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
Altria Group Inc., 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 demonstrates a general increase in leverage across the analyzed period, coupled with a substantial improvement in the capacity to service debt obligations.
- Debt-to-Capital and Debt-to-Assets Ratios
- A consistent upward trajectory is observed in both metrics through 2022. The debt-to-capital ratio rose from 0.82 in 2019 to a peak of 1.17 in 2022 before stabilizing at 1.16 in 2023. Similarly, the debt-to-assets ratio climbed from 0.57 in 2019 to 0.72 in 2022, followed by a moderate reduction to 0.68 in 2023. These patterns indicate an increasing reliance on borrowed funds relative to total capital and assets over the majority of the period.
- Interest Coverage Ratio
- A significant improvement in debt servicing capability is evident. Following a low of 1.58 in 2019, the ratio increased to 6.63 in 2020, experienced a temporary contraction to 4.22 in 2021, and subsequently climbed to reach 10.51 by the end of 2023. This trend indicates a strengthening of operating earnings relative to interest expenses, substantially reducing the risk of default.
- Debt-to-Equity and Financial Leverage
- Available data for the initial two-year window shows a sharp increase in leverage. The debt-to-equity ratio rose from 4.51 in 2019 to 10.38 in 2020, while financial leverage more than doubled from 7.92 to 16.70 during the same timeframe.
In summary, while the organization has maintained high levels of indebtedness relative to its equity and assets, the dramatic expansion of the interest coverage ratio suggests a strengthened financial position regarding the management of fixed interest obligations.
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Debt to Equity
Altria Group Inc., 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 long-term debt | 1,121) | 1,556) | 1,105) | 1,500) | 1,000) | |
| Long-term debt, excluding current portion | 25,112) | 25,124) | 26,939) | 27,971) | 27,042) | |
| Total debt | 26,233) | 26,680) | 28,044) | 29,471) | 28,042) | |
| Stockholders’ equity (deficit) attributable to Altria | (3,540) | (3,973) | (1,606) | 2,839) | 6,222) | |
| Solvency Ratio | ||||||
| Debt to equity1 | — | — | — | 10.38 | 4.51 | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Coca-Cola Co. | 1.62 | 1.62 | 1.86 | — | — | |
| Mondelēz International Inc. | 0.69 | 0.85 | 0.69 | — | — | |
| PepsiCo Inc. | 2.38 | 2.28 | 2.51 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Debt to Equity, Sector | ||||||
| Food, Beverage & Tobacco | 2.49 | 2.44 | 2.28 | — | — | |
| Debt to Equity, Industry | ||||||
| Consumer Staples | 1.16 | 1.08 | 1.07 | — | — | |
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 ÷ Stockholders’ equity (deficit) attributable to Altria
= 26,233 ÷ -3,540 = —
2 Click competitor name to see calculations.
A critical shift in the solvency profile is observed between 2019 and 2023, characterized by a transition from positive stockholders' equity to a sustained equity deficit. While total debt levels remained relatively stable with a slight downward trajectory in the later years, the erosion of the equity base has fundamentally altered the capital structure and leverage position.
- Total Debt Trends
- Total debt peaked at US$ 29,471 million in 2020 before initiating a consistent decline, reaching US$ 26,233 million by December 31, 2023. This downward trend indicates a gradual reduction in the absolute volume of borrowed capital over the final three years of the analyzed period.
- Stockholders' Equity Position
- A significant contraction in stockholders' equity is evident, falling from US$ 6,222 million in 2019 to a deficit of US$ 1,606 million in 2021. This deficit deepened to US$ 3,973 million in 2022 before seeing a slight recovery to US$ 3,540 million in 2023. The shift to negative equity indicates that total liabilities exceed total assets, reflecting a highly leveraged balance sheet.
- Debt to Equity Ratio Analysis
- The debt to equity ratio rose sharply from 4.51 in 2019 to 10.38 in 2020, driven by the rapid decline in equity. For the period spanning 2021 to 2023, the ratio is not reported, as the presence of an equity deficit renders the standard debt-to-equity calculation mathematically non-meaningful for assessing solvency.
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Debt to Capital
Altria Group Inc., 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 long-term debt | 1,121) | 1,556) | 1,105) | 1,500) | 1,000) | |
| Long-term debt, excluding current portion | 25,112) | 25,124) | 26,939) | 27,971) | 27,042) | |
| Total debt | 26,233) | 26,680) | 28,044) | 29,471) | 28,042) | |
| Stockholders’ equity (deficit) attributable to Altria | (3,540) | (3,973) | (1,606) | 2,839) | 6,222) | |
| Total capital | 22,693) | 22,707) | 26,438) | 32,310) | 34,264) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 1.16 | 1.17 | 1.06 | 0.91 | 0.82 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Coca-Cola Co. | 0.62 | 0.62 | 0.65 | — | — | |
| Mondelēz International Inc. | 0.41 | 0.46 | 0.41 | — | — | |
| PepsiCo Inc. | 0.70 | 0.69 | 0.72 | — | — | |
| Philip Morris International Inc. | 1.31 | 1.26 | 1.57 | — | — | |
| Debt to Capital, Sector | ||||||
| Food, Beverage & Tobacco | 0.71 | 0.71 | 0.70 | — | — | |
| Debt to Capital, Industry | ||||||
| Consumer Staples | 0.54 | 0.52 | 0.52 | — | — | |
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
= 26,233 ÷ 22,693 = 1.16
2 Click competitor name to see calculations.
The solvency profile indicates a progressive increase in leverage over the five-year period from 2019 to 2023, characterized by a shrinking capital base relative to outstanding debt.
- Total Debt Trends
- Total debt experienced a marginal increase in 2020, reaching 29,471 million US$, before entering a period of consistent decline. By December 31, 2023, total debt was reduced to 26,233 million US$, reflecting a steady reduction in absolute borrowing levels following the 2020 peak.
- Total Capital Contraction
- A significant downward trend is observed in total capital, which decreased from 34,264 million US$ in 2019 to 22,693 million US$ in 2023. This represents a substantial contraction of the overall capital base, outpacing the reduction in total debt.
- Debt to Capital Ratio Analysis
- The debt to capital ratio rose steadily from 0.82 in 2019 to a peak of 1.17 in 2022, ending the period at 1.16 in 2023. The progression of this ratio above 1.0 beginning in 2021 indicates that total debt has exceeded total capital, which typically signifies a negative shareholders' equity position. The upward trajectory of the ratio is primarily attributable to the aggressive decline in total capital relative to the slower pace of debt repayment.
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Debt to Assets
Altria Group Inc., 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 long-term debt | 1,121) | 1,556) | 1,105) | 1,500) | 1,000) | |
| Long-term debt, excluding current portion | 25,112) | 25,124) | 26,939) | 27,971) | 27,042) | |
| Total debt | 26,233) | 26,680) | 28,044) | 29,471) | 28,042) | |
| Total assets | 38,570) | 36,954) | 39,523) | 47,414) | 49,271) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.68 | 0.72 | 0.71 | 0.62 | 0.57 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Coca-Cola Co. | 0.43 | 0.42 | 0.45 | — | — | |
| Mondelēz International Inc. | 0.27 | 0.32 | 0.29 | — | — | |
| PepsiCo Inc. | 0.44 | 0.42 | 0.44 | — | — | |
| Philip Morris International Inc. | 0.73 | 0.70 | 0.67 | — | — | |
| Debt to Assets, Sector | ||||||
| Food, Beverage & Tobacco | 0.46 | 0.45 | 0.44 | — | — | |
| Debt to Assets, Industry | ||||||
| Consumer Staples | 0.31 | 0.30 | 0.30 | — | — | |
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
= 26,233 ÷ 38,570 = 0.68
2 Click competitor name to see calculations.
An analysis of the solvency metrics from 2019 to 2023 reveals a period of increasing leverage followed by a slight correction in the most recent fiscal year. The overall trend indicates that the company's asset base contracted more significantly than its debt obligations for the majority of the period, leading to a higher proportion of assets being financed by debt.
- Total Debt Trends
- Total debt exhibited a slight increase from US$ 28,042 million in 2019 to a peak of US$ 29,471 million in 2020. Subsequently, a consistent deleveraging trend occurred over the next three years, with total debt decreasing to US$ 26,233 million by December 31, 2023. This represents a net reduction in nominal debt levels compared to the 2019 baseline.
- Total Asset Trends
- Total assets experienced a marked decline between 2019 and 2022, falling from US$ 49,271 million to US$ 36,954 million. This contraction was most pronounced between 2020 and 2021. A partial recovery was observed in 2023, with assets increasing to US$ 38,570 million.
- Debt to Assets Ratio Analysis
- The debt to assets ratio rose steadily from 0.57 in 2019 to a peak of 0.72 in 2022. This increase was primarily driven by the reduction in total assets rather than an increase in total debt, suggesting a contraction in the balance sheet that intensified the relative weight of liabilities. In 2023, the ratio improved to 0.68, reflecting the dual impact of continued debt reduction and a modest increase in the asset base.
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Financial Leverage
Altria Group Inc., 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 | 38,570) | 36,954) | 39,523) | 47,414) | 49,271) | |
| Stockholders’ equity (deficit) attributable to Altria | (3,540) | (3,973) | (1,606) | 2,839) | 6,222) | |
| Solvency Ratio | ||||||
| Financial leverage1 | — | — | — | 16.70 | 7.92 | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Coca-Cola Co. | 3.77 | 3.85 | 4.10 | — | — | |
| Mondelēz International Inc. | 2.52 | 2.65 | 2.37 | — | — | |
| PepsiCo Inc. | 5.43 | 5.38 | 5.76 | — | — | |
| Philip Morris International Inc. | — | — | — | — | — | |
| Financial Leverage, Sector | ||||||
| Food, Beverage & Tobacco | 5.44 | 5.37 | 5.16 | — | — | |
| Financial Leverage, Industry | ||||||
| Consumer Staples | 3.71 | 3.59 | 3.59 | — | — | |
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 ÷ Stockholders’ equity (deficit) attributable to Altria
= 38,570 ÷ -3,540 = —
2 Click competitor name to see calculations.
An analysis of the solvency metrics reveals a significant transition in the company's capital structure from 2019 to 2023. The period is characterized by a substantial erosion of equity and an overall contraction of the asset base, resulting in a persistent deficit in stockholders' equity.
- Total Asset Trends
- Total assets exhibited a general decline for the majority of the period, falling from US$ 49,271 million in 2019 to a low of US$ 36,954 million in 2022. A marginal increase to US$ 38,570 million was recorded by the end of 2023.
- Equity Position and Deficit
- A critical downward trend is observed in stockholders' equity attributable to the company. The balance shifted from a positive US$ 6,222 million in 2019 to a negative position of US$ 1,606 million in 2021. This deficit intensified in 2022 to US$ 3,973 million, before moderating slightly to US$ 3,540 million in 2023.
- Financial Leverage Dynamics
- The financial leverage ratio experienced a rapid increase, more than doubling from 7.92 in 2019 to 16.70 in 2020. The subsequent transition to negative equity indicates that total liabilities exceeded total assets, fundamentally altering the leverage profile and rendering standard leverage ratios non-calculable for the final three years of the analyzed period.
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Interest Coverage
Altria Group Inc., 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 earnings (losses) attributable to Altria | 8,130) | 5,764) | 2,475) | 4,467) | (1,293) | |
| Add: Net income attributable to noncontrolling interest | —) | —) | —) | (13) | (5) | |
| Add: Income tax expense | 2,798) | 1,625) | 1,349) | 2,436) | 2,064) | |
| Add: Interest expense | 1,149) | 1,128) | 1,188) | 1,223) | 1,322) | |
| Earnings before interest and tax (EBIT) | 12,077) | 8,517) | 5,012) | 8,113) | 2,088) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 10.51 | 7.55 | 4.22 | 6.63 | 1.58 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Coca-Cola Co. | 9.48 | 14.25 | 8.78 | — | — | |
| Mondelēz International Inc. | 12.83 | 9.39 | 16.08 | — | — | |
| PepsiCo Inc. | 8.95 | 10.57 | 5.94 | — | — | |
| Philip Morris International Inc. | 7.95 | 16.33 | 17.80 | — | — | |
| Interest Coverage, Sector | ||||||
| Food, Beverage & Tobacco | 9.23 | 12.81 | 9.56 | — | — | |
| Interest Coverage, Industry | ||||||
| Consumer Staples | 11.37 | 15.69 | 11.46 | — | — | |
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
= 12,077 ÷ 1,149 = 10.51
2 Click competitor name to see calculations.
The solvency profile reflects a substantial strengthening of the capacity to meet interest obligations between 2019 and 2023. This improvement is characterized by a significant expansion in operating profitability relative to a stable debt-servicing cost structure.
- Earnings before interest and tax (EBIT)
- A strong upward trajectory is evident in operating earnings. EBIT grew from US$ 2,088 million in 2019 to US$ 12,077 million by 2023. Despite a temporary contraction to US$ 5,012 million in 2021, the overall trend demonstrates a robust increase in the earnings available to cover financial obligations.
- Interest Expense
- Interest costs have remained relatively consistent throughout the period. Expenses decreased from US$ 1,322 million in 2019 to a low of US$ 1,128 million in 2022, ending at US$ 1,149 million in 2023. This stability suggests a controlled debt structure or favorable refinancing terms during this timeframe.
- Interest Coverage Ratio
- The interest coverage ratio shows a marked improvement, rising from 1.58 in 2019 to 10.51 in 2023. The ratio experienced a dip to 4.22 in 2021, mirroring the decline in EBIT, but subsequently accelerated to its highest point in 2023. The progression indicates a significant reduction in financial risk and a vastly improved margin of safety for interest payments.
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