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)
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 financial data reveals several notable trends in leverage and coverage ratios over the five-year period ending December 31, 2019. Overall, the company's leverage position has shown slight increases across most measures, while coverage ratios exhibit some volatility.
- Debt to Equity Ratios
- The standard debt to equity ratio started at 0.38 in 2015, increased to 0.45 in 2016, dipped slightly to 0.40 in 2017, then rose again to 0.45 in 2018, and further to 0.47 in 2019. When including operating lease liabilities, this ratio follows a similar pattern but ends higher at 0.52 in 2019, indicating an increasing reliance on leased obligations as part of total liabilities.
- Debt to Capital Ratios
- The ratio of debt to capital reflects a modest upward trend, starting at 0.28 in 2015 and moving to 0.32 by 2019. Including operating lease liabilities intensifies this trend slightly, with the ratio rising from 0.28 to 0.34 over the same period. This suggests a gradual increase in the proportion of capital financed through debt and lease-related liabilities.
- Debt to Assets Ratios
- Debt to assets displayed relative stability, beginning at 0.18 in 2015 and fluctuating minimally to 0.20 in 2019. Including operating lease liabilities, however, shows a slight increase, ending at 0.22 in 2019 compared to 0.18 in 2015. This indicates that debt, when including leases, represents a growing portion of total asset financing.
- Financial Leverage
- The financial leverage ratio showed increases from 2.10 in 2015 to 2.36 in 2019, with a dip in 2017 (2.17) but a general rising trend. This implies the company’s assets are increasingly financed by debt or obligations, magnifying potential returns as well as risks.
- Interest Coverage Ratio
- The interest coverage ratio exhibited notable volatility. It dropped sharply from a strong position of 20.5 in 2015 to a low of 7.48 in 2016, improved modestly to 9.12 in 2017, further increased to 15.77 in 2018, then declined again to 10.12 in 2019. Despite fluctuations, the ratio remained above 7 in the latter years, indicating reasonable but somewhat inconsistent ability to cover interest expenses.
- Fixed Charge Coverage Ratio
- This ratio tracked a similar pattern to interest coverage, falling from 7.36 in 2015 to a low of 3.18 in 2016, improving to 4.18 in 2017, returning close to its initial level at 7.35 in 2018, and falling again to 5.22 in 2019. Such variation suggests uneven capacity to cover fixed financial obligations, although it remained at levels generally indicating moderate coverage.
In summary, the data indicates a gradual increase in leverage measures, particularly when including operating lease liabilities, reflecting growing financial commitments. Coverage ratios reveal some instability, which may warrant monitoring to ensure sustained ability to meet interest and fixed charges under varying operational conditions.
Debt Ratios
Coverage Ratios
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. | — | — | — | — | — | |
| Occidental Petroleum 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.
The financial data reveals several key trends regarding the company's capital structure over the five-year period ending December 31, 2019.
- Total Debt
- Total debt demonstrates a consistent upward trajectory throughout the period. Starting at 8,887 million US dollars at the end of 2015, it increased annually, reaching 11,763 million US dollars by the end of 2019. This suggests a growing reliance on borrowed funds or financing activities increasing over time.
- Stockholders’ Equity
- Equity levels fluctuated throughout the timeframe. The equity value initially decreased from 23,100 million US dollars in 2015 to 22,390 million in 2016. Subsequently, it rose sharply to 25,085 million in 2017 but then saw a slight decline to 24,653 million in 2018 before marginally increasing again to 24,910 million in 2019. Despite some volatility, equity remained roughly stable, ending slightly higher than the initial amount.
- Debt to Equity Ratio
- The debt to equity ratio increased overall, indicating a gradual shift toward greater leverage. Beginning at 0.38 in 2015, it moved up to 0.45 in 2016, decreased somewhat to 0.40 in 2017, but then consistently increased again to 0.45 in 2018 and further to 0.47 by 2019. This pattern reflects strengthening debt levels compared to equity, with the company assuming moderately more financial risk.
In summary, the company exhibited growing indebtedness alongside relatively stable equity over these years. The incremental rise in the debt to equity ratio illustrates a cautious increase in leverage. While equity shows some variation, the overall capital structure is trending toward a higher proportion of debt financing by the end of the period, which may impact risk and return dynamics going forward.
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. | — | — | — | — | — | |
| Occidental Petroleum 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.
The financial data reveals trends in debt levels, equity, and leverage ratios over the five-year period ending December 31, 2019.
- Total Debt (including operating lease liability)
- The total debt exhibited a generally increasing trend. Starting at $8,887 million in 2015, the debt rose steadily each year, reaching $13,024 million by 2019. This represents an increase of approximately 46.6% over the period, indicating a growing reliance on debt financing.
- Stockholders’ Equity
- Stockholders’ equity experienced moderate fluctuations. Initially valued at $23,100 million in 2015, it decreased slightly in 2016 to $22,390 million. However, equity rebounded in 2017 to $25,085 million, followed by minor declines and stabilization, ending at $24,910 million in 2019. Overall, equity increased modestly by around 7.8% from 2015 to 2019, suggesting relative stability in the company’s net asset base.
- Debt to Equity Ratio (including operating lease liability)
- The debt to equity ratio evidenced an upward trend, indicating increased leverage over the assessed years. Starting at 0.38 in 2015, the ratio rose to 0.45 in 2016, decreased slightly to 0.40 in 2017, then increased again to 0.45 in 2018 and further to 0.52 in 2019. The progression suggests a higher proportion of debt relative to equity, reflecting a shift towards greater financial leverage and potential risk.
In summary, the data indicate that the entity has incrementally increased its debt alongside relatively stable equity, resulting in rising leverage. This pattern could signal strategic decisions to fund operations or investments through debt, accompanied by a maintained equity position. The increased leverage warrants attention to debt servicing capabilities and financial risk management in future periods.
Debt to Capital
Phillips 66, debt to capital calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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. | — | — | — | — | — | |
| Occidental Petroleum 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.
- Total Debt
- Over the five-year period, total debt exhibits a generally increasing trend. Starting at 8,887 million US$ in 2015, it rises steadily each year to reach 11,763 million US$ by the end of 2019. This represents an approximate 32% increase over the observed time frame, indicating a consistent reliance on debt financing.
- Total Capital
- Total capital also shows a gradual upward movement, beginning at 31,987 million US$ in 2015 and reaching 36,673 million US$ by 2019. The increase is more moderate compared to total debt, with an overall growth of roughly 15%. This suggests a steady strengthening of the company’s capital base.
- Debt to Capital Ratio
- The debt to capital ratio fluctuates mildly but remains within a narrow range from 0.28 to 0.32 over the five years. Starting at 0.28 in 2015, the ratio peaks at 0.32 in 2019, reflecting a slight increase in debt relative to the company's total capital. This indicates the company has maintained a relatively stable capital structure despite the rising levels of total debt and total capital.
- Summary of Trends
- The data reflects a consistent rise in both total debt and total capital, with debt increasing at a slightly faster pace. The marginal increase in the debt to capital ratio suggests a cautious but noticeable shift towards greater leverage. Overall, the financial structure appears stable with incremental growth in capital and controlled increments in borrowing, implying deliberate management of financing sources.
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. | — | — | — | — | — | |
| Occidental Petroleum 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.
The financial data reveals key insights into the company's capital structure over the five-year period from 2015 to 2019.
- Total Debt (including operating lease liability)
- The total debt showed a consistent upward trajectory, rising from $8,887 million in 2015 to $13,024 million in 2019. This represents an increase of approximately 46.5% over the period, indicating a growing reliance on debt financing or an expansion strategy that required increased borrowing.
- Total Capital (including operating lease liability)
- The total capital also experienced growth, increasing from $31,987 million in 2015 to $37,934 million in 2019. This growth, while positive, was more moderate compared to the increase in total debt, amounting to around 18.6%. The increase in capital suggests continued investment or asset base expansion, though at a generally slower rate than debt accumulation.
- Debt to Capital Ratio (including operating lease liability)
- The debt to capital ratio exhibited fluctuations but an overall upward trend, starting at 0.28 in 2015 and ending at 0.34 in 2019. The ratio indicates the proportion of debt in the total capital structure, reflecting a gradual increase in leverage over the period. This rise signals that debt is becoming a more prominent component of the company’s financing mix, reaching a slightly more leveraged position in 2019 compared to 2015.
Overall, the data indicates that while the company has grown its capital base, it has increasingly financed this growth through debt. The increasing leverage might warrant attention regarding debt management and financial risk in future periods.
Debt to Assets
Phillips 66, debt to assets calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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. | — | — | — | — | — | |
| Occidental Petroleum 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 financial data over the five-year period indicates several trends related to the company's debt and asset management.
- Total debt
- The total debt has increased consistently from 8,887 million US dollars at the end of 2015 to 11,763 million US dollars by the end of 2019. This represents a steady rise in debt obligations, with an approximate total increase of 32% over the period.
- Total assets
- Total assets also exhibited growth during the same timeframe, rising from 48,580 million US dollars at the end of 2015 to 58,720 million US dollars by the end of 2019. The increase in assets is approximately 21%, indicating the company has been expanding its asset base.
- Debt to assets ratio
- The debt to assets ratio has remained relatively stable, fluctuating narrowly between 0.18 and 0.21. Specifically, it started at 0.18 in 2015, peaked at 0.21 in 2018, and then slightly decreased again to 0.20 by 2019. This suggests that although the absolute levels of both debt and assets increased, the proportion of debt relative to assets has maintained a consistent balance without significant volatility.
Overall, the data suggest that while the company has increased both its debt and assets over the analyzed period, it has managed to keep its leverage at a steady level, maintaining a relatively conservative capital structure in terms of debt utilization relative to total assets.
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. | — | — | — | — | — | |
| Occidental Petroleum 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.
The financial data indicates an upward trend in total debt, which increased from $8,887 million in 2015 to $13,024 million in 2019. This demonstrates a rising reliance on debt financing over the five-year period.
Total assets consistently grew during the same period, moving from $48,580 million in 2015 to $58,720 million in 2019. The asset growth suggests ongoing investment or expansion activities.
The debt to assets ratio experienced a gradual increase, starting at 0.18 in 2015 and reaching 0.22 in 2019. This rise shows a slight increase in leverage, indicating the company's debt is growing at a slightly faster pace compared to its asset base.
- Total Debt (including operating lease liability)
- Steady increase over five years, reaching approximately 46.5% growth.
- Total Assets
- Consistent asset growth with an increase of about 20.9% from 2015 to 2019.
- Debt to Assets Ratio
- Gradual rise from 0.18 to 0.22 indicates a moderate increase in financial leverage.
Overall, the company shows a trend of growth in both assets and debt, with leverage increasing at a controlled and moderate rate. This suggests a balanced approach to financing expansion, although the increasing proportion of debt warrants continued monitoring to ensure financial stability.
Financial Leverage
Phillips 66, financial leverage calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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. | — | — | — | — | — | |
| Occidental Petroleum 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.
The financial data exhibits certain distinct trends in the analyzed period spanning from 2015 to 2019.
- Total assets
- The total assets show a generally upward trajectory, increasing from 48,580 million USD in 2015 to 58,720 million USD by the end of 2019. This demonstrates a steady growth in asset base, although the increase was more moderate between 2017 and 2018, with a slight dip from 54,371 to 54,302 million USD.
- Stockholders’ equity
- Stockholders’ equity experienced slight fluctuations within the period. It started at 23,100 million USD in 2015, declined to 22,390 million USD in 2016, and then rebounded to 25,085 million USD in 2017. After a marginal decrease in 2018 to 24,653 million USD, there was a small rise again in 2019 reaching 24,910 million USD. Overall, equity levels show modest variability but remain relatively stable around the 24,000 to 25,000 million USD range towards the latter years.
- Financial leverage
- Financial leverage ratios indicate a fluctuating pattern with an increasing trend over the timeframe. Starting at 2.1 in 2015, the ratio rose to 2.31 in 2016, dipped slightly to 2.17 in 2017, then increased to 2.2 in 2018, and reached the highest level of 2.36 by the close of 2019. This trend suggests a gradual increase in the reliance on debt relative to equity to finance the company’s assets.
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. | — | — | — | — | — | |
| Occidental Petroleum 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 financial data demonstrates notable fluctuations in earnings before interest and tax (EBIT) over the five-year period. EBIT experienced a significant decline from 6,354 million US dollars in 2015 to 2,529 million US dollars in 2016, followed by a recovery to 3,993 million US dollars in 2017. A substantial increase occurred in 2018, reaching 7,949 million US dollars, before decreasing again to 4,636 million US dollars in 2019.
Interest and debt expense showed a relatively steady upward trend from 310 million US dollars in 2015 to a peak of 504 million US dollars in 2018, with a slight reduction to 458 million US dollars in 2019.
The interest coverage ratio, which measures the company's ability to cover interest expenses with EBIT, aligned closely with the EBIT trend. It declined sharply from 20.5 in 2015 to a low of 7.48 in 2016, improved to 9.12 in 2017, then increased markedly to 15.77 in 2018, before falling to 10.12 in 2019. Despite the fluctuations, the ratio remained above 7, indicating the company maintained sufficient coverage of interest expenses throughout the period.
- Earnings before interest and tax (EBIT)
- Displayed strong volatility, with a marked dip in 2016, gradual recovery, and peak in 2018.
- Interest and debt expense
- Incrementally increased over the period, peaking in 2018 with a slight decrease thereafter.
- Interest coverage ratio
- Correlated with EBIT trends, experienced substantial variation but remained at levels reflecting adequate interest coverage.
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. | — | — | — | — | — | |
| Occidental Petroleum 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 financial data reveals notable fluctuations in earnings before fixed charges and taxes over the five-year period. The value experienced a significant decline from 6995 million US dollars in 2015 to 3198 million US dollars in 2016. This was followed by a recovery phase with earnings rising to 4673 million US dollars in 2017 and sharply increasing to a peak of 8618 million US dollars in 2018. However, in 2019, earnings dropped again to 5167 million US dollars.
Fixed charges show a relatively stable trend with minor variations. The charges increased gradually from 951 million US dollars in 2015 to a maximum of 1173 million US dollars in 2018, before decreasing to 989 million US dollars in 2019. The changes in fixed charges are less pronounced than the fluctuations observed in earnings.
The fixed charge coverage ratio, reflecting the ability to cover fixed charges through earnings, moves in tandem with earnings but shows lower volatility compared to earnings alone. It drops significantly from 7.36 in 2015 to 3.18 in 2016, indicating reduced coverage capacity. This ratio improves to 4.18 in 2017 and nearly returns to the 2015 level at 7.35 in 2018, showing enhanced capacity to cover fixed charges. In 2019, the ratio declines again to 5.22, which still represents reasonable coverage but is below the earlier peak.
Overall, the data indicates cyclical earnings performance with a strong correlation to the fixed charge coverage. Fixed charges remain relatively consistent, but the ability to cover them fluctuates primarily due to changes in earnings before fixed charges and tax. This suggests sensitivity to operational income variations, which directly impact financial risk coverage.