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
Time Warner Cable Inc., solvency ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
An analysis of the solvency ratios from 2011 to 2015 indicates a consistent trend toward deleveraging and a strengthening of the overall balance sheet structure. There is a visible reduction in the reliance on debt relative to assets and equity, accompanied by a stable capacity to meet fixed financial obligations.
- Debt Structure and Asset Composition
- A sustained downward trend is observed across all primary debt ratios. The debt to equity ratio decreased from 3.51 in 2011 to 2.50 in 2015, reflecting a significant reduction in leverage relative to shareholders' equity. Similarly, the debt to assets ratio declined from 0.55 to 0.46 over the same period, while the debt to capital ratio moved from 0.78 to 0.71, confirming a shift toward a more conservative capital structure.
- Financial Leverage
- Financial leverage exhibited a peak in 2013 at 6.95 after rising from 6.41 in 2011. However, a notable contraction followed, with the ratio falling to 6.05 in 2014 and further to 5.48 by the end of 2015, aligning with the overall trend of reducing financial risk.
- Debt Service Coverage
- The ability to service debt remained stable and showed modest improvement over the five-year window. The interest coverage ratio rose from 2.62 in 2011 to 3.13 in 2015, while the fixed charge coverage ratio increased from 2.43 to 2.75. These metrics suggest that operational earnings remained sufficient to cover interest and other fixed obligations throughout the period.
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Debt to Equity
Time Warner Cable Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | 5) | 1,017) | 1,767) | 1,518) | 2,122) | |
| Long-term debt, excluding current maturities | 22,497) | 22,701) | 23,285) | 25,171) | 24,320) | |
| Total debt | 22,502) | 23,718) | 25,052) | 26,689) | 26,442) | |
| Total TWC shareholders’ equity | 8,995) | 8,013) | 6,943) | 7,279) | 7,530) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 2.50 | 2.96 | 3.61 | 3.67 | 3.51 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to equity = Total debt ÷ Total TWC shareholders’ equity
= 22,502 ÷ 8,995 = 2.50
2 Click competitor name to see calculations.
The solvency profile demonstrates a consistent improvement in financial leverage and stability between 2011 and 2015. A systematic reduction in total liabilities combined with a strengthening equity base resulted in a marked decrease in the debt-to-equity ratio over the analyzed period.
- Total Debt Trends
- Total debt experienced a slight increase in 2012, reaching a peak of US$ 26,689 million. Subsequently, a steady downward trend is observed, with total debt falling to US$ 22,502 million by December 31, 2015. This represents a total reduction of approximately US$ 4.18 billion from the 2012 peak, suggesting a concerted effort to deleverage the balance sheet.
- Shareholders' Equity Evolution
- Equity levels showed initial volatility, declining from US$ 7,530 million in 2011 to a low of US$ 6,943 million in 2013. Following this trough, a significant recovery phase occurred, with equity growing to US$ 8,995 million by the end of 2015. This upward trajectory indicates an increase in the organization's internal funding and net asset value.
- Debt to Equity Ratio Analysis
- The debt-to-equity ratio peaked at 3.67 in 2012, reflecting a period of high financial leverage. From 2013 onward, a continuous and accelerating decline is evident, with the ratio dropping to 2.50 by 2015. The simultaneous decrease in total debt and increase in shareholders' equity contributed to this improvement, signaling a transition toward a more conservative capital structure and enhanced solvency.
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Debt to Capital
Time Warner Cable Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | 5) | 1,017) | 1,767) | 1,518) | 2,122) | |
| Long-term debt, excluding current maturities | 22,497) | 22,701) | 23,285) | 25,171) | 24,320) | |
| Total debt | 22,502) | 23,718) | 25,052) | 26,689) | 26,442) | |
| Total TWC shareholders’ equity | 8,995) | 8,013) | 6,943) | 7,279) | 7,530) | |
| Total capital | 31,497) | 31,731) | 31,995) | 33,968) | 33,972) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.71 | 0.75 | 0.78 | 0.79 | 0.78 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to capital = Total debt ÷ Total capital
= 22,502 ÷ 31,497 = 0.71
2 Click competitor name to see calculations.
Between 2011 and 2015, a consistent trend of deleveraging is observed. Although both total debt and total capital decreased over the majority of this period, the reduction in debt occurred at a faster rate, resulting in a strengthened solvency position.
- Total Debt Trends
- Total debt experienced a marginal increase between 2011 and 2012, reaching a peak of US$ 26,689 million. Subsequently, a continuous downward trend was established, with debt levels falling to US$ 22,502 million by December 31, 2015.
- Total Capital Trends
- Total capital remained relatively flat between 2011 and 2012 before initiating a gradual decline. The total capital base decreased from US$ 33,972 million in 2011 to US$ 31,497 million in 2015.
- Debt to Capital Ratio Analysis
- The debt to capital ratio peaked at 0.79 in 2012. Following this peak, the ratio declined steadily for three consecutive years, ending at 0.71 in 2015. This trajectory indicates a systematic reduction in the proportion of debt relative to the overall capital structure.
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Debt to Assets
Time Warner Cable Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | 5) | 1,017) | 1,767) | 1,518) | 2,122) | |
| Long-term debt, excluding current maturities | 22,497) | 22,701) | 23,285) | 25,171) | 24,320) | |
| Total debt | 22,502) | 23,718) | 25,052) | 26,689) | 26,442) | |
| Total assets | 49,277) | 48,501) | 48,273) | 49,809) | 48,276) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.46 | 0.49 | 0.52 | 0.54 | 0.55 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Debt to assets = Total debt ÷ Total assets
= 22,502 ÷ 49,277 = 0.46
2 Click competitor name to see calculations.
The solvency profile of the organization exhibits a consistent improvement in leverage management from 2011 to 2015. This positive trend is characterized by a strategic reduction in total liabilities relative to the asset base, indicating a decrease in financial risk and a strengthened balance sheet.
- Total Debt Trends
- Total debt experienced a slight increase from US$ 26,442 million in 2011 to US$ 26,689 million in 2012, followed by a sustained downward trajectory. By December 31, 2015, total debt was reduced to US$ 22,502 million, representing a total decrease of approximately 14.9% from the 2011 baseline.
- Asset Base Stability
- Total assets remained relatively stable throughout the analyzed period, fluctuating within a narrow range. Assets peaked at US$ 49,809 million in 2012 and concluded the period at US$ 49,277 million in 2015, demonstrating a consistent capacity to maintain the organization's resource base while simultaneously reducing obligations.
- Debt to Assets Ratio Analysis
- The debt to assets ratio declined steadily every year, moving from 0.55 in 2011 to 0.46 in 2015. This continuous contraction of the ratio confirms that a smaller proportion of the organization's assets is financed through debt, signaling an improvement in overall solvency and a reduction in long-term financial leverage.
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Financial Leverage
Time Warner Cable Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 49,277) | 48,501) | 48,273) | 49,809) | 48,276) | |
| Total TWC shareholders’ equity | 8,995) | 8,013) | 6,943) | 7,279) | 7,530) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 5.48 | 6.05 | 6.95 | 6.84 | 6.41 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Financial leverage = Total assets ÷ Total TWC shareholders’ equity
= 49,277 ÷ 8,995 = 5.48
2 Click competitor name to see calculations.
The financial solvency profile between 2011 and 2015 is characterized by an initial increase in financial leverage followed by a consistent deleveraging trend. While total assets remained relatively stable throughout the period, fluctuations in shareholders' equity served as the primary driver for the changes in the leverage ratio.
- Total Asset Stability
- Total assets exhibited minimal volatility over the five-year period, starting at 48,276 million USD in 2011 and ending at 49,277 million USD in 2015. A slight peak was reached in 2012 at 49,809 million USD, followed by a moderate contraction in 2013, indicating a stable asset base.
- Shareholders' Equity Trends
- A distinct U-shaped pattern is observed in shareholders' equity. Equity declined from 7,530 million USD in 2011 to a period low of 6,943 million USD in 2013. This trend reversed sharply starting in 2014, with equity rising to 8,013 million USD and further increasing to 8,995 million USD by the end of 2015.
- Financial Leverage Analysis
- The financial leverage ratio mirrored the inverse movement of shareholders' equity. The ratio rose from 6.41 in 2011 to a peak of 6.95 in 2013, reflecting an increased reliance on debt during the period of equity contraction. Subsequently, a significant downward trend occurred, with the ratio falling to 6.05 in 2014 and reaching 5.48 by 2015. This decline suggests a strengthened solvency position and a reduced risk profile regarding long-term financial obligations.
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Interest Coverage
Time Warner Cable Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to TWC shareholders | 1,844) | 2,031) | 1,954) | 2,155) | 1,665) | |
| Add: Net income attributable to noncontrolling interest | —) | —) | —) | 4) | 2) | |
| Add: Income tax expense | 1,144) | 1,217) | 1,085) | 1,177) | 795) | |
| Add: Interest expense | 1,402) | 1,419) | 1,555) | 1,614) | 1,524) | |
| Earnings before interest and tax (EBIT) | 4,390) | 4,667) | 4,594) | 4,950) | 3,986) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 3.13 | 3.29 | 2.95 | 3.07 | 2.62 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Interest coverage = EBIT ÷ Interest expense
= 4,390 ÷ 1,402 = 3.13
2 Click competitor name to see calculations.
The analysis of solvency ratios between 2011 and 2015 indicates a general improvement in the capacity to meet interest obligations. While earnings and expenses experienced periodic volatility, the overall trend suggests a strengthened margin of safety for debt servicing over the five-year period.
- Earnings Before Interest and Tax (EBIT)
- EBIT exhibited a significant increase from 3,986 million USD in 2011 to a peak of 4,950 million USD in 2012. Following this growth, earnings entered a period of relative stability characterized by slight fluctuations, concluding at 4,390 million USD in 2015. Despite the moderate decline from the 2012 peak, operational earnings remained consistently higher than the 2011 levels.
- Interest Expense
- Interest costs peaked in 2012 at 1,614 million USD. Subsequent to this peak, a consistent downward trend is observed, with expenses decreasing annually to 1,402 million USD by 2015. This reduction in annual interest outlays contributed positively to the company's solvency profile.
- Interest Coverage Ratio
- The interest coverage ratio improved from 2.62 in 2011 to 3.13 in 2015. The ratio reached its maximum value in 2014 at 3.29, reflecting the combined effect of stable operational earnings and declining interest expenses. The maintenance of the ratio above 3.0 for the majority of the period indicates a more robust ability to cover interest payments compared to the 2011 baseline.
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Fixed Charge Coverage
Time Warner Cable Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to TWC shareholders | 1,844) | 2,031) | 1,954) | 2,155) | 1,665) | |
| Add: Net income attributable to noncontrolling interest | —) | —) | —) | 4) | 2) | |
| Add: Income tax expense | 1,144) | 1,217) | 1,085) | 1,177) | 795) | |
| Add: Interest expense | 1,402) | 1,419) | 1,555) | 1,614) | 1,524) | |
| Earnings before interest and tax (EBIT) | 4,390) | 4,667) | 4,594) | 4,950) | 3,986) | |
| Add: Rent expense | 305) | 298) | 257) | 237) | 202) | |
| Earnings before fixed charges and tax | 4,695) | 4,965) | 4,851) | 5,187) | 4,188) | |
| Interest expense | 1,402) | 1,419) | 1,555) | 1,614) | 1,524) | |
| Rent expense | 305) | 298) | 257) | 237) | 202) | |
| Fixed charges | 1,707) | 1,717) | 1,812) | 1,851) | 1,726) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 2.75 | 2.89 | 2.68 | 2.80 | 2.43 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Alphabet Inc. | — | — | — | — | — | |
| Comcast Corp. | — | — | — | — | — | |
| Meta Platforms Inc. | — | — | — | — | — | |
| Netflix Inc. | — | — | — | — | — | |
| Walt Disney Co. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
1 2015 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 4,695 ÷ 1,707 = 2.75
2 Click competitor name to see calculations.
The analysis of solvency ratios between 2011 and 2015 indicates a stable capacity to meet fixed financial obligations. The fixed charge coverage ratio remained consistently above 2.40, suggesting a sufficient margin of safety for the entity throughout the analyzed period.
- Earnings before fixed charges and tax
- Operating earnings demonstrated volatility over the five-year span. A significant increase occurred between 2011 and 2012, with earnings rising from 4,188 million to 5,187 million. Following this peak, earnings experienced fluctuations, ending the period at 4,695 million in 2015.
- Fixed charges
- Fixed charges remained relatively stable, with a slight overall downward trend after 2012. Obligations peaked at 1,851 million in 2012 and gradually decreased to 1,707 million by 2015, which assisted in maintaining the coverage ratio despite fluctuations in earnings.
- Fixed charge coverage ratio
- The coverage ratio improved from 2.43 in 2011 to a peak of 2.89 in 2014. This progression was driven by the initial surge in earnings in 2012 and a subsequent reduction in fixed charges by 2014. The ratio concluded the period at 2.75 in 2015, representing a net improvement in the solvency position relative to 2011 levels.
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