Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2012
- Net Profit Margin since 2012
- Debt to Equity since 2012
- Price to Operating Profit (P/OP) since 2012
- Price to Book Value (P/BV) since 2012
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Solvency Ratios (Summary)
Kraft Foods Group Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
- Debt to Equity
- The debt to equity ratio demonstrates a general downward trend from 2.66 in the first quarter of 2013 to a low of 1.79 by the third quarter of 2014, indicating a gradual reduction in reliance on debt relative to equity. However, an increase occurs in the last two quarters of 2014, reaching 2.3, before slightly decreasing to 2.22 in the first quarter of 2015. This fluctuation suggests some variability in capital structure management over the periods examined.
- Debt to Capital
- The debt to capital ratio steadily decreases from 0.73 in early 2013 to 0.64 in the third quarter of 2014, which signals a modest reduction in debt financing as a proportion of total capital. Similar to debt to equity, this ratio slightly increases again in the last quarter of 2014 to 0.7 and maintains near that level at 0.69 by the first quarter of 2015, reflecting a slight shift back towards higher debt levels.
- Debt to Assets
- This ratio remains relatively stable throughout the observation period, hovering around 0.43 to 0.44. This stability indicates that the proportion of debt used to finance total assets did not experience significant change, highlighting consistent asset financing practices.
- Financial Leverage
- Financial leverage shows a decreasing trend from 6.22 in March 2013 to a minimum of 4.08 in September 2014, implying a reduction in the use of debt relative to equity and assets. Yet, in the last quarter of 2014, leverage rises sharply to 5.26 and slightly decreases to 5.12 in the following quarter, indicating increased borrowing or decreased equity during this period.
- Interest Coverage
- The interest coverage ratio initially declines from 7.3 in the first quarter of 2013 to approximately 6.6 by the third quarter of that year, then improves notably to a peak of 9.49 in the first quarter of 2014. However, it gradually declines thereafter, falling sharply to 3.9 in the last quarter of 2014 and further to 3.63 in the first quarter of 2015. This downward trend in interest coverage toward the end of the period suggests reduced ability to meet interest obligations from operating earnings, potentially raising concerns about financial risk.
Debt Ratios
Coverage Ratios
Debt to Equity
Kraft Foods Group Inc., debt to equity calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Debt to equity = Total debt ÷ Equity
= ÷ =
2 Click competitor name to see calculations.
- Total debt
- The total debt remained relatively stable over the examined periods, fluctuating marginally around the 9,970 to 10,032 million USD range. This stability suggests a consistent approach to debt management without significant new borrowing or repayments.
- Equity
- Equity demonstrated an overall upward trend from March 2013 through September 2014, increasing from 3,742 million USD to a peak of 5,585 million USD. However, in the final two quarters ending December 2014 and March 2015, equity sharply declined to 4,365 million USD and 4,517 million USD, respectively, indicating a possible reduction in shareholders’ funds or asset bases during that period.
- Debt to equity ratio
- This ratio showed a notable improvement (decrease) from 2.66 in March 2013 down to a low of 1.79 in September 2014, reflecting strengthening equity relative to debt and a potentially healthier capital structure. In the last two quarters analyzed, the ratio worsened (increased) to 2.3 and then 2.22, corresponding with the decline in equity, indicating that the company became more leveraged during this time.
Debt to Capital
Kraft Foods Group Inc., debt to capital calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals the following trends and patterns over the quarterly periods:
- Total Debt
- The company's total debt remained relatively stable, with a slight upward trend from approximately 9.969 billion USD to just over 10.032 billion USD over the observed timeframe. This indicates minimal increase in borrowing or liabilities associated with debt over the duration.
- Total Capital
- Total capital generally increased from 13.711 billion USD to a peak of 15.604 billion USD by the third quarter of 2014, followed by a decline to around 14.549 billion USD by the first quarter of 2015. This suggests some fluctuations in the capital structure, potentially due to changes in equity, retained earnings, or other capital components.
- Debt to Capital Ratio
- The ratio of debt to total capital showed a steady decline from 0.73 to 0.64 over the first three quarters, reflecting an improving capital structure with relatively lower reliance on debt. However, this trend reversed in the last two quarters with the ratio rising again to 0.7 and then slightly declining to 0.69. The increase correlates with the observed decrease in total capital, while debt remained mostly constant. This indicates a relative increase in leverage towards the end of the period.
Overall, the company maintained a relatively consistent debt level while experiencing some volatility in total capital. The debt to capital ratio reflected these shifts, initially improving but then deteriorating somewhat towards the end of the period. The patterns suggest management focused on controlling debt but faced fluctuations in capital base, which impacted leverage metrics.
Debt to Assets
Kraft Foods Group Inc., debt to assets calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- The total debt remains relatively stable throughout the observed periods, starting at approximately 9,969 million USD and showing a very slight increase, ending at about 10,032 million USD. This indicates consistent leverage with minimal fluctuations in the company’s borrowing levels over the time frame analyzed.
- Total Assets
- Total assets demonstrate minor fluctuations, ranging from a high of around 23,361 million USD to a low near 22,803 million USD. Despite small declines in certain quarters, the overall asset base remains fairly steady, suggesting stable resource management without significant asset expansions or disposals.
- Debt to Assets Ratio
- The debt to assets ratio consistently hovers around 0.43, reflecting a stable capital structure with slight variations. There is a marginal increase to 0.44 during mid to late 2014, which could indicate a relative increase in debt compared to assets in those periods, but it returns to 0.43 in the final quarter observed.
Financial Leverage
Kraft Foods Group Inc., financial leverage calculation (quarterly data)
| Mar 28, 2015 | Dec 27, 2014 | Sep 27, 2014 | Jun 28, 2014 | Mar 29, 2014 | Dec 28, 2013 | Sep 28, 2013 | Jun 29, 2013 | Mar 30, 2013 | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Financial leverage = Total assets ÷ Equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveal several notable trends over the examined periods.
- Total Assets
- Total assets remained relatively stable throughout the quarters, fluctuating slightly within a narrow range. The values hovered around the 23,000 million US dollar mark, with minor variations indicating limited expansion or contraction in asset size over the observed timeframe.
- Equity
- Equity demonstrated a consistent upward trend during most of the periods, increasing from 3,742 million US dollars to a peak near 5,585 million US dollars by the end of the third quarter in 2014. However, a notable decline occurred in the subsequent quarter, dropping to 4,365 million US dollars, and only marginal recovery was seen in the following quarter reaching approximately 4,517 million US dollars. This fluctuation suggests an episode of decreased net worth or possible distribution activities impacting shareholders' equity in the latter part of the timeline.
- Financial Leverage
- The financial leverage ratio showed a decreasing trend from 6.22 to 4.08 between March 2013 and September 2014, indicating a reduction in dependence on debt relative to equity during this period. This improvement coincides with the growth in equity and stable asset base, reflecting a potentially healthier capital structure. However, a reversal occurred afterward, with the ratio climbing again to over 5.1 by March 2015, suggesting increased leverage and possibly higher financial risk in the final quarters evaluated.
Overall, the stability in total assets combined with the initial improvement and later deterioration in equity and financial leverage ratios point to a dynamic capital structure. The company appeared to reduce leverage and strengthen equity initially but then experienced a period where leverage increased and equity decreased, indicating changes in financing strategy or operational factors influencing the balance sheet composition.
Interest Coverage
Kraft Foods Group Inc., interest coverage calculation (quarterly data)
Based on: 10-Q (reporting date: 2015-03-28), 10-K (reporting date: 2014-12-27), 10-Q (reporting date: 2014-09-27), 10-Q (reporting date: 2014-06-28), 10-Q (reporting date: 2014-03-29), 10-K (reporting date: 2013-12-28), 10-Q (reporting date: 2013-09-28), 10-Q (reporting date: 2013-06-29), 10-Q (reporting date: 2013-03-30).
1 Q1 2015 Calculation
Interest coverage
= (EBITQ1 2015
+ EBITQ4 2014
+ EBITQ3 2014
+ EBITQ2 2014)
÷ (Interest expenseQ1 2015
+ Interest expenseQ4 2014
+ Interest expenseQ3 2014
+ Interest expenseQ2 2014)
= ( + + + )
÷ ( + + + )
=
The analysis of the quarterly financial data reveals notable fluctuations in key financial metrics over the periods under review.
- Earnings Before Interest and Tax (EBIT)
- The EBIT values exhibit considerable variability across the quarters. Starting at $809 million in March 2013, EBIT increased sharply in June 2013 to $1,398 million before declining in the subsequent quarter to $870 million. There is a notable uptick in the fourth quarter of 2013, reaching $1,514 million. In 2014, EBIT values show a general downward trend, with figures of $904 million in March, decreasing to $874 million in June and further to $726 million in September. Notably, the EBIT turns negative in December 2014 with a value of -$614 million, indicating a significant operational challenge during that quarter. By March 2015, EBIT recovers to $740 million, suggesting a partial rebound.
- Interest and Other Expense, Net
- The interest and other expenses show relatively minor fluctuations, mostly remaining within the range of $107 million to $133 million throughout the recorded quarters. The expense peaks at $133 million in June 2014 and reaches its lowest point at $107 million in March 2015, indicating a mild downward trend towards the end of the period.
- Interest Coverage Ratio
- The interest coverage ratio mirrors the volatility seen in EBIT. It starts at 7.3 in March 2013 and experiences a gradual decline to 6.6 by September 2013, before improving to a high of 9.49 in March 2014. Following this peak, the ratio decreases steadily through 2014, dropping sharply to 3.9 in December 2014, coinciding with the negative EBIT in that quarter. The ratio further declines to 3.63 by March 2015, indicating a deteriorating capacity to cover interest expenses with operating earnings over the period.
In summary, the company experienced significant volatility in operational earnings during the analyzed quarters, with a severe downturn at the end of 2014. While interest expenses remained relatively stable, the declining interest coverage ratio suggests increasing financial risk and potentially weaker ability to service debt through earnings during the latter part of the period.