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
Phillips 66, solvency ratios
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
The analysis of solvency ratios from 2015 to 2019 indicates a gradual increase in financial leverage and a period of volatility regarding the capacity to service debt obligations. While the overall debt profile remains moderate, there is a discernible trend toward higher debt reliance relative to equity and total capital.
- Debt Leverage Ratios
- The debt to equity ratio increased from 0.38 in 2015 to 0.47 in 2019. When operating lease liabilities are included, this increase is more pronounced, rising from 0.38 to 0.52 over the same period, suggesting that lease obligations have contributed significantly to the overall leverage profile by the end of 2019.
- Debt to capital ratios exhibited a similar upward trajectory, moving from 0.28 in 2015 to 0.32 in 2019. Including operating lease liabilities further elevates this figure to 0.34, indicating a consistent shift toward debt financing in the capital structure.
- Debt to assets remained relatively stable, fluctuating within a narrow range between 0.18 and 0.21. This stability suggests that the growth in debt has been largely proportional to the growth in the total asset base.
- Financial Leverage
- Financial leverage experienced a general increase over the five-year period, starting at 2.10 in 2015 and ending at 2.36 in 2019. This trend reflects an increased use of debt to acquire assets, which potentially amplifies returns but also increases the financial risk profile.
- Coverage Ratios
- Interest coverage showed significant volatility. A sharp decline was observed between 2015 and 2016, where the ratio dropped from 20.50 to 7.48. Although a recovery occurred by 2018, reaching 15.77, the ratio declined again to 10.12 by 2019, indicating fluctuating earnings relative to interest expenses.
- Fixed charge coverage mirrored the trend of the interest coverage ratio. The ratio decreased from 7.36 in 2015 to a low of 3.18 in 2016, recovered to 7.35 in 2018, and subsequently moderated to 5.22 in 2019. These fluctuations suggest periodic pressures on the cash flows available to cover fixed financial obligations.
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Debt to Equity
Phillips 66, debt to equity calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 547) | 67) | 41) | 550) | 44) | |
| Long-term debt | 11,216) | 11,093) | 10,069) | 9,588) | 8,843) | |
| Total debt | 11,763) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Stockholders’ equity | 24,910) | 24,653) | 25,085) | 22,390) | 23,100) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.47 | 0.45 | 0.40 | 0.45 | 0.38 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity
= 11,763 ÷ 24,910 = 0.47
2 Click competitor name to see calculations.
An analysis of the solvency position from 2015 through 2019 reveals a gradual increase in financial leverage. While the equity base remained relatively stable throughout the period, a consistent rise in total debt led to an overall increase in the company's reliance on borrowed capital.
- Total Debt Trends
- Total debt exhibited a steady upward trajectory, increasing from US$ 8,887 million in 2015 to US$ 11,763 million by 2019. A notable increase occurred between 2015 and 2016, followed by a period of sustained growth, with the highest absolute debt level reached at the end of the 2019 fiscal year.
- Stockholders' Equity Stability
- Stockholders' equity demonstrated moderate fluctuations but remained within a consistent range, starting at US$ 23,100 million in 2015 and ending at US$ 24,910 million in 2019. The lack of significant growth in equity relative to debt contributed to the rise in the leverage ratio.
- Debt to Equity Ratio Analysis
- The debt to equity ratio rose from 0.38 in 2015 to 0.47 in 2019. Although a temporary decline to 0.40 was observed in 2017, the five-year trend indicates a progressive increase in the proportion of debt used to finance assets. This suggests a strategic shift toward a more leveraged capital structure over the observed period.
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Debt to Equity (including Operating Lease Liability)
Phillips 66, debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 547) | 67) | 41) | 550) | 44) | |
| Long-term debt | 11,216) | 11,093) | 10,069) | 9,588) | 8,843) | |
| Total debt | 11,763) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Operating lease liabilities (included in Other accruals) | 455) | —) | —) | —) | —) | |
| Operating lease liabilities (included in Other liabilities and deferred credits) | 806) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 13,024) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Stockholders’ equity | 24,910) | 24,653) | 25,085) | 22,390) | 23,100) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.52 | 0.45 | 0.40 | 0.45 | 0.38 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity
= 13,024 ÷ 24,910 = 0.52
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2015 to 2019 reveals a gradual increase in financial leverage. While stockholders' equity remained relatively stable throughout the period, a steady rise in total debt, including operating lease liabilities, led to a corresponding increase in the debt-to-equity ratio.
- Debt Accumulation Trend
- Total debt exhibited a consistent upward trajectory, rising from US$ 8,887 million in 2015 to US$ 13,024 million by 2019. The most pronounced increase occurred between 2018 and 2019, where debt grew by approximately US$ 1.86 billion, marking the largest single-year increment in the observed period.
- Equity Stability
- Stockholders' equity remained comparatively range-bound, fluctuating between a low of US$ 22,390 million in 2016 and a peak of US$ 25,085 million in 2017. The stability of the equity base indicates that the growth in total liabilities was not offset by a proportional increase in shareholder funding.
- Debt-to-Equity Ratio Progression
- The debt-to-equity ratio increased from 0.38 in 2015 to 0.52 in 2019. Although a slight contraction to 0.40 was observed in 2017, the overall five-year trend indicates a growing reliance on debt financing relative to equity. The rise to 0.52 by the end of 2019 suggests a shift toward a more leveraged capital structure.
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Debt to Capital
Phillips 66, debt to capital calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 547) | 67) | 41) | 550) | 44) | |
| Long-term debt | 11,216) | 11,093) | 10,069) | 9,588) | 8,843) | |
| Total debt | 11,763) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Stockholders’ equity | 24,910) | 24,653) | 25,085) | 22,390) | 23,100) | |
| Total capital | 36,673) | 35,813) | 35,195) | 32,528) | 31,987) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.32 | 0.31 | 0.29 | 0.31 | 0.28 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to capital = Total debt ÷ Total capital
= 11,763 ÷ 36,673 = 0.32
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2015 to 2019 reveals a general increase in both total debt and total capital, resulting in a slight upward trend in the company's leverage profile.
- Total Debt Trends
- Total debt exhibited a consistent upward trajectory over the five-year period, rising from 8,887 million US$ in 2015 to 11,763 million US$ by 2019. While a marginal decrease occurred between 2016 and 2017, the overall trend indicates an expansion of borrowed funds, with the most significant annual increase occurring between 2015 and 2016.
- Total Capital Growth
- Total capital increased steadily each year, growing from 31,987 million US$ in 2015 to 36,673 million US$ in 2019. This consistent growth suggests a continuous expansion of the company's overall funding base, encompassing both equity and debt.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained relatively stable, fluctuating within a narrow range between 0.28 and 0.32. After an initial increase from 0.28 in 2015 to 0.31 in 2016, the ratio experienced a slight contraction to 0.29 in 2017 before trending upward to finish at 0.32 in 2019. This indicates that while debt levels rose, they did so in a manner generally proportional to the growth in total capital, maintaining a balanced capital structure with a slight shift toward higher leverage by the end of the period.
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Debt to Capital (including Operating Lease Liability)
Phillips 66, debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 547) | 67) | 41) | 550) | 44) | |
| Long-term debt | 11,216) | 11,093) | 10,069) | 9,588) | 8,843) | |
| Total debt | 11,763) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Operating lease liabilities (included in Other accruals) | 455) | —) | —) | —) | —) | |
| Operating lease liabilities (included in Other liabilities and deferred credits) | 806) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 13,024) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Stockholders’ equity | 24,910) | 24,653) | 25,085) | 22,390) | 23,100) | |
| Total capital (including operating lease liability) | 37,934) | 35,813) | 35,195) | 32,528) | 31,987) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.34 | 0.31 | 0.29 | 0.31 | 0.28 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 13,024 ÷ 37,934 = 0.34
2 Click competitor name to see calculations.
An analysis of the solvency position between 2015 and 2019 reveals a gradual increase in the proportion of debt within the total capital structure. While both total debt and total capital experienced growth over the five-year period, debt increased at a significantly more accelerated pace than total capital.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a consistent upward trajectory, rising from 8,887 million US$ in 2015 to 13,024 million US$ by the end of 2019. This represents a total increase of approximately 46.5% over the period, with a notable acceleration in borrowing observed between 2018 and 2019.
- Total Capital Growth
- Total capital increased steadily from 31,987 million US$ in 2015 to 37,934 million US$ in 2019. The expansion of the capital base was more moderate than the growth in liabilities, totaling an increase of approximately 18.6% over the five-year interval.
- Debt to Capital Ratio Analysis
- The debt to capital ratio moved from 0.28 in 2015 to 0.34 in 2019. Despite a minor contraction to 0.29 in 2017, the overall trend indicates an increasing reliance on debt financing. The rise in this ratio suggests a shift toward a more leveraged financial structure, as the growth in total debt outpaced the growth in the overall capital base.
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Debt to Assets
Phillips 66, debt to assets calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 547) | 67) | 41) | 550) | 44) | |
| Long-term debt | 11,216) | 11,093) | 10,069) | 9,588) | 8,843) | |
| Total debt | 11,763) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Total assets | 58,720) | 54,302) | 54,371) | 51,653) | 48,580) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.20 | 0.21 | 0.19 | 0.20 | 0.18 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to assets = Total debt ÷ Total assets
= 11,763 ÷ 58,720 = 0.20
2 Click competitor name to see calculations.
The solvency position between 2015 and 2019 is characterized by a balanced expansion of both total liabilities and assets, resulting in a stable leverage profile. While absolute debt levels increased over the five-year period, the concurrent growth in the asset base prevented any significant deterioration in the solvency ratio.
- Total Debt Trends
- Total debt exhibited a general upward trajectory, rising from 8,887 million USD in 2015 to 11,763 million USD by 2019. The most pronounced increases occurred between 2015 and 2016 and again from 2017 through 2019, indicating a gradual increase in the use of borrowed capital to fund operations or growth.
- Total Asset Evolution
- Total assets grew steadily from 48,580 million USD in 2015 to 58,720 million USD in 2019. Aside from a marginal plateau observed in 2018, the asset base expanded consistently, providing a stronger foundation to support the increasing debt load.
- Debt to Assets Ratio Analysis
- The debt to assets ratio remained range-bound between 0.18 and 0.21 throughout the period. A slight peak of 0.21 was observed in 2018, which occurred as total debt increased while asset growth remained flat. However, by 2019, the ratio normalized to 0.20 as asset growth accelerated. This stability suggests that the organization maintained a disciplined approach to its capital structure, ensuring that debt accumulation did not outpace asset acquisition.
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Debt to Assets (including Operating Lease Liability)
Phillips 66, debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Short-term debt | 547) | 67) | 41) | 550) | 44) | |
| Long-term debt | 11,216) | 11,093) | 10,069) | 9,588) | 8,843) | |
| Total debt | 11,763) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Operating lease liabilities (included in Other accruals) | 455) | —) | —) | —) | —) | |
| Operating lease liabilities (included in Other liabilities and deferred credits) | 806) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 13,024) | 11,160) | 10,110) | 10,138) | 8,887) | |
| Total assets | 58,720) | 54,302) | 54,371) | 51,653) | 48,580) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.22 | 0.21 | 0.19 | 0.20 | 0.18 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 13,024 ÷ 58,720 = 0.22
2 Click competitor name to see calculations.
Between 2015 and 2019, a consistent increase in financial leverage is observed, characterized by a steady rise in both total debt and total assets. While the asset base expanded over the five-year period, the growth in debt obligations, including operating lease liabilities, occurred at a more rapid pace, leading to a gradual upward trend in the debt-to-assets ratio.
- Total Debt Evolution
- Total debt experienced a continuous upward trajectory, rising from 8,887 million US dollars in 2015 to 13,024 million US dollars by 2019. The most significant absolute increase occurred between 2018 and 2019, where debt rose by approximately 1.86 billion US dollars.
- Asset Base Expansion
- Total assets demonstrated a steady growth pattern, increasing from 48,580 million US dollars in 2015 to 58,720 million US dollars in 2019. This growth indicates a consistent expansion of the company's resources over the analyzed period.
- Debt to Assets Ratio Interpretation
- The debt-to-assets ratio shifted from 0.18 in 2015 to 0.22 in 2019. This progression indicates that a larger proportion of the company's assets was financed through debt by the end of the period. Although the ratio increased, it remained relatively low, suggesting that the company maintained a conservative solvency position despite the increasing reliance on borrowed funds.
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Financial Leverage
Phillips 66, financial leverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 58,720) | 54,302) | 54,371) | 51,653) | 48,580) | |
| Stockholders’ equity | 24,910) | 24,653) | 25,085) | 22,390) | 23,100) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.36 | 2.20 | 2.17 | 2.31 | 2.10 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity
= 58,720 ÷ 24,910 = 2.36
2 Click competitor name to see calculations.
Between 2015 and 2019, the company's asset base grew consistently while equity levels remained relatively stable. This divergence resulted in a gradual increase in financial leverage, signaling a shift toward a more leveraged capital structure to support the expansion of total assets.
- Total Assets Growth
- A sustained upward trajectory is observed in total assets, which rose from US$ 48,580 million in 2015 to US$ 58,720 million by 2019. This represents a total increase of approximately 20.8% over the analyzed period, with the most significant growth occurring between 2018 and 2019.
- Stockholders' Equity Stability
- Equity levels exhibited minimal variance, fluctuating between a low of US$ 22,390 million in 2016 and a peak of US$ 25,085 million in 2017. The final value of US$ 24,910 million in 2019 indicates that stockholders' equity remained nearly flat relative to the growth seen in the asset base.
- Financial Leverage Ratio Trends
- The financial leverage ratio fluctuated throughout the period, starting at 2.10 in 2015 and reaching a peak of 2.36 by 2019. After an initial spike in 2016 and a subsequent correction in 2017, the ratio trended upward. This progression suggests an increasing reliance on debt or liabilities to finance the growth of assets, as the ratio of total assets to equity expanded over the five-year duration.
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Interest Coverage
Phillips 66, interest coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Phillips 66 | 3,076) | 5,595) | 5,106) | 1,555) | 4,227) | |
| Add: Net income attributable to noncontrolling interest | 301) | 278) | 142) | 89) | 53) | |
| Add: Income tax expense | 801) | 1,572) | (1,693) | 547) | 1,764) | |
| Add: Interest and debt expense | 458) | 504) | 438) | 338) | 310) | |
| Earnings before interest and tax (EBIT) | 4,636) | 7,949) | 3,993) | 2,529) | 6,354) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 10.12 | 15.77 | 9.12 | 7.48 | 20.50 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Interest coverage = EBIT ÷ Interest expense
= 4,636 ÷ 458 = 10.12
2 Click competitor name to see calculations.
The solvency profile between 2015 and 2019 is characterized by significant volatility in operating earnings, which directly impacted the capacity to service debt obligations. While the interest coverage ratio fluctuated, it remained at levels indicating a consistent ability to meet interest payments throughout the period.
- Earnings Before Interest and Tax (EBIT)
- Operating performance experienced substantial variance, with a notable decline from US$ 6,354 million in 2015 to a period low of US$ 2,529 million in 2016. A strong recovery followed, peaking at US$ 7,949 million in 2018, before moderating to US$ 4,636 million by the end of 2019.
- Interest and Debt Expense
- Interest and debt costs exhibited a steady upward trend for the majority of the analyzed period, increasing from US$ 310 million in 2015 to a peak of US$ 504 million in 2018. A slight reduction to US$ 458 million was recorded in 2019.
- Interest Coverage Ratio
- The coverage ratio mirrored the volatility of EBIT, dropping sharply from 20.50 in 2015 to 7.48 in 2016. The ratio recovered to 15.77 in 2018, coinciding with the peak in operating earnings, before descending to 10.12 in 2019. Despite these fluctuations, the ratio consistently remained well above the critical threshold of 1.0, suggesting that a sufficient margin of safety was maintained to cover interest expenses.
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Fixed Charge Coverage
Phillips 66, fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Phillips 66 | 3,076) | 5,595) | 5,106) | 1,555) | 4,227) | |
| Add: Net income attributable to noncontrolling interest | 301) | 278) | 142) | 89) | 53) | |
| Add: Income tax expense | 801) | 1,572) | (1,693) | 547) | 1,764) | |
| Add: Interest and debt expense | 458) | 504) | 438) | 338) | 310) | |
| Earnings before interest and tax (EBIT) | 4,636) | 7,949) | 3,993) | 2,529) | 6,354) | |
| Add: Operating lease cost | 531) | 669) | 680) | 669) | 641) | |
| Earnings before fixed charges and tax | 5,167) | 8,618) | 4,673) | 3,198) | 6,995) | |
| Interest and debt expense | 458) | 504) | 438) | 338) | 310) | |
| Operating lease cost | 531) | 669) | 680) | 669) | 641) | |
| Fixed charges | 989) | 1,173) | 1,118) | 1,007) | 951) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 5.22 | 7.35 | 4.18 | 3.18 | 7.36 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Chevron Corp. | — | — | — | — | — | |
| ConocoPhillips | — | — | — | — | — | |
| Exxon Mobil Corp. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 5,167 ÷ 989 = 5.22
2 Click competitor name to see calculations.
The analysis of solvency between 2015 and 2019 reveals significant volatility in the capacity to cover fixed obligations, driven primarily by fluctuations in earnings rather than changes in the cost of fixed charges.
- Earnings before fixed charges and tax
- Earnings exhibited substantial variance over the five-year period. A sharp decline occurred in 2016, where earnings dropped to 3,198 million US dollars from 6,995 million US dollars in 2015. This was followed by a strong recovery trend, peaking in 2018 at 8,618 million US dollars before retreating to 5,167 million US dollars in 2019.
- Fixed charges
- Fixed charges remained relatively stable compared to earnings. There was a gradual increase from 951 million US dollars in 2015 to a peak of 1,173 million US dollars in 2018, followed by a reduction to 989 million US dollars in 2019. The stability of these obligations suggests a consistent capital structure during the period analyzed.
- Fixed charge coverage ratio
- The coverage ratio mirrors the volatility of earnings. The ratio fell from 7.36 in 2015 to a period low of 3.18 in 2016, indicating a tightened margin of safety. A subsequent recovery saw the ratio return to 7.35 by 2018, effectively restoring the solvency position to 2015 levels. By 2019, the ratio moderated to 5.22. Despite these fluctuations, the ratio remained consistently above 3.0, suggesting that the entity maintained a sufficient cushion to meet its fixed financial commitments throughout the analyzed timeframe.
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