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)
Allergan Inc., solvency ratios
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
- Debt Ratios
- The debt to equity ratio shows a general decline from 0.46 in 2010 to 0.28 in 2014, indicating a reduction in the proportion of debt relative to shareholders' equity over the period. Similarly, the debt to capital ratio decreased from 0.32 to 0.22, reinforcing the trend of lowered debt levels in the company's capital structure. The debt to assets ratio also followed this downward trend, declining from 0.27 to 0.17, suggesting that the company's total asset base is less leveraged with debt over time.
- Financial Leverage
- The financial leverage ratio decreased from 1.75 in 2010 to 1.6 in 2014, with a slight increase to 1.64 in 2013. This indicates a modest reduction in the use of debt financing relative to equity, reflecting a somewhat more conservative capital structure through the years.
- Interest Coverage
- The interest coverage ratio improved dramatically, rising from 3.17 in 2010 to 29.66 in 2014. This significant increase implies a substantial enhancement in the company’s ability to meet interest obligations from operating earnings, suggesting stronger profitability and reduced risk of financial distress.
- Fixed Charge Coverage
- The fixed charge coverage ratio experienced a marked improvement from 2.29 in 2010 to 14.93 in 2014. This trend points to the company’s enhanced capacity to cover fixed financial charges, including interest and lease payments, from earnings before interest and taxes, improving overall financial stability.
Debt Ratios
Coverage Ratios
Debt to Equity
Allergan Inc., debt to equity calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Notes payable | 72,100) | 55,600) | 48,800) | 83,900) | 28,100) | |
| Convertible notes | —) | —) | —) | —) | 642,500) | |
| Long-term debt, excluding current maturities | 2,085,300) | 2,098,300) | 1,512,400) | 1,515,400) | 1,534,200) | |
| Total debt | 2,157,400) | 2,153,900) | 1,561,200) | 1,599,300) | 2,204,800) | |
| Total Allergan, Inc. stockholders’ equity | 7,753,000) | 6,463,200) | 5,837,100) | 5,309,600) | 4,757,700) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 0.28 | 0.33 | 0.27 | 0.30 | 0.46 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Debt to equity = Total debt ÷ Total Allergan, Inc. stockholders’ equity
= 2,157,400 ÷ 7,753,000 = 0.28
2 Click competitor name to see calculations.
- Total Debt
- The total debt experienced a significant decline from 2,204,800 thousand US dollars at the end of 2010 to 1,599,300 thousand US dollars by the end of 2011. It remained relatively stable in 2012 at 1,561,200 thousand US dollars, followed by a notable increase in 2013 to 2,153,900 thousand US dollars, which was maintained through 2014 with a slight increment to 2,157,400 thousand US dollars. Overall, the pattern shows an initial debt reduction phase followed by a subsequent rise back to levels slightly below the 2010 figure.
- Total Stockholders’ Equity
- A continuous upward trend is observed in stockholders' equity throughout the entire period. Beginning at 4,757,700 thousand US dollars in 2010, equity increased steadily each year, reaching 7,753,000 thousand US dollars by the end of 2014. This indicates ongoing growth in company ownership value over the five years.
- Debt to Equity Ratio
- The debt to equity ratio showed a decline from 0.46 in 2010 to a low of 0.27 in 2012, reflecting a reduction in leverage relative to equity. Despite the increase in total debt observed after 2012, the ratio increased only modestly to 0.33 in 2013 before decreasing again to 0.28 in 2014. This suggests that the growth in equity outpaced the increase in debt during the latter period, maintaining a relatively conservative leverage position.
Debt to Capital
Allergan Inc., debt to capital calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Notes payable | 72,100) | 55,600) | 48,800) | 83,900) | 28,100) | |
| Convertible notes | —) | —) | —) | —) | 642,500) | |
| Long-term debt, excluding current maturities | 2,085,300) | 2,098,300) | 1,512,400) | 1,515,400) | 1,534,200) | |
| Total debt | 2,157,400) | 2,153,900) | 1,561,200) | 1,599,300) | 2,204,800) | |
| Total Allergan, Inc. stockholders’ equity | 7,753,000) | 6,463,200) | 5,837,100) | 5,309,600) | 4,757,700) | |
| Total capital | 9,910,400) | 8,617,100) | 7,398,300) | 6,908,900) | 6,962,500) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.22 | 0.25 | 0.21 | 0.23 | 0.32 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Debt to capital = Total debt ÷ Total capital
= 2,157,400 ÷ 9,910,400 = 0.22
2 Click competitor name to see calculations.
- Total Debt
- The total debt exhibited a significant decrease from 2,204,800 thousand US dollars in 2010 to 1,599,300 thousand in 2011, representing a reduction of approximately 27.4%. This downward trend continued with a further slight decline to 1,561,200 thousand in 2012. Subsequently, there was a notable increase in total debt, rising to 2,153,900 thousand in 2013 and remaining relatively stable at 2,157,400 thousand in 2014. Overall, the debt level showed initial deleveraging followed by a period of rising liabilities towards the latter years.
- Total Capital
- Total capital was relatively stable from 2010 to 2011, with a small decrease from 6,962,500 thousand to 6,908,900 thousand. Starting in 2012, total capital increased consistently each year, reaching 7,398,300 thousand, then advancing to 8,617,100 thousand in 2013, and culminating at 9,910,400 thousand in 2014. This steady growth reflects a strengthening capital base over the observed period.
- Debt to Capital Ratio
- The debt to capital ratio declined markedly from 0.32 in 2010 to 0.23 in 2011 and further to 0.21 in 2012, indicating an improved capital structure with reduced leverage. Despite the increase in total debt in 2013, the ratio only rose moderately to 0.25, then decreased again to 0.22 in 2014. This suggests that the growth in total capital outpaced the increase in debt, maintaining a relatively conservative leverage position in the latter years.
Debt to Assets
Allergan Inc., debt to assets calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Notes payable | 72,100) | 55,600) | 48,800) | 83,900) | 28,100) | |
| Convertible notes | —) | —) | —) | —) | 642,500) | |
| Long-term debt, excluding current maturities | 2,085,300) | 2,098,300) | 1,512,400) | 1,515,400) | 1,534,200) | |
| Total debt | 2,157,400) | 2,153,900) | 1,561,200) | 1,599,300) | 2,204,800) | |
| Total assets | 12,415,700) | 10,574,300) | 9,179,300) | 8,508,600) | 8,308,100) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.17 | 0.20 | 0.17 | 0.19 | 0.27 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Debt to assets = Total debt ÷ Total assets
= 2,157,400 ÷ 12,415,700 = 0.17
2 Click competitor name to see calculations.
- Total Debt
- The total debt experienced a significant decrease from 2,204,800 thousand US dollars in 2010 to 1,599,300 thousand US dollars in 2011, followed by a slight reduction to 1,561,200 thousand US dollars in 2012. However, there was a marked increase in total debt in 2013, rising to 2,153,900 thousand US dollars and remaining relatively stable into 2014 at 2,157,400 thousand US dollars.
- Total Assets
- Total assets showed a consistent upward trend throughout the period. Starting at 8,308,100 thousand US dollars in 2010, the assets increased moderately to 8,508,600 thousand US dollars in 2011, and then accelerated their growth to 9,179,300 thousand US dollars in 2012. This growth continued more rapidly in the following years, reaching 10,574,300 thousand US dollars in 2013 and culminating at 12,415,700 thousand US dollars in 2014.
- Debt to Assets Ratio
- The debt to assets ratio declined significantly from 0.27 in 2010 to 0.19 in 2011, indicating improved leverage and possibly a stronger asset base relative to debt. This downward trend continued in 2012, reaching 0.17, representing further deleveraging or asset growth outpacing debt increases. The ratio slightly increased to 0.20 in 2013, reflecting the rise in debt observed during that year but decreased again to 0.17 in 2014, aligning with the substantial increase in total assets.
Financial Leverage
Allergan Inc., financial leverage calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Total assets | 12,415,700) | 10,574,300) | 9,179,300) | 8,508,600) | 8,308,100) | |
| Total Allergan, Inc. stockholders’ equity | 7,753,000) | 6,463,200) | 5,837,100) | 5,309,600) | 4,757,700) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 1.60 | 1.64 | 1.57 | 1.60 | 1.75 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Financial leverage = Total assets ÷ Total Allergan, Inc. stockholders’ equity
= 12,415,700 ÷ 7,753,000 = 1.60
2 Click competitor name to see calculations.
- Total Assets
- Over the five-year period, total assets showed a consistent upward trend, increasing from approximately $8.31 billion in 2010 to about $12.42 billion in 2014. This represents a significant growth of around 49.5%, indicating an expansion of the company's asset base year over year.
- Total Stockholders’ Equity
- Stockholders' equity also exhibited steady growth, rising from approximately $4.76 billion in 2010 to $7.75 billion in 2014. This increase of roughly 62.8% suggests that the company's net worth and shareholder value have expanded at a rate that outpaced the growth in total assets.
- Financial Leverage
- The financial leverage ratio fluctuated slightly within a narrow range, starting at 1.75 in 2010, decreasing to 1.57 by 2012, then rising slightly to 1.64 in 2013, before settling at 1.6 in 2014. Overall, the trend indicates moderate use of debt relative to equity, with some reduction in leverage observed over the period, reflecting a cautious approach to financial risk.
- Summary
- The company's financial position demonstrated strong growth in both assets and equity, with equity increasing at a faster pace than assets. The relatively stable financial leverage ratio suggests balanced capital management, maintaining prudent debt levels while supporting asset growth. These trends collectively point to an improving financial strength and a consistent enhancement of shareholder value over the reviewed period.
Interest Coverage
Allergan Inc., interest coverage calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Allergan, Inc. | 1,524,200) | 985,100) | 1,098,800) | 934,500) | 600) | |
| Add: Net income attributable to noncontrolling interest | 4,600) | 3,600) | 3,700) | 3,600) | 4,300) | |
| Less: Discontinued operations | (3,800) | (283,800) | —) | —) | —) | |
| Add: Income tax expense | 456,700) | 458,300) | 430,800) | 361,600) | 165,900) | |
| Add: Interest expense | 69,400) | 75,000) | 63,600) | 71,800) | 78,700) | |
| Earnings before interest and tax (EBIT) | 2,058,700) | 1,805,800) | 1,596,900) | 1,371,500) | 249,500) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 29.66 | 24.08 | 25.11 | 19.10 | 3.17 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Interest coverage = EBIT ÷ Interest expense
= 2,058,700 ÷ 69,400 = 29.66
2 Click competitor name to see calculations.
The analysis of the financial data reveals notable trends in operational profitability, interest expenses, and coverage ratios over the five-year period ending December 31, 2014.
- Earnings before interest and tax (EBIT)
- EBIT demonstrates a marked upward trajectory starting from US$249.5 million in 2010 to US$2.0587 billion in 2014. The most significant increase occurs between 2010 and 2011, where EBIT rose over fivefold. Subsequent years show continued but more moderate growth, indicating expanding operational profitability and possibly improved business efficiency or product performance during this timeframe.
- Interest Expense
- The interest expense remains relatively stable throughout the period, fluctuating slightly between approximately US$63.6 million and US$78.7 million. The expense shows a mild decline overall, with the lowest point recorded in 2012 (US$63.6 million) and slight increases in subsequent years. This trend suggests effective management of debt levels or favorable interest terms, keeping financing costs controlled despite increasing operational scale.
- Interest Coverage Ratio
- The interest coverage ratio, representing the company’s ability to meet interest obligations through EBIT, improves substantially over time. Starting at 3.17 in 2010, it jumps significantly in 2011 to 19.1 and continues to increase, reaching 29.66 by 2014. This upward trend indicates greatly enhanced capacity to service debt, reflecting both the robust growth in EBIT and stable to declining interest expenses. The high coverage ratio by 2014 signals strong financial health and lower risk from an interest liability perspective.
Overall, the data underscores strong operational growth accompanied by disciplined financial management. The substantial increase in EBIT alongside steady or slightly reduced interest expenses leads to a markedly improved ability to cover interest charges. These trends indicate a solidifying financial position and greater resilience in servicing debt obligations over the analyzed period.
Fixed Charge Coverage
Allergan Inc., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | Dec 31, 2010 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net earnings attributable to Allergan, Inc. | 1,524,200) | 985,100) | 1,098,800) | 934,500) | 600) | |
| Add: Net income attributable to noncontrolling interest | 4,600) | 3,600) | 3,700) | 3,600) | 4,300) | |
| Less: Discontinued operations | (3,800) | (283,800) | —) | —) | —) | |
| Add: Income tax expense | 456,700) | 458,300) | 430,800) | 361,600) | 165,900) | |
| Add: Interest expense | 69,400) | 75,000) | 63,600) | 71,800) | 78,700) | |
| Earnings before interest and tax (EBIT) | 2,058,700) | 1,805,800) | 1,596,900) | 1,371,500) | 249,500) | |
| Add: Rental expense | 73,400) | 79,000) | 67,000) | 58,100) | 53,500) | |
| Earnings before fixed charges and tax | 2,132,100) | 1,884,800) | 1,663,900) | 1,429,600) | 303,000) | |
| Interest expense | 69,400) | 75,000) | 63,600) | 71,800) | 78,700) | |
| Rental expense | 73,400) | 79,000) | 67,000) | 58,100) | 53,500) | |
| Fixed charges | 142,800) | 154,000) | 130,600) | 129,900) | 132,200) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 14.93 | 12.24 | 12.74 | 11.01 | 2.29 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | — | — | — | — | — | |
| Bristol-Myers Squibb Co. | — | — | — | — | — | |
| Danaher Corp. | — | — | — | — | — | |
| Eli Lilly & Co. | — | — | — | — | — | |
| Gilead Sciences Inc. | — | — | — | — | — | |
| Johnson & Johnson | — | — | — | — | — | |
| Merck & Co. Inc. | — | — | — | — | — | |
| Pfizer Inc. | — | — | — | — | — | |
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | |
| Thermo Fisher Scientific Inc. | — | — | — | — | — | |
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31).
1 2014 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 2,132,100 ÷ 142,800 = 14.93
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax exhibit a consistent upward trend over the five-year period. Starting at 303,000 thousand USD in 2010, the figure increased significantly to 1,429,600 thousand USD in 2011. The growth continued in the following years, reaching 1,663,900 thousand USD in 2012, 1,884,800 thousand USD in 2013, and 2,132,100 thousand USD by the end of 2014. This reflects a substantial expansion in operational profitability over time.
- Fixed charges
- Fixed charges remained relatively stable throughout the reported years, fluctuating marginally. The expense was 132,200 thousand USD in 2010 and slightly decreased to 129,900 thousand USD in 2011. It saw a minor increase to 130,600 thousand USD in 2012, followed by a more noticeable rise to 154,000 thousand USD in 2013. The fixed charges then decreased somewhat to 142,800 thousand USD in 2014. Overall, fixed charges show moderate variances but no clear upward or downward trend over the period.
- Fixed charge coverage ratio
- The fixed charge coverage ratio improved significantly over the period, indicating enhanced ability to cover fixed charges with earnings. Beginning at 2.29 in 2010, the ratio surged to 11.01 in 2011, suggesting a substantial increase in financial strength. It continued to rise to 12.74 in 2012, slightly declined to 12.24 in 2013, and then reached its highest point of 14.93 in 2014. These values indicate progressively stronger coverage and likely improved financial stability.