Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Net Profit Margin since 2012
- Return on Assets (ROA) since 2012
- Price to Operating Profit (P/OP) since 2012
- Analysis of Debt
- Aggregate Accruals
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Solvency Ratios (Summary)
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Debt Ratios | ||||
Debt to equity | ||||
Debt to capital | ||||
Debt to assets | ||||
Financial leverage | ||||
Coverage Ratios | ||||
Interest coverage | ||||
Fixed charge coverage |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
- Debt to equity ratio
- The ratio exhibits a notable decline from 2.79 in 2012 to 1.92 in 2013, followed by an increase to 2.3 in 2014. This indicates a reduction in leveraging relative to shareholders' equity in 2013, with a subsequent partial reversal in 2014.
- Debt to capital ratio
- The debt to capital ratio decreased from 0.74 in 2012 to 0.66 in 2013, then increased again to 0.7 in 2014. This pattern aligns closely with the debt to equity trend, showing an initial reduction in reliance on debt financing followed by a moderate increase.
- Debt to assets ratio
- This ratio remained relatively stable over the three years, holding steady at 0.43 in both 2012 and 2013, with a slight uptick to 0.44 in 2014. This suggests the proportion of assets financed through debt did not significantly change during the period.
- Financial leverage
- The financial leverage ratio declined substantially from 6.53 in 2012 to 4.46 in 2013, indicating a decrease in total assets funded by equity. However, it increased again to 5.26 in 2014, denoting a partial reversal and indicating a modest rise in leverage.
- Interest coverage ratio
- The interest coverage ratio shows a downward trend from 10.51 in 2012 to 9.16 in 2013, followed by a sharper decline to 3.9 in 2014. This indicates a decreasing ability to cover interest expenses with operating income, highlighting potential increased financial risk.
- Fixed charge coverage ratio
- The fixed charge coverage remained nearly constant between 2012 (7.01) and 2013 (7.04), then decreased significantly to 3.22 in 2014. This suggests a weakening in the company's ability to meet fixed financial obligations beyond interest, which could indicate tightening financial conditions.
Debt Ratios
Coverage Ratios
Debt to Equity
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||
Current portion of long-term debt | ||||
Long-term debt, excluding current portion | ||||
Total debt | ||||
Equity | ||||
Solvency Ratio | ||||
Debt to equity1 | ||||
Benchmarks | ||||
Debt to Equity, Competitors2 | ||||
lululemon athletica inc. | ||||
Nike Inc. |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Debt to equity = Total debt ÷ Equity
= ÷ =
2 Click competitor name to see calculations.
The financial data for the analyzed periods reveals important trends in the company's capital structure and leverage.
- Total Debt
- The total debt remained relatively stable over the three years, with figures close to US$10 billion. There was a slight increase from US$9,971 million in 2012 to US$10,032 million in 2014, indicating a consistent level of debt financing during this period.
- Equity
- Equity demonstrated notable fluctuations. It increased significantly from US$3,572 million in 2012 to US$5,187 million in 2013, suggesting a possible capital injection or accumulation of retained earnings. However, in 2014, equity decreased to US$4,365 million, reflecting either distributions, losses, or other equity adjustments.
- Debt to Equity Ratio
- The debt to equity ratio shows a marked improvement in 2013, dropping from 2.79 to 1.92, primarily due to the substantial increase in equity. This indicates a stronger equity base relative to debt and potentially lower financial risk. However, in 2014, the ratio increased to 2.3, driven by the reduction in equity combined with stable debt levels, signifying a rise in leverage and possibly increased financial risk compared to the prior year but still better than the level observed in 2012.
Debt to Capital
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||
Current portion of long-term debt | ||||
Long-term debt, excluding current portion | ||||
Total debt | ||||
Equity | ||||
Total capital | ||||
Solvency Ratio | ||||
Debt to capital1 | ||||
Benchmarks | ||||
Debt to Capital, Competitors2 | ||||
lululemon athletica inc. | ||||
Nike Inc. |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total debt
- Over the three-year period, total debt exhibited a modest increase from 9,971 million USD in 2012 to 10,032 million USD in 2014. The debt level was relatively stable in 2013 with a minor increase to 9,980 million USD.
- Total capital
- Total capital showed a fluctuating trend. It increased significantly from 13,543 million USD in 2012 to 15,167 million USD in 2013, marking a notable capital expansion. However, in 2014, total capital decreased to 14,397 million USD, indicating a partial reversal of the previous gain yet still maintaining a higher capital base than in 2012.
- Debt to capital ratio
- The debt to capital ratio declined from 0.74 in 2012 to 0.66 in 2013, reflecting a reduced reliance on debt relative to the overall capital structure during that year. In 2014, the ratio increased to 0.7, suggesting that debt formed a larger proportion of the capital structure again, though not reaching the initial 2012 level.
Debt to Assets
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||
Current portion of long-term debt | ||||
Long-term debt, excluding current portion | ||||
Total debt | ||||
Total assets | ||||
Solvency Ratio | ||||
Debt to assets1 | ||||
Benchmarks | ||||
Debt to Assets, Competitors2 | ||||
lululemon athletica inc. | ||||
Nike Inc. |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data over the three-year period exhibits a relatively stable capital structure with slight fluctuations in key metrics. There is a moderate increase in total debt, while total assets gradually decline, leading to changes in leverage ratios.
- Total debt
- Total debt displayed a modest upward trend, rising from 9,971 million US dollars in 2012 to 10,032 million US dollars by the end of 2014. The increase is marginal, indicating no significant change in borrowing levels over the three years.
- Total assets
- Total assets decreased progressively during the same period, from 23,329 million US dollars in 2012 to 22,947 million US dollars in 2014. This steady decline suggests possible asset sales, depreciation exceeding acquisitions, or changes in asset valuation.
- Debt to assets ratio
- The debt to assets ratio maintained a fairly consistent level, hovering around 0.43 in 2012 and 2013, but increasing slightly to 0.44 in 2014. This reflects a marginal rise in financial leverage, likely driven by the simultaneous increase in debt and decrease in assets.
Overall, the company maintained a consistent debt load relative to its assets, with a slight increase in leverage that may warrant monitoring. Asset reductions could impact future financing or operational flexibility if the trend continues.
Financial Leverage
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||
Total assets | ||||
Equity | ||||
Solvency Ratio | ||||
Financial leverage1 | ||||
Benchmarks | ||||
Financial Leverage, Competitors2 | ||||
lululemon athletica inc. | ||||
Nike Inc. |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Financial leverage = Total assets ÷ Equity
= ÷ =
2 Click competitor name to see calculations.
- Total Assets
- The total assets exhibited a slight downward trend over the three-year period, decreasing from 23,329 million US dollars in 2012 to 22,947 million US dollars in 2014. The decline reflects a modest reduction in the asset base, with a notably small decrease of 181 million from 2012 to 2013, followed by a further decline of 201 million in 2014.
- Equity
- Equity demonstrated significant variation within the same period. It increased sharply from 3,572 million US dollars in 2012 to 5,187 million US dollars in 2013, indicating a substantial improvement in shareholder's funds. However, this was followed by a decline to 4,365 million US dollars in 2014, suggesting a reversal of some of the gains achieved in the previous year, though still remaining above the 2012 level.
- Financial Leverage
- The financial leverage ratio, which is indicative of the degree to which assets are financed by equity, showed a notable decline from 6.53 in 2012 to 4.46 in 2013. This change suggests a reduction in reliance on debt financing during that year. In 2014, the ratio increased again to 5.26, reflecting a partial return to higher leverage, though not to the initial 2012 level. This fluctuation implies shifting capital structure strategies over the examined period.
Interest Coverage
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||
Net earnings | ||||
Add: Income tax expense | ||||
Add: Interest and other expense, net | ||||
Earnings before interest and tax (EBIT) | ||||
Solvency Ratio | ||||
Interest coverage1 | ||||
Benchmarks | ||||
Interest Coverage, Competitors2 | ||||
lululemon athletica inc. | ||||
Nike Inc. |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
- Earnings Before Interest and Tax (EBIT)
- There was a significant increase in EBIT from 2012 to 2013, rising from 2,711 million US dollars to 4,591 million US dollars. However, in 2014, EBIT decreased sharply to 1,890 million US dollars, indicating considerable volatility in operating profitability during this period.
- Interest and Other Expense, Net
- Interest and other expenses nearly doubled from 258 million US dollars in 2012 to 501 million US dollars in 2013. In 2014, this expense level remained relatively high at 484 million US dollars, suggesting sustained elevated financing or related costs in recent years.
- Interest Coverage Ratio
- The interest coverage ratio, which assesses the firm's ability to meet interest obligations from EBIT, declined consistently over the three years. It decreased from a comfortable 10.51 in 2012 to 9.16 in 2013, before dropping markedly to 3.9 in 2014. This trend signals a weakening capacity to cover interest expenses, potentially indicating increased financial risk or deteriorating operational earnings relative to interest burdens.
Fixed Charge Coverage
Dec 27, 2014 | Dec 28, 2013 | Dec 29, 2012 | ||
---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||
Net earnings | ||||
Add: Income tax expense | ||||
Add: Interest and other expense, net | ||||
Earnings before interest and tax (EBIT) | ||||
Add: Rental expenses | ||||
Earnings before fixed charges and tax | ||||
Interest and other expense, net | ||||
Rental expenses | ||||
Fixed charges | ||||
Solvency Ratio | ||||
Fixed charge coverage1 | ||||
Benchmarks | ||||
Fixed Charge Coverage, Competitors2 | ||||
lululemon athletica inc. | ||||
Nike Inc. |
Based on: 10-K (reporting date: 2014-12-27), 10-K (reporting date: 2013-12-28), 10-K (reporting date: 2012-12-29).
1 2014 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- There was a notable increase from 2861 million US dollars in 2012 to 4767 million US dollars in 2013, reflecting a strong growth period. However, in 2014, the earnings declined sharply to 2038 million US dollars, indicating a significant drop in profitability after the previous year's peak.
- Fixed charges
- Fixed charges increased from 408 million US dollars in 2012 to 677 million US dollars in 2013, representing higher financial obligations. In 2014, fixed charges slightly decreased to 632 million US dollars but remained considerably elevated compared to 2012 levels.
- Fixed charge coverage ratio
- The fixed charge coverage ratio was relatively stable at around 7.0 in 2012 and 2013, demonstrating a comfortable ability to cover fixed charges with earnings before fixed charges and tax. In 2014, this ratio dropped to 3.22, signaling a reduced capacity to cover fixed costs and suggesting increased financial risk or reduced operational efficiency during that year.