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)
Kraft Heinz Co., solvency ratios
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
- Debt to Equity Ratio
- The debt to equity ratio showed an overall upward trend from 0.44 in 2015 to 0.57 in 2019, with a minor dip in 2017 to 0.48. This indicates a gradual increase in leverage, suggesting that the company relied more on debt financing relative to equity over the period.
- Debt to Equity Including Operating Lease Liability
- Including operating lease liabilities, the debt to equity ratio followed a nearly identical pattern to the standard ratio, ending slightly higher at 0.58 in 2019. This implies that the impact of operating leases on leverage was present but marginally increased the ratio.
- Debt to Capital Ratio
- The debt to capital ratio increased from 0.30 in 2015 to peak at 0.38 in 2018 before easing slightly to 0.36 in 2019. This reflects a moderate increase in the proportion of debt financing within the company’s overall capital structure during the period.
- Debt to Capital Including Operating Lease Liability
- When factoring in operating lease liabilities, the debt to capital ratio showed a similar progression, increasing slightly more to 0.37 by 2019, indicating that operating leases modestly contributed to the company's total debt burden.
- Debt to Assets Ratio
- The debt to assets ratio also rose from 0.21 in 2015 to a high of 0.30 in 2018, then slightly declined to 0.29 in 2019. This trend points to an overall increase in the company's reliance on debt relative to its total assets, although the slight dip in the final year may indicate some deleveraging.
- Debt to Assets Including Operating Lease Liability
- Including operating lease liabilities did not significantly alter the debt to assets ratio, with values mirroring the standard debt to assets ratio and ending at 0.29 in 2019. This suggests the operational leases had a consistent but limited impact on total asset leverage.
- Financial Leverage
- Financial leverage ratio decreased from 2.13 in 2015 to 1.82 in 2017, indicating a reduction in the company’s reliance on debt relative to equity. However, it increased again to 2.00 in 2018 before a slight reduction to 1.97 in 2019. These fluctuations suggest variability in capital structure management over the period.
- Interest Coverage Ratio
- The interest coverage ratio exhibited considerable volatility. It improved substantially from 1.77 in 2015 to over 5.4 in 2016 and 2017, signaling enhanced ability to cover interest expenses. However, it plunged dramatically to negative -7.82 in 2018, indicating an inability to service interest costs during that year. The ratio partially recovered to 2.96 in 2019, reflecting operational or financial improvements but remaining below the earlier peak levels.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio followed a similar pattern to interest coverage. It rose sharply from 0.87 in 2015 to 4.9 in 2017, indicating improved capacity to cover all fixed charges. Yet in 2018, it turned deeply negative at -6.63, mirroring difficulties in meeting fixed obligations. Recovery was seen in 2019 with the ratio rising to 2.71, suggesting some restoration in financial stability but still not reaching prior highs.
Debt Ratios
Coverage Ratios
Debt to Equity
Kraft Heinz Co., debt to equity calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and other short-term debt | 6) | 21) | 460) | 645) | 4) | |
| Current portion of long-term debt | 1,022) | 377) | 2,743) | 2,046) | 79) | |
| Long-term debt, excluding current portion | 28,216) | 30,770) | 28,333) | 29,713) | 25,151) | |
| Total debt | 29,244) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Shareholders’ equity | 51,623) | 51,657) | 66,034) | 57,358) | 57,685) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.57 | 0.60 | 0.48 | 0.56 | 0.44 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to equity = Total debt ÷ Shareholders’ equity
= 29,244 ÷ 51,623 = 0.57
2 Click competitor name to see calculations.
- Total debt
- The total debt displayed an initial increase from 25,234 million US dollars in 2015 to a peak of 32,404 million US dollars in 2016. Subsequently, it showed a declining trend, decreasing to 31,536 million in 2017, then to 31,168 million in 2018, and further down to 29,244 million in 2019. Overall, the total debt remained relatively high compared to the 2015 level but showed a consistent reduction after 2016.
- Shareholders’ equity
- Shareholders’ equity saw a slight decline from 57,685 million US dollars in 2015 to 57,358 million in 2016. However, equity increased markedly in 2017, reaching 66,034 million. This was followed by a significant drop in 2018 to 51,657 million, with a marginal decrease continuing into 2019 at 51,623 million. This pattern indicates volatility in equity levels, with a notable peak in 2017 and a subsequent decline.
- Debt to equity ratio
- The debt to equity ratio started at 0.44 in 2015 and increased to 0.56 in 2016, corresponding with the rise in total debt and slight fall in equity. In 2017, the ratio decreased to 0.48, reflecting a stronger equity position. However, the ratio rose again to 0.60 in 2018 and edged down slightly to 0.57 in 2019, indicating an increased leverage relative to equity towards the end of the period analyzed.
Debt to Equity (including Operating Lease Liability)
Kraft Heinz Co., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and other short-term debt | 6) | 21) | 460) | 645) | 4) | |
| Current portion of long-term debt | 1,022) | 377) | 2,743) | 2,046) | 79) | |
| Long-term debt, excluding current portion | 28,216) | 30,770) | 28,333) | 29,713) | 25,151) | |
| Total debt | 29,244) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Lease liabilities, operating leases, current | 147) | —) | —) | —) | —) | |
| Lease liabilities, operating leases, non-current | 454) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 29,845) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Shareholders’ equity | 51,623) | 51,657) | 66,034) | 57,358) | 57,685) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 0.58 | 0.60 | 0.48 | 0.56 | 0.44 | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Shareholders’ equity
= 29,845 ÷ 51,623 = 0.58
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt experienced an overall increase from 2015 to 2016, rising from 25,234 million USD to 32,404 million USD. Following that peak, the debt level showed a gradual decline over the subsequent years, reaching 29,845 million USD by the end of 2019. This indicates that while there was a significant increase initially, the company undertook efforts to reduce or manage its debt more effectively afterward.
- Shareholders’ Equity
- Shareholders' equity remained relatively stable between 2015 and 2016, with values close to 57,000 million USD. However, in 2017, equity saw a marked increase, reaching 66,034 million USD, suggesting improved financial health or capital infusion during this period. This was followed by a notable decrease in 2018, declining to 51,657 million USD, and then stabilizing slightly to 51,623 million USD in 2019.
- Debt to Equity Ratio (including operating lease liability)
- This ratio increased significantly from 0.44 in 2015 to 0.56 in 2016, reflecting the rise in debt relative to shareholders’ equity during that period. It then improved somewhat in 2017, decreasing to 0.48, suggesting a more balanced capital structure. However, the ratio increased again in 2018 to 0.6 and remained elevated at 0.58 in 2019, signifying a higher leverage level and greater reliance on debt financing relative to equity in the later years.
- Overall Observations
- The financial data demonstrates a notable fluctuation in both debt and equity components over the five-year span. The company increased its leverage in 2016, as indicated by the rise in total debt and debt-to-equity ratio. Despite a momentary strengthening of equity in 2017, shareholders’ equity declined sharply in the following years, while debt levels began a slow reduction. The resulting elevated debt-to-equity ratios in 2018 and 2019 suggest that the company maintained a higher leverage position through those years, which could imply increased financial risk or strategic capital structuring decisions.
Debt to Capital
Kraft Heinz Co., debt to capital calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and other short-term debt | 6) | 21) | 460) | 645) | 4) | |
| Current portion of long-term debt | 1,022) | 377) | 2,743) | 2,046) | 79) | |
| Long-term debt, excluding current portion | 28,216) | 30,770) | 28,333) | 29,713) | 25,151) | |
| Total debt | 29,244) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Shareholders’ equity | 51,623) | 51,657) | 66,034) | 57,358) | 57,685) | |
| Total capital | 80,867) | 82,825) | 97,570) | 89,762) | 82,919) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.36 | 0.38 | 0.32 | 0.36 | 0.30 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to capital = Total debt ÷ Total capital
= 29,244 ÷ 80,867 = 0.36
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibits a fluctuating trend over the five-year period. It initially increased from 25,234 million USD at the end of 2015 to a peak of 32,404 million USD at the end of 2016. This was followed by a gradual decline over the subsequent years, dropping to 31,536 million USD in 2017, 31,168 million USD in 2018, and further down to 29,244 million USD by the end of 2019.
- Total Capital
- Total capital showed an overall increase from 82,919 million USD in 2015 to a high of 97,570 million USD in 2017. However, it declined noticeably in the following years, falling to 82,825 million USD in 2018 and further decreasing to 80,867 million USD by the end of 2019. This indicates some volatility in the company's capital structure during this period.
- Debt to Capital Ratio
- The debt to capital ratio fluctuated in a relatively narrow range between 0.30 and 0.38. Starting at 0.30 in 2015, the ratio increased to 0.36 in 2016, then decreased slightly to 0.32 in 2017. Subsequently, it rose again to 0.38 in 2018 before marginally declining to 0.36 by the end of 2019. This pattern reflects adjustments in leverage levels but overall suggests a moderate reliance on debt financing throughout the period.
Debt to Capital (including Operating Lease Liability)
Kraft Heinz Co., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and other short-term debt | 6) | 21) | 460) | 645) | 4) | |
| Current portion of long-term debt | 1,022) | 377) | 2,743) | 2,046) | 79) | |
| Long-term debt, excluding current portion | 28,216) | 30,770) | 28,333) | 29,713) | 25,151) | |
| Total debt | 29,244) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Lease liabilities, operating leases, current | 147) | —) | —) | —) | —) | |
| Lease liabilities, operating leases, non-current | 454) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 29,845) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Shareholders’ equity | 51,623) | 51,657) | 66,034) | 57,358) | 57,685) | |
| Total capital (including operating lease liability) | 81,468) | 82,825) | 97,570) | 89,762) | 82,919) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.37 | 0.38 | 0.32 | 0.36 | 0.30 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 29,845 ÷ 81,468 = 0.37
2 Click competitor name to see calculations.
The analysis of the provided financial data reveals several key trends regarding the company's debt and capital structure over the five-year period ending in 2019.
- Total Debt (Including Operating Lease Liability)
- The total debt increased significantly from US$25,234 million in 2015 to US$32,404 million in 2016. After this peak, the debt level showed a gradual decline, decreasing to US$31,536 million in 2017, US$31,168 million in 2018, and further down to US$29,845 million by the end of 2019.
- Total Capital (Including Operating Lease Liability)
- Total capital exhibited a fluctuating trend. It increased from US$82,919 million in 2015 to a high of US$97,570 million in 2017. However, this upward momentum reversed sharply in 2018, with capital dropping to US$82,825 million and continuing a slight decline to US$81,468 million in 2019. Overall, despite initial growth, total capital decreased substantially in the last two years of the data series.
- Debt to Capital Ratio (Including Operating Lease Liability)
- This ratio, indicative of the proportion of debt within the total capital, reflected notable volatility. Starting at 0.30 in 2015, it increased to 0.36 in 2016, then declined to 0.32 in 2017. The ratio rose again to 0.38 in 2018 and slightly decreased to 0.37 in 2019. The fluctuations suggest varying reliance on debt financing relative to total capital over the period, with the highest leverage observed in 2018 and 2019.
In summary, the company experienced rising total debt until 2016 followed by a moderate reduction, while total capital peaked in 2017 and declined thereafter. The debt to capital ratio indicates an overall increase in leverage in the latter years, pointing to a higher proportion of debt financing in the capital structure towards the end of the period.
Debt to Assets
Kraft Heinz Co., debt to assets calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and other short-term debt | 6) | 21) | 460) | 645) | 4) | |
| Current portion of long-term debt | 1,022) | 377) | 2,743) | 2,046) | 79) | |
| Long-term debt, excluding current portion | 28,216) | 30,770) | 28,333) | 29,713) | 25,151) | |
| Total debt | 29,244) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Total assets | 101,450) | 103,461) | 120,232) | 120,480) | 122,973) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.29 | 0.30 | 0.26 | 0.27 | 0.21 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to assets = Total debt ÷ Total assets
= 29,244 ÷ 101,450 = 0.29
2 Click competitor name to see calculations.
- Total debt
- The total debt exhibited an upward trend from 2015 to 2016, increasing from US$25,234 million to US$32,404 million. Subsequently, there was a slight decline in 2017 to US$31,536 million, followed by a continued gradual decrease through 2019, ending at US$29,244 million. This indicates that the company experienced a peak in its debt level in 2016 and has since been reducing its debt burden.
- Total assets
- Total assets showed a generally declining trend throughout the period under review. Beginning at US$122,973 million in 2015, there was a minor decrease in 2016 and 2017, maintaining a level above US$120 billion. However, a more pronounced decline occurred in 2018 and 2019, with total assets falling to US$103,461 million and US$101,450 million respectively. This downward movement suggests a contraction in asset base over the last two years.
- Debt to assets ratio
- The debt to assets ratio rose from 0.21 in 2015 to 0.27 in 2016, reflecting the increase in debt relative to assets. It remained relatively stable at 0.26 in 2017 but then increased further to 0.30 in 2018, indicating a higher proportion of debt financing relative to assets. In 2019, the ratio slightly decreased to 0.29. Overall, this ratio's ascending trend over the period suggests a gradual increase in leverage, especially notable in 2018, despite some reduction in debt levels and assets.
Debt to Assets (including Operating Lease Liability)
Kraft Heinz Co., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Commercial paper and other short-term debt | 6) | 21) | 460) | 645) | 4) | |
| Current portion of long-term debt | 1,022) | 377) | 2,743) | 2,046) | 79) | |
| Long-term debt, excluding current portion | 28,216) | 30,770) | 28,333) | 29,713) | 25,151) | |
| Total debt | 29,244) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Lease liabilities, operating leases, current | 147) | —) | —) | —) | —) | |
| Lease liabilities, operating leases, non-current | 454) | —) | —) | —) | —) | |
| Total debt (including operating lease liability) | 29,845) | 31,168) | 31,536) | 32,404) | 25,234) | |
| Total assets | 101,450) | 103,461) | 120,232) | 120,480) | 122,973) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.29 | 0.30 | 0.26 | 0.27 | 0.21 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 29,845 ÷ 101,450 = 0.29
2 Click competitor name to see calculations.
- Total Debt (Including Operating Lease Liability)
-
The total debt exhibited an increasing trend from 2015 to 2016, rising from 25,234 million US dollars to 32,404 million US dollars. Following this peak, the debt level slightly declined to 31,536 million in 2017 and then remained relatively stable with minor decreases through 2018 and 2019, ultimately reaching 29,845 million US dollars. This suggests a period of increased leverage followed by moderate debt reduction efforts.
- Total Assets
-
Total assets showed a generally downward trajectory over the five-year period. Beginning at 122,973 million US dollars in 2015, assets decreased slightly to 120,480 million in 2016 and to 120,232 million in 2017. From 2017 onwards, assets declined more sharply, reaching 103,461 million in 2018 and further dropping to 101,450 million in 2019. This indicates a contraction in the asset base, particularly notable in the latter years.
- Debt to Assets Ratio (Including Operating Lease Liability)
-
The debt to assets ratio increased from 0.21 in 2015 to 0.27 in 2016 and then slightly decreased to 0.26 in 2017. Afterward, the ratio climbed further to 0.30 in 2018, before slightly reducing to 0.29 in 2019. This pattern reflects an overall increase in financial leverage over the period, with the highest leverage reached in 2018, followed by a minor reduction in the subsequent year. The increase in leverage corresponds with the period of declining total assets, emphasizing rising reliance on debt financing.
Financial Leverage
Kraft Heinz Co., financial leverage calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 101,450) | 103,461) | 120,232) | 120,480) | 122,973) | |
| Shareholders’ equity | 51,623) | 51,657) | 66,034) | 57,358) | 57,685) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.97 | 2.00 | 1.82 | 2.10 | 2.13 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Financial leverage = Total assets ÷ Shareholders’ equity
= 101,450 ÷ 51,623 = 1.97
2 Click competitor name to see calculations.
- Total Assets
- The total assets demonstrate a gradual decline over the five-year period. Starting at approximately 122,973 million US dollars at the end of 2015, the assets slightly decreased to 120,480 million in 2016 and remained nearly stable through 2017. A more noticeable decline occurred in 2018 and 2019, with total assets falling to 103,461 million and then slightly further to 101,450 million US dollars. This indicates a contraction in the asset base, which may reflect asset disposals, depreciation, or other balance sheet adjustments.
- Shareholders’ Equity
- Shareholders' equity fluctuated throughout the period reviewed. It started at 57,685 million US dollars at the end of 2015 and experienced a minor decrease in 2016. In 2017, there was a marked increase to 66,034 million US dollars, which could suggest retained earnings growth or capital injections. However, equity decreased sharply in 2018 to 51,657 million and remained nearly constant in 2019 at 51,623 million, indicating possible losses, dividends paid out, or other reductions impacting net equity.
- Financial Leverage
- Financial leverage, measured as a ratio, shows a general downward trend from 2.13 in 2015 to 1.82 in 2017, indicating a reduction in the degree of leverage or debt relative to equity during that period. However, leverage increased again in 2018 to 2.00 and slightly decreased to 1.97 in 2019. This suggests a moderate increase in reliance on debt financing after 2017, followed by a stabilization at a higher leverage level compared to 2017. The fluctuations could be linked to changes in debt levels or equity adjustments observed in the same timeframe.
Interest Coverage
Kraft Heinz Co., interest coverage calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Kraft Heinz | 1,935) | (10,192) | 10,999) | 3,632) | 634) | |
| Add: Net income attributable to noncontrolling interest | (2) | (62) | (9) | 10) | 13) | |
| Add: Income tax expense | 728) | (1,067) | (5,460) | 1,381) | 366) | |
| Add: Interest expense | 1,361) | 1,284) | 1,234) | 1,134) | 1,321) | |
| Earnings before interest and tax (EBIT) | 4,022) | (10,037) | 6,764) | 6,157) | 2,334) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 2.96 | -7.82 | 5.48 | 5.43 | 1.77 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Interest coverage = EBIT ÷ Interest expense
= 4,022 ÷ 1,361 = 2.96
2 Click competitor name to see calculations.
- Earnings before interest and tax (EBIT)
- The EBIT showed a significant increase from 2015 to 2017, rising from 2,334 million US dollars to 6,764 million US dollars. However, in 2018, a substantial decline occurred, resulting in a negative EBIT of -10,037 million US dollars. In 2019, the EBIT recovered partially to 4,022 million US dollars, indicating some restoration of operating profitability.
- Interest expense
- Interest expense exhibited a relatively stable upward trend over the five-year period, increasing gradually from 1,321 million US dollars in 2015 to 1,361 million US dollars in 2019. This suggests a modest increase in debt servicing costs or borrowing levels over time.
- Interest coverage ratio
- The interest coverage ratio, which measures the ability to meet interest obligations from operating earnings, showed strong improvement from 1.77 in 2015 to a peak of 5.48 in 2017. This indicates enhanced earnings capacity relative to interest expenses. However, the ratio deteriorated sharply in 2018 to -7.82, reflecting the negative EBIT and an inability to cover interest expenses. In 2019, the ratio recovered to 2.96, signaling a return to positive earnings relative to interest costs but remaining well below the levels seen in 2016 and 2017.
Fixed Charge Coverage
Kraft Heinz Co., fixed charge coverage calculation, comparison to benchmarks
| Dec 28, 2019 | Dec 29, 2018 | Dec 30, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| U.S. federal statutory tax rate | 21.00% | 21.00% | 35.00% | 35.00% | 35.00% | |
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Kraft Heinz | 1,935) | (10,192) | 10,999) | 3,632) | 634) | |
| Add: Net income attributable to noncontrolling interest | (2) | (62) | (9) | 10) | 13) | |
| Add: Income tax expense | 728) | (1,067) | (5,460) | 1,381) | 366) | |
| Add: Interest expense | 1,361) | 1,284) | 1,234) | 1,134) | 1,321) | |
| Earnings before interest and tax (EBIT) | 4,022) | (10,037) | 6,764) | 6,157) | 2,334) | |
| Add: Operating lease costs | 191) | 200) | 183) | 149) | 160) | |
| Earnings before fixed charges and tax | 4,213) | (9,837) | 6,947) | 6,306) | 2,494) | |
| Interest expense | 1,361) | 1,284) | 1,234) | 1,134) | 1,321) | |
| Operating lease costs | 191) | 200) | 183) | 149) | 160) | |
| Preferred dividends | —) | —) | —) | 180) | 900) | |
| Preferred dividends, tax adjustment1 | —) | —) | —) | 97) | 485) | |
| Preferred dividends, after tax adjustment | —) | —) | —) | 277) | 1,385) | |
| Fixed charges | 1,552) | 1,484) | 1,417) | 1,560) | 2,866) | |
| Solvency Ratio | ||||||
| Fixed charge coverage2 | 2.71 | -6.63 | 4.90 | 4.04 | 0.87 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors3 | ||||||
| Coca-Cola Co. | — | — | — | — | — | |
| Mondelēz International Inc. | — | — | — | — | — | |
| PepsiCo Inc. | — | — | — | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-12-28), 10-K (reporting date: 2018-12-29), 10-K (reporting date: 2017-12-30), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).
1 2019 Calculation
Preferred dividends, tax adjustment = (Preferred dividends × U.S. federal statutory tax rate) ÷ (1 − U.S. federal statutory tax rate)
= (0 × 21.00%) ÷ (1 − 21.00%) = 0
2 2019 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 4,213 ÷ 1,552 = 2.71
3 Click competitor name to see calculations.
- Earnings Before Fixed Charges and Tax
- The earnings before fixed charges and tax exhibited significant fluctuations over the analyzed period. Starting at 2,494 million US dollars in 2015, the figure increased substantially to 6,306 million in 2016 and further to 6,947 million in 2017, indicating a strong upward trend in profitability during these years. However, in 2018, there was a sharp downturn, with earnings falling into a substantial negative value of -9,837 million, signaling a period of considerable financial distress. The following year, 2019, saw a recovery to 4,213 million, suggesting an improvement in operating performance but still below the peak levels seen in 2016 and 2017.
- Fixed Charges
- The fixed charges remained relatively stable throughout the five-year span. They decreased from 2,866 million in 2015 to 1,560 million in 2016 and continued a modest decline to 1,417 million in 2017. In 2018, fixed charges slightly increased to 1,484 million and rose again to 1,552 million in 2019. This stability indicates consistent interest and lease obligations, with only minor variations year-over-year.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio mirrored the volatility observed in earnings before fixed charges and tax. It rose sharply from 0.87 in 2015 to 4.04 in 2016, and further to 4.90 in 2017, reflecting improving ability to cover fixed charges from earnings. However, it turned negative to -6.63 in 2018, corresponding with the large negative earnings in that year, indicating a failure to generate sufficient earnings to cover fixed charges. By 2019, the ratio recovered to 2.71, denoting an improved but still moderate capacity to meet fixed financial obligations.
- Summary
- The data reveals a period of strong earnings growth and improving fixed charge coverage from 2015 through 2017, followed by a severe earnings decline and negative coverage in 2018. Although there was a recovery in 2019, earnings and coverage levels did not reach the previous highs. Fixed charges remained fairly constant, implying that the company's financial obligations were stable despite earnings volatility. The significant downturn in 2018 represents an important anomaly that merits further investigation to understand its causes and implications for financial stability.