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Phillips 66 (PSX)
Analysis of Debt
Difficulty: Advanced
Debt Accounting Policy
Capitalized Interest
A portion of interest from external borrowings is capitalized on major projects with an expected construction period of one year or longer. Capitalized interest is added to the cost of the related asset, and is amortized over the useful life of the related asset.
Source: 10-K (filing date: 2019-02-22).
Total Debt (Carrying Amount)
Phillips 66, balance sheet: debt
US$ in millions
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Short-term debt | |
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Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-17), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-20).
| Item | Description | The company |
|---|---|---|
| Total total debt (carrying amount) | Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. | Phillips 66’s total debt declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
Total Debt (Fair Value)
| Dec 31, 2018 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Floating-rate debt | |
| Fixed-rate debt, excluding capital leases | |
| Capitalized leases | |
| Total total debt (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (filing date: 2019-02-22).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt:
| Interest Rate | Debt Amount1 | Interest Rate × Debt Amount | Weighted-average Interest Rate2 |
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Based on: 10-K (filing date: 2019-02-22).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Phillips 66, interest costs incurred
US$ in millions
| 12 months ended | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||||||
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| Interest and debt expense | |
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| Interest capitalized | |
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| Interest and debt expense incurred | |
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Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-17), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-20).
| Item | Description | The company |
|---|---|---|
| Interest and debt expense | Amount of the cost of borrowed funds accounted for as interest expense for debt. | Phillips 66’s interest and debt expense increased from 2016 to 2017 and from 2017 to 2018. |
| Interest capitalized | Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred. | Phillips 66’s interest capitalized declined from 2016 to 2017 but then slightly increased from 2017 to 2018. |
| Interest and debt expense incurred | Total interest costs incurred during the period and either capitalized or charged against earnings. | Phillips 66’s interest and debt expense incurred increased from 2016 to 2017 and from 2017 to 2018. |
Adjusted Interest Coverage Ratio
Based on: 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-17), 10-K (filing date: 2016-02-19), 10-K (filing date: 2015-02-20).
2018 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest and debt expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest and debt expense incurred
= ÷ =
| Financial Ratio | Description | The company |
|---|---|---|
| Adjusted interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). | Phillips 66’s adjusted interest coverage ratio improved from 2016 to 2017 and from 2017 to 2018. |