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United Parcel Service Inc. (UPS)
Analysis of Debt
Difficulty: Advanced
Total Debt (Carrying Amount)
United Parcel Service Inc., balance sheet: debt
US$ in millions
Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).
| Debt item | Description | The company |
|---|---|---|
| Total long-term debt, including current maturities (carrying amount) | Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations. | United Parcel Service Inc.’s total debt increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
Total Debt (Fair Value)
| Dec 31, 2018 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Total long-term debt, including current maturities (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (filing date: 2019-02-21).
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: 2019-02-21).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
United Parcel Service Inc., interest costs incurred
US$ in millions
| 12 months ended | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |
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| Capitalized interest | |
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| Interest costs incurred | |
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Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).
| Debt item | Description | The company |
|---|---|---|
| Interest expense | Amount of the cost of borrowed funds accounted for as interest expense for debt. | United Parcel Service Inc.’s interest expense increased from 2016 to 2017 and from 2017 to 2018. |
| Capitalized interest | Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred. | United Parcel Service Inc.’s capitalized interest increased from 2016 to 2017 and from 2017 to 2018. |
| Interest costs incurred | Total interest costs incurred during the period and either capitalized or charged against earnings. | United Parcel Service Inc.’s interest costs incurred increased from 2016 to 2017 and from 2017 to 2018. |
Adjusted Interest Coverage Ratio
Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).
2018 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
| Solvency ratio | Description | The company |
|---|---|---|
| Adjusted interest coverage ratio | A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest). | United Parcel Service Inc.’s adjusted interest coverage ratio improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018. |