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
Valero Energy Corp., solvency ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The solvency profile reflects a period of significant volatility between 2020 and 2021, followed by a robust recovery and strengthening of the balance sheet through 2023. The organization successfully reverted its leverage metrics to pre-2020 levels while substantially improving its ability to service fixed obligations.
- Capital Structure and Leverage
- A marked increase in leverage occurred in 2020, characterized by the debt-to-equity ratio rising from 0.44 to 0.78 and the debt-to-assets ratio increasing from 0.18 to 0.28. This trend persisted into 2021 before a consistent decline began. By December 31, 2023, the debt-to-equity ratio returned to 0.44 and debt-to-assets stabilized at 0.18, indicating a full return to the capital structure proportions observed in 2019.
- Financial Leverage Trends
- Financial leverage exhibited a steady increase from 2019, peaking at 3.14 in 2021. This indicates a temporary intensification of asset magnification through debt. A subsequent reversal occurred in 2022 and 2023, with the ratio declining to 2.39, which is lower than the initial 2019 level of 2.47.
- Debt Coverage and Servicing Capacity
- A severe contraction in coverage capacity was observed in 2020, where the interest coverage ratio fell to -2.57 and the fixed charge coverage ratio dropped to -1.02, signaling a period of earnings insufficiency relative to fixed obligations. This was followed by a rapid and significant recovery; interest coverage peaked at 28.24 in 2022 and remained high at 20.88 in 2023. Similarly, fixed charge coverage rose to 17.27 in 2022 and 12.65 in 2023, demonstrating a vastly superior debt-servicing capacity compared to the 2019 baseline.
- Impact of Operating Lease Liabilities
- The inclusion of operating lease liabilities consistently shifted all leverage ratios upward across the five-year period. However, the trajectory of these adjusted ratios mirrored the primary solvency metrics, peaking in 2020-2021 and returning toward baseline levels by 2023, suggesting that lease obligations remained a stable component of the overall liability structure.
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Debt to Equity
Valero Energy Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of debt and finance lease obligations | 1,406) | 1,109) | 1,264) | 723) | 494) | |
| Debt and finance lease obligations, less current portion | 10,118) | 10,526) | 12,606) | 13,954) | 9,178) | |
| Total debt | 11,524) | 11,635) | 13,870) | 14,677) | 9,672) | |
| Total Valero Energy Corporation stockholders’ equity | 26,346) | 23,561) | 18,430) | 18,801) | 21,803) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.44 | 0.49 | 0.75 | 0.78 | 0.44 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Chevron Corp. | 0.13 | 0.15 | 0.23 | — | — | |
| ConocoPhillips | 0.38 | 0.35 | 0.44 | — | — | |
| Exxon Mobil Corp. | 0.20 | 0.21 | 0.28 | — | — | |
| Debt to Equity, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.20 | 0.20 | 0.28 | — | — | |
| Debt to Equity, Industry | ||||||
| Energy | 0.21 | 0.22 | 0.31 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to equity = Total debt ÷ Total Valero Energy Corporation stockholders’ equity
= 11,524 ÷ 26,346 = 0.44
2 Click competitor name to see calculations.
The solvency profile of Valero Energy Corp. between 2019 and 2023 is characterized by a temporary increase in financial leverage followed by a period of strategic deleveraging and equity growth. The debt to equity ratio exhibits a cyclical movement, initiating and concluding the five-year period at a value of 0.44.
- Total Debt Trends
- A significant increase in total debt is observed between 2019 and 2020, rising from US$ 9,672 million to a peak of US$ 14,677 million. Following this peak, a consistent downward trajectory was maintained through 2023, with total debt reducing to US$ 11,524 million. This suggests a concerted effort to reduce long-term liabilities after a period of increased borrowing.
- Stockholders' Equity Evolution
- Equity levels experienced a contraction from US$ 21,803 million in 2019 to a minimum of US$ 18,430 million in 2021. This decline was subsequently reversed, with equity growing substantially in 2022 and 2023 to reach US$ 26,346 million. The expansion of the equity base contributed significantly to the overall improvement in the company's solvency position.
- Debt to Equity Ratio Analysis
- The debt to equity ratio spiked from 0.44 in 2019 to 0.78 in 2020, driven by the simultaneous increase in total debt and decrease in stockholders' equity. From 2021 onward, the ratio declined steadily—reaching 0.75 in 2021 and 0.49 in 2022—before returning to 0.44 by December 31, 2023. This return to baseline indicates a restoration of the balance sheet structure to its 2019 leverage levels.
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Debt to Equity (including Operating Lease Liability)
Valero Energy Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of debt and finance lease obligations | 1,406) | 1,109) | 1,264) | 723) | 494) | |
| Debt and finance lease obligations, less current portion | 10,118) | 10,526) | 12,606) | 13,954) | 9,178) | |
| Total debt | 11,524) | 11,635) | 13,870) | 14,677) | 9,672) | |
| Current operating lease liabilities | 360) | 311) | 315) | 285) | 331) | |
| Noncurrent operating lease liabilities | 753) | 776) | 940) | 885) | 959) | |
| Total debt (including operating lease liability) | 12,637) | 12,722) | 15,125) | 15,847) | 10,962) | |
| Total Valero Energy Corporation stockholders’ equity | 26,346) | 23,561) | 18,430) | 18,801) | 21,803) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.48 | 0.54 | 0.82 | 0.84 | 0.50 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.16 | 0.17 | 0.25 | — | — | |
| ConocoPhillips | 0.40 | 0.36 | 0.45 | — | — | |
| Exxon Mobil Corp. | 0.23 | 0.24 | 0.31 | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.22 | 0.23 | 0.31 | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Energy | 0.24 | 0.25 | 0.34 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Valero Energy Corporation stockholders’ equity
= 12,637 ÷ 26,346 = 0.48
2 Click competitor name to see calculations.
An analysis of the solvency position reveals a cyclical movement in leverage over the five-year period from 2019 to 2023. The company experienced a notable increase in financial leverage during the 2020-2021 period, which was subsequently reversed through strategic debt reduction and substantial equity growth.
- Debt to Equity Ratio Trends
- The Debt to Equity ratio exhibited a sharp increase from 0.50 in 2019 to a peak of 0.84 in 2020. Following this peak, a consistent downward trend is observed, with the ratio declining to 0.54 in 2022 and further improving to 0.48 by the end of 2023. This indicates a strengthened solvency profile, with the final ratio falling below the initial 2019 baseline.
- Total Debt Dynamics
- Total debt, including operating lease liabilities, increased from US$ 10,962 million in 2019 to US$ 15,847 million in 2020. A steady deleveraging process followed this spike, with total debt decreasing for three consecutive years to reach US$ 12,637 million by December 31, 2023.
- Stockholders' Equity Evolution
- A contraction in stockholders' equity occurred between 2019 and 2021, with values dropping from US$ 21,803 million to a low of US$ 18,430 million. However, a significant recovery was observed in the latter part of the period, as equity grew to US$ 26,346 million by 2023. This expansion of the equity base, occurring simultaneously with debt reduction, served as the primary driver for the improvement in the overall debt-to-equity ratio.
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Debt to Capital
Valero Energy Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of debt and finance lease obligations | 1,406) | 1,109) | 1,264) | 723) | 494) | |
| Debt and finance lease obligations, less current portion | 10,118) | 10,526) | 12,606) | 13,954) | 9,178) | |
| Total debt | 11,524) | 11,635) | 13,870) | 14,677) | 9,672) | |
| Total Valero Energy Corporation stockholders’ equity | 26,346) | 23,561) | 18,430) | 18,801) | 21,803) | |
| Total capital | 37,870) | 35,196) | 32,300) | 33,478) | 31,475) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.30 | 0.33 | 0.43 | 0.44 | 0.31 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Chevron Corp. | 0.11 | 0.13 | 0.18 | — | — | |
| ConocoPhillips | 0.28 | 0.26 | 0.31 | — | — | |
| Exxon Mobil Corp. | 0.17 | 0.17 | 0.22 | — | — | |
| Debt to Capital, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.16 | 0.17 | 0.22 | — | — | |
| Debt to Capital, Industry | ||||||
| Energy | 0.18 | 0.18 | 0.24 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to capital = Total debt ÷ Total capital
= 11,524 ÷ 37,870 = 0.30
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2019 to 2023 reveals a period of significant debt expansion followed by a disciplined deleveraging phase. The overall trend indicates a return to a conservative capital structure, with the company ending the period with a lower reliance on debt relative to its total capital base than at the start of the five-year window.
- Total Debt Trends
- Total debt experienced a sharp increase between 2019 and 2020, rising from US$ 9,672 million to a peak of US$ 14,677 million. Following this surge, a consistent downward trajectory was observed over the subsequent three years, with debt levels receding to US$ 11,524 million by December 31, 2023. This represents a significant reduction from the 2020 peak, signaling an active effort to reduce financial leverage.
- Total Capital Evolution
- Total capital demonstrated a generally positive growth trend, increasing from US$ 31,475 million in 2019 to US$ 37,870 million in 2023. While there was a minor contraction in 2021, the overall increase in the capital base, coupled with the reduction in total debt, suggests a strengthening of the equity position or other non-debt capital components.
- Debt to Capital Ratio Performance
- The debt to capital ratio mirrors the fluctuations in total debt, peaking at 0.44 in 2020. From 2021 onward, a steady decline is evident, moving from 0.43 to 0.33 in 2022, and finally reaching 0.30 in 2023. The convergence toward the 0.30 level indicates that the company has successfully restored its solvency profile to pre-2020 levels, effectively lowering its financial risk profile.
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Debt to Capital (including Operating Lease Liability)
Valero Energy Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of debt and finance lease obligations | 1,406) | 1,109) | 1,264) | 723) | 494) | |
| Debt and finance lease obligations, less current portion | 10,118) | 10,526) | 12,606) | 13,954) | 9,178) | |
| Total debt | 11,524) | 11,635) | 13,870) | 14,677) | 9,672) | |
| Current operating lease liabilities | 360) | 311) | 315) | 285) | 331) | |
| Noncurrent operating lease liabilities | 753) | 776) | 940) | 885) | 959) | |
| Total debt (including operating lease liability) | 12,637) | 12,722) | 15,125) | 15,847) | 10,962) | |
| Total Valero Energy Corporation stockholders’ equity | 26,346) | 23,561) | 18,430) | 18,801) | 21,803) | |
| Total capital (including operating lease liability) | 38,983) | 36,283) | 33,555) | 34,648) | 32,765) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.32 | 0.35 | 0.45 | 0.46 | 0.33 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.14 | 0.15 | 0.20 | — | — | |
| ConocoPhillips | 0.28 | 0.26 | 0.31 | — | — | |
| Exxon Mobil Corp. | 0.19 | 0.19 | 0.24 | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.18 | 0.19 | 0.23 | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Energy | 0.20 | 0.20 | 0.25 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 12,637 ÷ 38,983 = 0.32
2 Click competitor name to see calculations.
An analysis of solvency metrics between 2019 and 2023 reveals a period of temporary leverage expansion followed by a sustained trend of deleveraging and capital growth. The financial structure transitioned from a conservative position to a more leveraged state in 2020, before returning to levels below the 2019 baseline by the end of 2023.
- Total Debt Trends
- Total debt, including operating lease liabilities, exhibited a sharp increase from US$ 10,962 million in 2019 to a peak of US$ 15,847 million in 2020. Following this peak, a consistent reduction in debt obligations was observed over the subsequent three years, with the balance decreasing to US$ 12,637 million by December 31, 2023.
- Total Capitalization
- Total capital showed a general upward trajectory over the five-year period, increasing from US$ 32,765 million in 2019 to US$ 38,983 million in 2023. The expansion of the capital base, particularly the growth observed between 2021 and 2023, served to dilute the impact of outstanding debt on the overall capital structure.
- Debt to Capital Ratio Analysis
- The debt to capital ratio rose from 0.33 in 2019 to a peak of 0.46 in 2020, reflecting a significant increase in financial leverage. This ratio remained relatively stable in 2021 at 0.45 before declining steadily to 0.35 in 2022 and finally to 0.32 in 2023. This downward trend indicates an improvement in solvency and a reduction in the proportion of debt used to finance the company's assets.
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Debt to Assets
Valero Energy Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of debt and finance lease obligations | 1,406) | 1,109) | 1,264) | 723) | 494) | |
| Debt and finance lease obligations, less current portion | 10,118) | 10,526) | 12,606) | 13,954) | 9,178) | |
| Total debt | 11,524) | 11,635) | 13,870) | 14,677) | 9,672) | |
| Total assets | 63,056) | 60,982) | 57,888) | 51,774) | 53,864) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.18 | 0.19 | 0.24 | 0.28 | 0.18 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Chevron Corp. | 0.08 | 0.09 | 0.13 | — | — | |
| ConocoPhillips | 0.20 | 0.18 | 0.22 | — | — | |
| Exxon Mobil Corp. | 0.11 | 0.11 | 0.14 | — | — | |
| Debt to Assets, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.11 | 0.11 | 0.15 | — | — | |
| Debt to Assets, Industry | ||||||
| Energy | 0.12 | 0.12 | 0.16 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to assets = Total debt ÷ Total assets
= 11,524 ÷ 63,056 = 0.18
2 Click competitor name to see calculations.
The analysis of solvency indicators between 2019 and 2023 reveals a cyclical pattern of leverage, characterized by a significant increase in borrowed capital followed by a period of steady deleveraging and asset growth.
- Total Debt Trajectory
- A sharp increase in total debt is observed between 2019 and 2020, rising from US$ 9,672 million to US$ 14,677 million. Following this peak, a consistent downward trend occurred over the subsequent three years, with total debt decreasing to US$ 11,524 million by December 31, 2023.
- Total Asset Growth
- After a marginal decline in 2020, total assets entered a period of sustained expansion. Assets grew from US$ 51,774 million in 2020 to US$ 63,056 million in 2023, reflecting a strengthening of the balance sheet's resource base.
- Debt to Assets Ratio Evolution
- The debt to assets ratio mirrored the volatility of the underlying components, peaking at 0.28 in 2020. A progressive reduction in this ratio followed, declining to 0.24 in 2021, 0.19 in 2022, and finally returning to the 2019 level of 0.18 by the end of 2023. This trend indicates a strategic reduction in financial leverage and a decrease in the proportion of assets financed through debt.
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Debt to Assets (including Operating Lease Liability)
Valero Energy Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current portion of debt and finance lease obligations | 1,406) | 1,109) | 1,264) | 723) | 494) | |
| Debt and finance lease obligations, less current portion | 10,118) | 10,526) | 12,606) | 13,954) | 9,178) | |
| Total debt | 11,524) | 11,635) | 13,870) | 14,677) | 9,672) | |
| Current operating lease liabilities | 360) | 311) | 315) | 285) | 331) | |
| Noncurrent operating lease liabilities | 753) | 776) | 940) | 885) | 959) | |
| Total debt (including operating lease liability) | 12,637) | 12,722) | 15,125) | 15,847) | 10,962) | |
| Total assets | 63,056) | 60,982) | 57,888) | 51,774) | 53,864) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.20 | 0.21 | 0.26 | 0.31 | 0.20 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Chevron Corp. | 0.10 | 0.11 | 0.15 | — | — | |
| ConocoPhillips | 0.20 | 0.18 | 0.23 | — | — | |
| Exxon Mobil Corp. | 0.13 | 0.13 | 0.16 | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.13 | 0.13 | 0.16 | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Energy | 0.14 | 0.14 | 0.17 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 12,637 ÷ 63,056 = 0.20
2 Click competitor name to see calculations.
The solvency position over the observed five-year period is characterized by a temporary increase in leverage followed by a sustained period of deleveraging and asset growth. This trajectory resulted in the restoration of the initial solvency baseline by the end of 2023.
- Debt to Assets Ratio Trend
- The ratio experienced a sharp increase from 0.20 in 2019 to a peak of 0.31 in 2020. Subsequently, a consistent downward trend was observed, with the ratio decreasing to 0.26 in 2021 and 0.21 in 2022, ultimately returning to 0.20 by the end of 2023.
- Total Debt Dynamics
- Total debt, inclusive of operating lease liabilities, rose from 10,962 million USD in 2019 to 15,847 million USD in 2020. From 2021 onward, a steady reduction in total obligations occurred, with the balance declining to 12,637 million USD by December 31, 2023.
- Asset Base Expansion
- Following a slight contraction in 2020 to 51,774 million USD, total assets entered a period of consistent growth. Assets increased to 57,888 million USD in 2021, 60,982 million USD in 2022, and 63,056 million USD in 2023, which served to further lower the debt-to-assets ratio.
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Financial Leverage
Valero Energy Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 63,056) | 60,982) | 57,888) | 51,774) | 53,864) | |
| Total Valero Energy Corporation stockholders’ equity | 26,346) | 23,561) | 18,430) | 18,801) | 21,803) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 2.39 | 2.59 | 3.14 | 2.75 | 2.47 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Chevron Corp. | 1.63 | 1.62 | 1.72 | — | — | |
| ConocoPhillips | 1.95 | 1.95 | 2.00 | — | — | |
| Exxon Mobil Corp. | 1.84 | 1.89 | 2.01 | — | — | |
| Financial Leverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.77 | 1.79 | 1.90 | — | — | |
| Financial Leverage, Industry | ||||||
| Energy | 1.80 | 1.82 | 1.93 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Financial leverage = Total assets ÷ Total Valero Energy Corporation stockholders’ equity
= 63,056 ÷ 26,346 = 2.39
2 Click competitor name to see calculations.
The financial leverage profile exhibits a cyclical pattern characterized by a peak in 2021 followed by a consistent reduction in risk through 2023. While total assets grew steadily after 2020, the rate of equity accumulation outpaced asset growth in the most recent two fiscal years, resulting in a strengthened solvency position.
- Financial Leverage Ratio Trend
- The leverage ratio increased from 2.47 in 2019 to a peak of 3.14 in 2021, indicating a period of increased reliance on debt relative to equity. However, a sharp reversal occurred in 2022 and 2023, with the ratio declining to 2.59 and 2.39, respectively. This downward trend reflects a reduction in financial risk and a shift toward a more conservative capital structure.
- Asset Expansion
- Total assets experienced a slight contraction in 2020, falling to US$ 51,774 million, but subsequently entered a phase of sustained growth. By December 31, 2023, total assets reached US$ 63,056 million, representing a consistent upward trajectory over the final three years of the analyzed period.
- Stockholders' Equity Dynamics
- Equity levels declined between 2019 and 2021, reaching a low of US$ 18,430 million. This period of equity erosion coincided with the peak in the financial leverage ratio. From 2022 onwards, equity grew substantially, reaching US$ 26,346 million by the end of 2023. This robust recovery in equity served as the primary driver for the improved solvency metrics observed in the most recent fiscal years.
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Interest Coverage
Valero Energy Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Valero Energy Corporation stockholders | 8,835) | 11,528) | 930) | (1,421) | 2,422) | |
| Add: Net income attributable to noncontrolling interest | 314) | 351) | 358) | 314) | 362) | |
| Add: Income tax expense | 2,619) | 3,428) | 255) | (903) | 702) | |
| Add: Interest and debt expense, net of capitalized interest | 592) | 562) | 603) | 563) | 454) | |
| Earnings before interest and tax (EBIT) | 12,360) | 15,869) | 2,146) | (1,447) | 3,940) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 20.88 | 28.24 | 3.56 | -2.57 | 8.68 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Chevron Corp. | 64.08 | 97.27 | 31.39 | — | — | |
| ConocoPhillips | 21.88 | 36.07 | 15.38 | — | — | |
| Exxon Mobil Corp. | 63.17 | 98.43 | 33.98 | — | — | |
| Interest Coverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 48.02 | 74.46 | 26.79 | — | — | |
| Interest Coverage, Industry | ||||||
| Energy | 40.96 | 62.30 | 23.05 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Interest coverage = EBIT ÷ Interest expense
= 12,360 ÷ 592 = 20.88
2 Click competitor name to see calculations.
The solvency profile of the company between 2019 and 2023 is characterized by significant volatility in operating earnings, which directly influenced the capacity to service debt obligations. While interest expenses remained relatively stable throughout the period, the fluctuating earnings before interest and tax (EBIT) led to wide swings in the interest coverage ratio.
- Interest Coverage Ratio Trajectory
- A sharp decline in solvency was observed in 2020, where the interest coverage ratio fell to -2.57, reflecting a period where operating losses precluded the ability to cover interest expenses from current earnings. A recovery began in 2021 with the ratio rising to 3.56, followed by a substantial surge in 2022 to a peak of 28.24. By the end of 2023, the ratio moderated to 20.88, though it remained significantly higher than pre-2022 levels, indicating a strengthened margin of safety for creditors.
- EBIT Performance and Volatility
- The primary driver of the coverage ratio fluctuations was the high variance in EBIT. Earnings shifted from 3,940 million US dollars in 2019 to a loss of 1,447 million US dollars in 2020. The subsequent expansion was aggressive, with EBIT reaching a high of 15,869 million US dollars in 2022 before settling at 12,360 million US dollars in 2023. This volatility suggests that the company's ability to service debt is highly sensitive to operational performance and external market conditions.
- Interest Expense Stability
- In contrast to the volatility of earnings, net interest and debt expenses demonstrated relative stability. These costs fluctuated within a narrow range, moving from 454 million US dollars in 2019 to a peak of 603 million US dollars in 2021, and ending at 592 million US dollars in 2023. The stability of the debt service cost means that the dramatic improvements in the interest coverage ratio since 2021 were driven almost exclusively by operational growth rather than a reduction in debt burden or interest rates.
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Fixed Charge Coverage
Valero Energy Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Valero Energy Corporation stockholders | 8,835) | 11,528) | 930) | (1,421) | 2,422) | |
| Add: Net income attributable to noncontrolling interest | 314) | 351) | 358) | 314) | 362) | |
| Add: Income tax expense | 2,619) | 3,428) | 255) | (903) | 702) | |
| Add: Interest and debt expense, net of capitalized interest | 592) | 562) | 603) | 563) | 454) | |
| Earnings before interest and tax (EBIT) | 12,360) | 15,869) | 2,146) | (1,447) | 3,940) | |
| Add: Operating lease cost | 418) | 379) | 381) | 434) | 439) | |
| Earnings before fixed charges and tax | 12,778) | 16,248) | 2,527) | (1,013) | 4,379) | |
| Interest and debt expense, net of capitalized interest | 592) | 562) | 603) | 563) | 454) | |
| Operating lease cost | 418) | 379) | 381) | 434) | 439) | |
| Fixed charges | 1,010) | 941) | 984) | 997) | 893) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 12.65 | 17.27 | 2.57 | -1.02 | 4.90 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Chevron Corp. | 9.57 | 18.28 | 8.43 | — | — | |
| ConocoPhillips | 17.14 | 28.76 | 11.94 | — | — | |
| Exxon Mobil Corp. | 19.68 | 31.21 | 13.55 | — | — | |
| Fixed Charge Coverage, Sector | ||||||
| Oil, Gas & Consumable Fuels | 14.54 | 25.07 | 10.99 | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Energy | 12.31 | 20.61 | 9.19 | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 12,778 ÷ 1,010 = 12.65
2 Click competitor name to see calculations.
The solvency profile exhibits significant volatility over the five-year period, characterized by a severe contraction in 2020 followed by a substantial expansion in coverage capacity. The overall trajectory indicates a transition from a period of acute financial stress to a state of exceptionally high solvency.
- Fixed Charge Stability
- Fixed charges remained remarkably consistent throughout the period, fluctuating within a narrow range between US$ 893 million and US$ 1,010 million. This stability indicates that the company's fixed obligations were well-managed and did not contribute to the fluctuations observed in the coverage ratio.
- Earnings Volatility
- Earnings before fixed charges and tax demonstrated extreme variance, serving as the primary driver of solvency changes. A deficit of US$ 1,013 million in 2020 marked a sharp decline from the US$ 4,379 million reported in 2019. This was followed by an aggressive recovery, with earnings peaking at US$ 16,248 million in 2022 before moderating to US$ 12,778 million in 2023.
- Fixed Charge Coverage Ratio Trends
- The coverage ratio mirrors the volatility of earnings, dropping from 4.90 in 2019 to -1.02 in 2020, signaling a temporary inability to meet fixed obligations from operating earnings. A recovery began in 2021 with a ratio of 2.57, escalating to a peak of 17.27 in 2022. The ratio concluded the period at 12.65 in 2023, representing a robust margin of safety and a strong capacity to service fixed charges.
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