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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- Capital Asset Pricing Model (CAPM)
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- Net Profit Margin since 2005
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Solvency Ratios (Summary)
National Oilwell Varco Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
The financial ratios reflect several notable trends over the examined periods.
- Debt to Equity
- This ratio increased from 0.03 in early 2012 to a peak near 0.24 by the end of 2015, indicating a gradual rise in the company’s reliance on debt relative to equity. From early 2016, a slight decrease to around 0.20 was observed, suggesting some deleveraging or stabilization of capital structure.
- Debt to Capital
- A similar upward trend is visible, moving from 0.03 in early 2012 to approximately 0.19 by late 2015. This shows an increasing portion of debt in the total capital mix, plateauing and then slightly easing toward mid-2016.
- Debt to Assets
- The ratio rose from a very low 0.02 to about 0.15 near the end of 2015, indicating a higher debt usage against assets. The ratio then held steady around 0.14 through mid-2016, revealing consistency in asset financing leverage.
- Financial Leverage
- Financial leverage, representing total assets relative to equity, generally rose from around 1.43 in early 2012 to around 1.70 near the end of 2014, before slightly declining to about 1.48 by mid-2016. This pattern corresponds with the changes in debt ratios and indicates increased use of leverage followed by some reduction.
- Interest Coverage
- The interest coverage ratio demonstrated a marked decline over time. Starting at very high levels above 90 in 2012, it dropped steadily to approximately 31 by late 2014. Following this, it fell further, turning negative in 2015 and continuing decreasing to around -18 by mid-2016. This suggests a significant deterioration in the company’s ability to cover interest expenses from operating earnings, reflecting increased financial strain or reduced profitability.
Overall, the company’s financial leverage increased over the period, as reflected in rising debt-related ratios and financial leverage. Despite this higher leverage, the sharp decline in interest coverage highlights challenges in earnings relative to debt servicing costs, signaling increasing financial risk towards the latter part of the timeframe analyzed.
Debt Ratios
Coverage Ratios
Debt to Equity
National Oilwell Varco Inc., debt to equity calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Debt to equity = Total debt ÷ Total Company stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable fluctuations in the company’s capital structure over the analyzed quarterly periods. A detailed examination of total debt, total stockholders’ equity, and the debt-to-equity ratio provides insight into the company’s leverage and equity trends from March 2012 through June 2016.
- Total Debt
- The total debt exhibited a rising trend from March 2012, starting at 510 million US dollars and reaching a peak of 4,349 million US dollars by March 2013. After this peak, total debt gradually declined with some oscillations, falling to approximately 3,280 million US dollars by June 2016. This pattern indicates an initial phase of increased borrowing followed by a deleveraging or stabilization phase over the subsequent years.
- Total Company Stockholders’ Equity
- The stockholders' equity showed a consistent upward trajectory from 18,416 million US dollars at the beginning of the period (March 2012) to a peak of 22,230 million US dollars by December 2013. After reaching this peak, equity values gradually diminished, decreasing to 16,118 million US dollars by June 2016. This decline in equity after steady growth could reflect losses, dividend payments, share repurchases, or other factors reducing equity during the latter periods.
- Debt to Equity Ratio
- The debt-to-equity ratio followed the trends observed in debt and equity components. Initially low at 0.03 in March 2012, the ratio surged to 0.21 by March 2013, mirroring the sharp increase in total debt relative to equity. The ratio then fluctuated moderately, staying mostly within the 0.14 to 0.24 range, and ending near 0.20 by June 2016. This suggests that despite fluctuations, the company maintained a relatively stable leverage ratio in the range of approximately 0.15 to 0.24 in the last several quarters.
Overall, the data indicates a period of increased borrowing activity through early 2013 followed by a gradual reduction in debt levels while equity diminished after its peak in late 2013. The leverage ratio confirms a somewhat moderate and stable use of debt relative to equity in recent years, suggesting a controlled approach to financing with debt after the initial surge.
Debt to Capital
National Oilwell Varco Inc., debt to capital calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several important trends concerning the company's capital structure over the examined period from March 2012 to June 2016.
- Total Debt
- The total debt level demonstrated a significant increase from 510 million USD in the first quarter of 2012, peaking at 4,349 million USD by the first quarter of 2013. After this peak, total debt showed a gradual decrease with some fluctuations, ending at 3,280 million USD in June 2016. This pattern indicates that the company engaged in a sizeable amount of debt accumulation in 2012 and early 2013, followed by efforts to reduce or stabilize its debt levels thereafter.
- Total Capital
- Total capital steadily increased from 18,926 million USD at the start of the period to a peak of 25,846 million USD by the first quarter of 2014. Post-2014, there was a consistent decline in total capital, falling to 19,398 million USD in the second quarter of 2016. This pattern suggests a growth phase in the company's capital base up through early 2014, after which the capital base contracted, possibly due to asset sales, reduced equity, or other capital decreases.
- Debt to Capital Ratio
- The debt to capital ratio rose from a low of 0.03 in March 2012 to a high around 0.19 in mid-2015 and early 2016. This indicates a progressive increase in leverage during the earlier part of the period, reaching a peak between 2014 and 2016. The ratio showed minor fluctuations but remained elevated in the final years compared to the beginning, reflecting a higher reliance on debt financing relative to total capital.
Overall, the company experienced a phase of increasing indebtedness and capital base growth up until approximately 2014, followed by a reduction in capital and a controlled decrease in total debt. The elevated leverage ratios in the latter years suggest a strategic shift that increased the proportion of debt in the company’s capital structure, which could impact financial risk and cost of capital depending on market conditions and operational performance going forward.
Debt to Assets
National Oilwell Varco Inc., debt to assets calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt shows an overall increasing trend from the first quarter of 2012 through the first quarter of 2015, where it peaks at 4,305 million US dollars in June 2015. After this peak, total debt begins a gradual decline, reaching 3,280 million US dollars by the second quarter of 2016. Notably, there is a sharp increase from March 2012 to March 2013, followed by a more moderate fluctuation up to the peak in mid-2015.
- Total Assets
- Total assets exhibit a general upward trend until the fourth quarter of 2013, reaching a high of 34,812 million US dollars. After this point, total assets begin a steady decrease. The decline becomes more pronounced after the first quarter of 2014 with total assets falling to 23,784 million US dollars by the second quarter of 2016. This indicates a contraction in asset base over the later periods.
- Debt to Assets Ratio
- The debt to assets ratio increases from 0.02 in March 2012 to approximately 0.15 in December 2015, indicating a rise in leverage relative to the asset base. This ratio remains relatively stable around 0.09 from early 2014 through early 2015 before climbing again in 2015 and maintaining elevated levels through mid-2016. The increase in this ratio combined with decreasing total assets suggests increased financial risk and higher leverage in the latter periods.
- Overall Financial Trend
- The data reflects a pattern of rising indebtedness peaking in mid-2015, coupled with a gradual reduction in the asset base starting from late 2013. The rising debt to assets ratio suggests a higher reliance on debt financing relative to assets, which raises concerns about financial stability. The company’s ability to manage debt levels alongside a shrinking asset base will be critical in subsequent periods.
Financial Leverage
National Oilwell Varco Inc., financial leverage calculation (quarterly data)
| 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Total Company stockholders’ equity | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Financial leverage = Total assets ÷ Total Company stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's overall financial position and capital structure over the observed periods.
- Total assets
- The total assets exhibited a general upward trend from March 31, 2012, through December 31, 2013, increasing from $26,287 million to a peak of approximately $34,812 million. However, from early 2014 onwards, a consistent decline in total assets is observed, falling to $23,784 million by June 30, 2016. This trend suggests a contraction or divestiture of assets or a possible decrease in asset acquisition during the latter periods.
- Total company stockholders’ equity
- Stockholders' equity increased steadily from $18,416 million at the start of the series to $22,230 million by December 31, 2013, indicating growth in retained earnings or additional equity financing during this timeframe. After this peak, equity declined gradually, reaching $16,118 million in June 2016. This decrease might reflect losses, dividend payments exceeding earnings, share repurchases, or other equity-reducing transactions in the latter periods.
- Financial leverage (ratio)
- Financial leverage rose from 1.43 in March 2012 to a peak of 1.70 around March 2015, indicating an increased use of debt relative to equity in financing the company's assets. From that peak onward, the ratio slightly declined, settling near 1.48 by mid-2016. This suggests a partial reduction in leverage or relatively stronger equity retention compared to debt during this final phase.
In summary, the company experienced growth in assets and equity through late 2013, followed by a period of contraction in both metrics. Meanwhile, financial leverage increased through early 2015, reflecting greater debt reliance, and then eased somewhat in more recent quarters. These patterns may indicate strategic shifts in asset management, capital structure adjustments, or responses to market conditions impacting the company's financial strategy over this period.
Interest Coverage
National Oilwell Varco Inc., interest coverage calculation (quarterly data)
| Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||||||||||||||||||||
| SLB N.V. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31).
1 Q2 2016 Calculation
Interest coverage
= (EBITQ2 2016
+ EBITQ1 2016
+ EBITQ4 2015
+ EBITQ3 2015)
÷ (Interest expenseQ2 2016
+ Interest expenseQ1 2016
+ Interest expenseQ4 2015
+ Interest expenseQ3 2015)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- Earnings Before Interest and Tax (EBIT) Trend
- The EBIT values demonstrate a relatively stable performance throughout 2012 and early 2013, fluctuating between approximately $750 million and $960 million. A peak is observed in the fourth quarter of 2013, reaching $1,010 million. However, starting mid-2014, there is a noticeable decline in EBIT, culminating in a significant downturn from early 2015. The EBIT deteriorates sharply in 2015 and early 2016, with values turning negative by the first quarter of 2016, reaching as low as -$1,647 million. This suggests severe operational challenges or extraordinary losses impacting profitability during this later period.
- Interest and Financial Costs Trend
- Interest and financial costs remain relatively stable across the analyzed quarters, fluctuating within a narrow range between $8 million and $30 million. There is a gradual increase from 2012 through 2013, after which it stabilizes around the mid-20 million range. Despite the volatility in EBIT, the cost of interest shows minimal variation, indicating that financing expenses remain under control or that changes in debt levels are moderate over time.
- Interest Coverage Ratio Trend
- The interest coverage ratio, calculated as EBIT divided by interest and financial costs, reflects the company’s ability to meet its interest obligations. This ratio exhibits a declining trend over the reported periods. In 2012, the ratio is exceptionally strong, exceeding 70 and reaching over 100 in the second quarter. This indicates a robust capacity to cover interest expenses. However, beginning in 2013, the ratio decreases steadily, dropping below 40 by the end of 2013 and continuing to fall through 2014 and 2015. By 2016, the ratio turns negative, reaching values such as -4.72 and -18.4, which signifies that EBIT is insufficient to cover interest costs, highlighting significant financial stress and increased risk of insolvency at that time.
- Summary and Implications
- Overall, the data reveals a company facing declining operational profitability beginning in mid-2014, leading to negative earnings by 2016. While interest expenses remain relatively constant, the ability to service these obligations diminishes drastically, as reflected in the plummeting interest coverage ratio. This downward trend underscores potential liquidity and solvency concerns, suggesting that the company may need to address operational inefficiencies, reduce costs, or restructure its financing to restore financial stability.