Long-term Debt and Solvency Analysis

Difficulty level: Basic

Solvency ratios also known as long-term debt ratios measure a company's ability to meet long-term obligations.


Ratios (Summary)

Target Corp., debt and solvency ratios

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Debt to equity 0.91 0.85 1.07 1.11 1.02 1.10
Debt to capital 0.48 0.46 0.52 0.52 0.50 0.52
Interest coverage 5.14 3.76 7.05 6.15 6.94 5.83

Source: Based on data from Target Corp. Annual Reports

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Target Corp.'s debt-to-equity ratio improved from 2013 to 2014 but then slightly deteriorated from 2014 to 2015.
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Target Corp.'s debt-to-capital ratio improved from 2013 to 2014 but then slightly deteriorated from 2014 to 2015.
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Target Corp.'s interest coverage ratio deteriorated from 2013 to 2014 but then slightly improved from 2014 to 2015.

ADVERTISEMENT

Top


Debt to Equity

Target Corp., debt to equity calculation, comparison to benchmarks

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Current portion of long-term debt and other borrowings 91  1,160  2,994  3,786  119  1,696 
Long-term debt and other borrowings, excluding current portion 12,705  12,622  14,654  13,697  15,607  15,118 
Total debt 12,796  13,782  17,648  17,483  15,726  16,814 
Shareholders' investment 13,997  16,231  16,558  15,821  15,487  15,347 
Ratio
Debt to equity1 0.91 0.85 1.07 1.11 1.02 1.10
Benchmarks
Debt to Equity, Competitors
Amazon.com Inc. 1.50 0.71 0.61 0.25 0.13
Wal-Mart Stores Inc. 0.74 0.71 0.75 0.73 0.58
Debt to Equity, Sector
Broadline Retailers 0.84 0.77 0.80 0.74 0.63
Debt to Equity, Industry
Consumer Services 0.71 0.62 0.58 0.54 0.48

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 Debt to equity = Total debt ÷ Shareholders' investment
= 12,796 ÷ 13,997 = 0.91

Ratio Description The company
Debt-to-equity ratio A solvency ratio calculated as total debt divided by total shareholders' equity. Target Corp.'s debt-to-equity ratio improved from 2013 to 2014 but then slightly deteriorated from 2014 to 2015.

ADVERTISEMENT

Top


Debt to Capital

Target Corp., debt to capital calculation, comparison to benchmarks

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Current portion of long-term debt and other borrowings 91  1,160  2,994  3,786  119  1,696 
Long-term debt and other borrowings, excluding current portion 12,705  12,622  14,654  13,697  15,607  15,118 
Total debt 12,796  13,782  17,648  17,483  15,726  16,814 
Shareholders' investment 13,997  16,231  16,558  15,821  15,487  15,347 
Total capital 26,793  30,013  34,206  33,304  31,213  32,161 
Ratio
Debt to capital1 0.48 0.46 0.52 0.52 0.50 0.52
Benchmarks
Debt to Capital, Competitors
Amazon.com Inc. 0.60 0.42 0.38 0.20 0.11
Wal-Mart Stores Inc. 0.43 0.41 0.43 0.42 0.37
Debt to Capital, Sector
Broadline Retailers 0.46 0.43 0.44 0.42 0.39
Debt to Capital, Industry
Consumer Services 0.42 0.38 0.37 0.35 0.32

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 Debt to capital = Total debt ÷ Total capital
= 12,796 ÷ 26,793 = 0.48

Ratio Description The company
Debt-to-capital ratio A solvency ratio calculated as total debt divided by total debt plus shareholders' equity. Target Corp.'s debt-to-capital ratio improved from 2013 to 2014 but then slightly deteriorated from 2014 to 2015.

ADVERTISEMENT

Top


Interest Coverage

Target Corp., interest coverage calculation, comparison to benchmarks

 
Jan 31, 2015 Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010
Selected Financial Data (USD $ in millions)
Net earnings (loss) (1,636) 1,971  2,999  2,929  2,920  2,488 
Less: Discontinued operations, net of tax (4,085)
Add: Income tax expense 1,204  1,132  1,610  1,527  1,575  1,384 
Add: Net interest expense 882  1,126  762  866  757  801 
Earnings before interest and tax (EBIT) 4,535  4,229  5,371  5,322  5,252  4,673 
Ratio
Interest coverage1 5.14 3.76 7.05 6.15 6.94 5.83
Benchmarks
Interest Coverage, Competitors
Amazon.com Inc. 0.65 4.09 5.23 15.18 39.56
Wal-Mart Stores Inc. 11.56 12.43 11.51 11.67 11.69
Interest Coverage, Sector
Broadline Retailers 8.54 10.76 9.92 10.57 10.45
Interest Coverage, Industry
Consumer Services 9.81 10.35 9.47 9.55 8.70

Source: Based on data from Target Corp. Annual Reports

2015 Calculations

1 Interest coverage = EBIT ÷ Interest expense
= 4,535 ÷ 882 = 5.14

Ratio Description The company
Interest coverage ratio A solvency ratio calculated as EBIT divided by interest payments. Target Corp.'s interest coverage ratio deteriorated from 2013 to 2014 but then slightly improved from 2014 to 2015.

ADVERTISEMENT

Top