a steady increase in the proportion of debt in the company's capital structure.
- Debt to assets
- The debt-to-assets ratio rose from a low 0.02 in 2011 to 0.15 in 2015. This indicates an increasing reliance on debt financing relative to total assets. The ratio increased notably between 2011 and 2012, and then showed moderate growth through to 2015.
- Financial leverage
- Financial leverage showed a gradual upward trend, increasing from 1.45 in 2011 to 1.63 in 2015. This rise suggests a slow increase in the use of debt or other liabilities to finance assets, reflecting a modestly higher financial risk profile over the period.
- Interest coverage
- Interest coverage was very strong in 2011 and 2012, exceeding 70, but declined sharply to approximately 31 in 2013 and 34 in 2014. In 2015, it turned negative to -4.72, indicating the company was unable to meet interest obligations from earnings. This significant deterioration in interest coverage signals a potential liquidity or profitability issue affecting debt servicing capability.
Debt Ratios
Coverage Ratios
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 | ||||||
| Long-term debt, excluding current portion | ||||||
| Total debt | ||||||
| Total Company stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity1 | ||||||
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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
= ÷ =
2 Click competitor name to see calculations.
- Total debt
-
There is a significant upward trend in total debt over the five-year period. Starting at 510 million US dollars in 2011, total debt increased sharply to 3,149 million in 2012 and remained relatively stable around 3,150 to 3,166 million through 2013 and 2014. In 2015, the total debt further grew to 3,930 million, marking the highest level in the period under review.
- Total Company stockholders’ equity
-
Total stockholders' equity has generally followed an increasing trend from 17,619 million US dollars in 2011 to a peak of 22,230 million in 2013. However, after 2013, equity began declining, dropping to 20,692 million in 2014 and decreasing further to 16,383 million in 2015. This indicates a reversal in equity growth during the last two years of the period.
- Debt to equity ratio
-
The debt to equity ratio rose consistently over the timeframe. Beginning at a very low level of 0.03 in 2011, it increased notably to 0.16 in 2012, then slightly decreased to 0.14 in 2013 before rising again to 0.15 in 2014. The ratio experienced a more marked increase in 2015, reaching 0.24. This upward trend suggests a growing reliance on debt relative to equity in the company’s capital structure.
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 | ||||||
| Long-term debt, excluding current portion | ||||||
| Total debt | ||||||
| Total Company stockholders’ equity | ||||||
| Total capital | ||||||
| Solvency Ratio | ||||||
| Debt to capital1 | ||||||
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a substantial increase from 510 million USD in 2011 to 3,930 million USD in 2015. The most significant rise occurred between 2011 and 2012, where debt increased more than sixfold. From 2012 through 2014, the debt levels remained relatively stable around 3,150-3,166 million USD, before rising again in 2015.
- Total Capital
- Total capital showed an overall upward trend from 18,129 million USD in 2011, peaking at 25,380 million USD in 2013, followed by a decline to 20,313 million USD in 2015. The growth phase lasted from 2011 through 2013, while the decrease occurred during 2014 and 2015.
- Debt to Capital Ratio
- The debt to capital ratio increased markedly over the period, starting very low at 0.03 in 2011 and reaching 0.19 by 2015. This suggests that the company's reliance on debt financing grew steadily, particularly after 2011, aligning with the increase in total debt and the decline in total capital in the later years.
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 | ||||||
| Long-term debt, excluding current portion | ||||||
| Total debt | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets1 | ||||||
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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
= ÷ =
2 Click competitor name to see calculations.
- Total debt trends
- The total debt experienced a significant increase from 510 million US dollars at the end of 2011 to 3,149 million in 2012. Following that, the debt remained relatively stable around 3,150 to 3,166 million through 2013 and 2014, before rising again to 3,930 million in 2015. This demonstrates a substantial elevation in debt levels over the period, particularly from 2011 to 2012 and again in 2015.
- Total assets trends
- Total assets showed a growth trend from 25,515 million US dollars at the end of 2011 to a peak of 34,812 million in 2013. Thereafter, a decline was observed, with assets decreasing to 33,562 million in 2014 and further dropping to 26,725 million by the end of 2015. This pattern indicates asset accumulation until 2013 followed by depreciation or disposal in subsequent years.
- Debt to assets ratio trends
- The debt to assets ratio rose from a very low level of 0.02 in 2011 to 0.10 in 2012, reflecting the surge in debt relative to assets during that period. The ratio then remained steady at around 0.09 through 2013 and 2014, indicating a stable leverage position relative to assets. However, in 2015, the ratio noticeably increased to 0.15, suggesting a higher level of leverage and potentially elevated financial risk due to increased debt or reduced asset base.
- Overall financial position insights
- Overall, the financial leverage of the company increased substantially over the timeframe, starting from very low debt levels and moving toward considerably higher debt relative to assets by 2015. The growth in assets peaked mid-period but was not sustained, declining markedly by the end of the period. The rising debt combined with decreasing assets in the latter years may indicate strategic financial decisions, possible challenges in asset management, or changes in market conditions impacting asset value and financing structure.
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 | ||||||
| Total Company stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Financial leverage1 | ||||||
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
- The total assets demonstrated growth from 2011 through 2013, increasing from 25,515 million US dollars to 34,812 million US dollars. In 2014, there was a slight decline to 33,562 million US dollars, followed by a more pronounced decrease in 2015 to 26,725 million US dollars. This suggests a period of asset expansion followed by contraction beginning in 2014.
- Total Company Stockholders’ Equity
- Stockholders’ equity increased steadily from 17,619 million US dollars in 2011 to a peak of 22,230 million US dollars in 2013. However, after 2013, equity figures decreased to 20,692 million US dollars in 2014 and further declined to 16,383 million US dollars in 2015, indicating a reduction in the net worth attributable to shareholders during this period.
- Financial Leverage
- The financial leverage ratio showed a consistent upward trend from 1.45 times in 2011 to 1.63 times in 2015. This gradual increase in leverage indicates that the company has been increasing its use of debt relative to equity over this timeframe, which could imply heightened financial risk or strategic leveraging.
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 | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Income from discontinued operations | ||||||
| Add: Income tax expense | ||||||
| Add: Interest and financial costs | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Solvency Ratio | ||||||
| Interest coverage1 | ||||||
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Schlumberger Ltd. | ||||||
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
= ÷ =
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
-
The EBIT showed an upward trend from 2011 to 2014, increasing from 2,962 million US dollars in 2011 to a peak of 3,599 million US dollars in 2014. This indicates a consistent improvement in operating profitability during this period. However, in 2015, there was a sharp decline, with EBIT dropping to a negative figure of -486 million US dollars, signaling a significant operating loss.
- Interest and financial costs
-
Interest and financial costs increased steadily from 40 million US dollars in 2011 to 111 million US dollars in 2013, followed by a slight decline to 103 million US dollars by 2015. This rising cost trend between 2011 and 2013 suggests increased borrowing or higher interest rates, which then stabilized somewhat in the subsequent years.
- Interest coverage ratio
-
The interest coverage ratio, which measures the ability to meet interest expenses from operating earnings, declined substantially over the period. It remained very high during 2011 and 2012 at over 70 times, indicating strong capacity to cover interest expenses. However, it decreased sharply to around 31 in 2013 and 34 in 2014, reflecting a weakening margin. By 2015, the ratio became negative (-4.72), corresponding to the operating loss, and indicating an inability to cover interest expenses from EBIT.