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)
Kimberly-Clark Corp., solvency ratios
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
- Debt to Equity Ratios
- Data for the debt to equity ratio is available for 2017 and 2020, showing an increase from 11.8 to 13.36. When including operating lease liabilities, the ratio rises slightly more to 14.25 in 2020, indicating an overall increase in leverage through these years.
- Debt to Capital Ratios
- The debt to capital ratio remains relatively stable with minor fluctuations. It starts at 1.01 in 2016, decreases to 0.92 in 2017, then rebounds to 1.04 in 2018, and settles around 1.00 in 2019 and 0.93 in 2020. When including operating leases, the pattern is identical, signifying consistent capital structure management over the period.
- Debt to Assets Ratios
- The debt to assets ratio shows a slight downward trend, moving from 0.52 in 2016 to 0.48 in 2020. However, when including operating lease liabilities, the ratio is higher and shows a slight increase from 0.52 to 0.51 by 2020, with a peak at 0.53 in 2019, suggesting that operating leases contribute a meaningful component to total liabilities relative to assets.
- Financial Leverage
- Financial leverage data is only available for 2017 and 2020, increasing significantly from 24.09 to 27.99. This increase implies a stronger use of debt relative to equity, consistent with the observed rise in the debt to equity ratio over the same period.
- Interest Coverage Ratios
- The interest coverage ratio fluctuates over the years, decreasing from 10.85 in 2016 to 8.29 in 2018, then improving to 11.62 in 2019 and further to 13.19 in 2020. This suggests improved capacity to meet interest obligations over recent periods, which indicates strengthening earnings relative to interest expenses.
- Fixed Charge Coverage Ratios
- Fixed charge coverage shows a decline from 6.32 in 2016 to 4.53 in 2018 followed by a recovery to 5.88 in 2019 and a slight increase to 5.94 in 2020. The pattern indicates some pressure on the ability to cover fixed charges in 2018, with gradual improvement afterward, though coverage remains below initial levels.
Debt Ratios
Coverage Ratios
Debt to Equity
Kimberly-Clark Corp., debt to equity calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt payable within one year | 486) | 1,534) | 1,208) | 953) | 1,133) | |
| Long-term debt, excluding payable within one year | 7,878) | 6,213) | 6,247) | 6,472) | 6,439) | |
| Total debt | 8,364) | 7,747) | 7,455) | 7,425) | 7,572) | |
| Total Kimberly-Clark Corporation stockholders’ equity | 626) | (33) | (287) | 629) | (102) | |
| Solvency Ratio | ||||||
| Debt to equity1 | 13.36 | — | — | 11.80 | — | |
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Procter & Gamble Co. | 0.75 | 0.64 | — | — | — | |
| Debt to Equity, Industry | ||||||
| Consumer Staples | 1.24 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to equity = Total debt ÷ Total Kimberly-Clark Corporation stockholders’ equity
= 8,364 ÷ 626 = 13.36
2 Click competitor name to see calculations.
- Total Debt
-
The total debt exhibits a generally upward trajectory over the five-year period analyzed. Starting at $7,572 million at the end of 2016, it slightly decreased to $7,425 million in 2017, then stabilized around $7,455 million in 2018. From 2019, total debt increased more noticeably, reaching $7,747 million, and continued rising to $8,364 million by the end of 2020. This pattern indicates a gradual increase in the company's leverage over time.
- Shareholders' Equity
-
The shareholders’ equity shows significant volatility during the period, with negative values reported throughout. In 2016, the equity was negative at -$102 million, deteriorating further to -$629 million in 2017. The equity improved somewhat in 2018 and 2019, with figures of -$287 million and -$33 million respectively, indicating a narrowing of the deficit. By 2020, the equity swung back to a negative value of -$626 million. This inconsistency and persistent negative equity suggest ongoing challenges in the company’s net asset position.
- Debt to Equity Ratio
-
The debt to equity ratio data is incomplete but indicates very high leverage. The recorded ratio was 11.8 in 2017 and further increased to 13.36 by 2020. This elevated ratio, combined with the negative equity figures, implies that liabilities significantly exceed shareholders’ equity, highlighting potential solvency risks and a heavy reliance on debt financing.
- Overall Observations
-
The financial data reveals a pattern of increasing total debt alongside persistent negative shareholders’ equity, which results in very high debt to equity ratios where data is available. The fluctuations in equity, combined with steadily rising debt levels, point towards pressure on the company’s capital structure and possible liquidity or financial stability concerns. This situation warrants careful monitoring and may suggest the need for strategic measures to improve the equity position or manage debt levels more effectively.
Debt to Equity (including Operating Lease Liability)
Kimberly-Clark Corp., debt to equity (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt payable within one year | 486) | 1,534) | 1,208) | 953) | 1,133) | |
| Long-term debt, excluding payable within one year | 7,878) | 6,213) | 6,247) | 6,472) | 6,439) | |
| Total debt | 8,364) | 7,747) | 7,455) | 7,425) | 7,572) | |
| Current operating lease liabilities | 133) | 130) | —) | —) | —) | |
| Noncurrent operating lease liabilities (classified in Other liabilities) | 423) | 274) | —) | —) | —) | |
| Total debt (including operating lease liability) | 8,920) | 8,151) | 7,455) | 7,425) | 7,572) | |
| Total Kimberly-Clark Corporation stockholders’ equity | 626) | (33) | (287) | 629) | (102) | |
| Solvency Ratio | ||||||
| Debt to equity (including operating lease liability)1 | 14.25 | — | — | 11.80 | — | |
| Benchmarks | ||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | ||||||
| Procter & Gamble Co. | 0.77 | 0.64 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 1.39 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Total Kimberly-Clark Corporation stockholders’ equity
= 8,920 ÷ 626 = 14.25
2 Click competitor name to see calculations.
- Debt Levels
- The total debt, including operating lease liabilities, showed a generally increasing trend over the analyzed period. Beginning at approximately 7.57 billion USD at the end of 2016, it slightly decreased in 2017 to 7.43 billion USD, remained nearly stable in 2018 at 7.46 billion USD, then increased more significantly to 8.15 billion USD in 2019, and further to 8.92 billion USD by the end of 2020.
- Equity Position
- The stockholders’ equity experienced substantial fluctuations and was notably negative at certain points. In 2016, the equity was marginally negative at -102 million USD, deteriorated further to -287 million USD in 2017, slightly improved to -33 million USD in 2018, and then increased significantly to 626 million USD in 2020. This volatility suggests varying impacts on equity that could be tied to operational performance or accounting adjustments.
- Debt to Equity Ratio
- The debt-to-equity ratio, including operating lease liabilities, exhibits considerable variation. Data is available for 2017 and 2020, showing ratios of 11.8 and 14.25, respectively. This indicates an increasing leverage position, meaning the company relied more on debt relative to equity financing by 2020 compared to 2017.
- Overall Observations
- The overall financial structure shows an increase in leverage over the period under review, with total debt rising and equity volatile but improving towards a positive figure by 2020. The increasing debt-to-equity ratio may suggest higher financial risk. Efforts in equity restoration appear evident as of 2020, though the high leverage ratio underlines continued reliance on debt financing.
Debt to Capital
Kimberly-Clark Corp., debt to capital calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt payable within one year | 486) | 1,534) | 1,208) | 953) | 1,133) | |
| Long-term debt, excluding payable within one year | 7,878) | 6,213) | 6,247) | 6,472) | 6,439) | |
| Total debt | 8,364) | 7,747) | 7,455) | 7,425) | 7,572) | |
| Total Kimberly-Clark Corporation stockholders’ equity | 626) | (33) | (287) | 629) | (102) | |
| Total capital | 8,990) | 7,714) | 7,168) | 8,054) | 7,470) | |
| Solvency Ratio | ||||||
| Debt to capital1 | 0.93 | 1.00 | 1.04 | 0.92 | 1.01 | |
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Procter & Gamble Co. | 0.43 | 0.39 | — | — | — | |
| Debt to Capital, Industry | ||||||
| Consumer Staples | 0.55 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= 8,364 ÷ 8,990 = 0.93
2 Click competitor name to see calculations.
- Total debt
- The total debt exhibited a fluctuating pattern over the analyzed periods. Starting from US$7,572 million at the end of 2016, it slightly decreased to US$7,425 million in 2017, followed by a marginal increase to US$7,455 million in 2018. An upward trend was observed subsequently with total debt rising to US$7,747 million in 2019 and further to US$8,364 million in 2020. This indicates a gradual increase in the company’s leverage over the latter years.
- Total capital
- Total capital showed variability during the period under review. Initially, it rose from US$7,470 million in 2016 to US$8,054 million in 2017, representing growth in the company's capital base. However, a notable decline occurred in 2018, with total capital falling to US$7,168 million. Following this dip, a recovery trend is evident, with total capital increasing to US$7,714 million in 2019 and reaching US$8,990 million in 2020, demonstrating an overall growth by the end of the period.
- Debt to capital ratio
- The debt to capital ratio exhibited variations reflecting changes in both debt and capital over time. In 2016, the ratio was slightly above 1.00 at 1.01, suggesting that total debt marginally exceeded total capital. It then decreased to 0.92 in 2017, indicating an improved capital structure with relatively lower debt compared to capital. In 2018, the ratio increased again to 1.04, pointing to a higher reliance on debt financing. The ratio stabilized at 1.00 in 2019 before declining to 0.93 in 2020, suggesting a reduction in the company's leverage and a more balanced capital structure towards the end of the period.
Debt to Capital (including Operating Lease Liability)
Kimberly-Clark Corp., debt to capital (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt payable within one year | 486) | 1,534) | 1,208) | 953) | 1,133) | |
| Long-term debt, excluding payable within one year | 7,878) | 6,213) | 6,247) | 6,472) | 6,439) | |
| Total debt | 8,364) | 7,747) | 7,455) | 7,425) | 7,572) | |
| Current operating lease liabilities | 133) | 130) | —) | —) | —) | |
| Noncurrent operating lease liabilities (classified in Other liabilities) | 423) | 274) | —) | —) | —) | |
| Total debt (including operating lease liability) | 8,920) | 8,151) | 7,455) | 7,425) | 7,572) | |
| Total Kimberly-Clark Corporation stockholders’ equity | 626) | (33) | (287) | 629) | (102) | |
| Total capital (including operating lease liability) | 9,546) | 8,118) | 7,168) | 8,054) | 7,470) | |
| Solvency Ratio | ||||||
| Debt to capital (including operating lease liability)1 | 0.93 | 1.00 | 1.04 | 0.92 | 1.01 | |
| Benchmarks | ||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | ||||||
| Procter & Gamble Co. | 0.43 | 0.39 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.58 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 8,920 ÷ 9,546 = 0.93
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- Over the five-year period, total debt displayed a fluctuating trend with an overall increase. Starting at 7,572 million USD in 2016, there was a slight decline to 7,425 million USD in 2017, followed by relative stability in 2018 at 7,455 million USD. From 2018 onward, the debt increased notably to 8,151 million USD in 2019 and further to 8,920 million USD in 2020, indicating a pronounced rise in financial leverage towards the end of the period.
- Total Capital (including operating lease liability)
- The total capital exhibited variability throughout the period. It grew from 7,470 million USD in 2016 to a peak of 8,054 million USD in 2017 before experiencing a decline to 7,168 million USD in 2018. Subsequently, capital recovered to 8,118 million USD in 2019 and reached the highest value of 9,546 million USD in 2020. The general pattern illustrates moderate volatility with significant capital expansion in the final year observed.
- Debt to Capital Ratio (including operating lease liability)
- The debt to capital ratio showed fluctuations between 0.92 and 1.04 during the period. In 2016, the ratio was slightly above 1.0 at 1.01, indicating that debt slightly exceeded total capital. This ratio decreased to 0.92 in 2017, signifying a lower proportion of debt relative to capital. However, it rose again to 1.04 in 2018, the highest point during the interval. The ratio then stabilized around 1.0 in 2019 and decreased to 0.93 in 2020, suggesting improved capital structure management with a slight reduction in financial risk related to leverage by the end of the period.
Debt to Assets
Kimberly-Clark Corp., debt to assets calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt payable within one year | 486) | 1,534) | 1,208) | 953) | 1,133) | |
| Long-term debt, excluding payable within one year | 7,878) | 6,213) | 6,247) | 6,472) | 6,439) | |
| Total debt | 8,364) | 7,747) | 7,455) | 7,425) | 7,572) | |
| Total assets | 17,523) | 15,283) | 14,518) | 15,151) | 14,602) | |
| Solvency Ratio | ||||||
| Debt to assets1 | 0.48 | 0.51 | 0.51 | 0.49 | 0.52 | |
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Procter & Gamble Co. | 0.29 | 0.26 | — | — | — | |
| Debt to Assets, Industry | ||||||
| Consumer Staples | 0.33 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to assets = Total debt ÷ Total assets
= 8,364 ÷ 17,523 = 0.48
2 Click competitor name to see calculations.
- Total Debt
- The total debt shows a relatively stable trend from 2016 through 2018, with values fluctuating slightly between 7,425 million and 7,572 million US dollars. Starting from 2019, there is a noticeable increase, reaching 7,747 million US dollars, followed by a more significant rise in 2020 to 8,364 million US dollars. This indicates a gradual accumulation of debt over the later periods.
- Total Assets
- Total assets experienced a mild growth from 14,602 million US dollars in 2016 to 15,151 million US dollars in 2017. There was a slight decline in 2018 to 14,518 million US dollars, followed by a recovery and growth to 15,283 million US dollars in 2019. A substantial increase occurred in 2020, with total assets reaching 17,523 million US dollars. Overall, the asset base expanded significantly over the five-year span, especially in the final year.
- Debt to Assets Ratio
- The debt to assets ratio demonstrates a modest downward trend, starting at 0.52 in 2016 and decreasing to 0.49 in 2017. It rose again slightly to 0.51 in both 2018 and 2019, before declining to 0.48 in 2020. The ratio's fluctuations suggest that while total debt levels were increasing, total assets grew proportionally faster, resulting in a slight improvement in leverage by the end of the period.
Debt to Assets (including Operating Lease Liability)
Kimberly-Clark Corp., debt to assets (including operating lease liability) calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Debt payable within one year | 486) | 1,534) | 1,208) | 953) | 1,133) | |
| Long-term debt, excluding payable within one year | 7,878) | 6,213) | 6,247) | 6,472) | 6,439) | |
| Total debt | 8,364) | 7,747) | 7,455) | 7,425) | 7,572) | |
| Current operating lease liabilities | 133) | 130) | —) | —) | —) | |
| Noncurrent operating lease liabilities (classified in Other liabilities) | 423) | 274) | —) | —) | —) | |
| Total debt (including operating lease liability) | 8,920) | 8,151) | 7,455) | 7,425) | 7,572) | |
| Total assets | 17,523) | 15,283) | 14,518) | 15,151) | 14,602) | |
| Solvency Ratio | ||||||
| Debt to assets (including operating lease liability)1 | 0.51 | 0.53 | 0.51 | 0.49 | 0.52 | |
| Benchmarks | ||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | ||||||
| Procter & Gamble Co. | 0.30 | 0.26 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | ||||||
| Consumer Staples | 0.37 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 8,920 ÷ 17,523 = 0.51
2 Click competitor name to see calculations.
- Total Debt (including operating lease liability)
- The total debt exhibited moderate fluctuations during the analyzed period from 2016 to 2020. Initially, there was a slight decrease from 7,572 million US dollars in 2016 to 7,425 million in 2017, followed by a marginal increase to 7,455 million in 2018. Subsequently, the total debt showed a more pronounced rise, reaching 8,151 million in 2019 and further increasing to 8,920 million in 2020. This overall upward trend in total debt from 2018 onwards suggests increased leveraging or capital expenditures.
- Total Assets
- Total assets showed a general upward trend over the five-year period. From 14,602 million US dollars at the end of 2016, assets grew steadily to 15,151 million in 2017. There was a slight dip in 2018 to 14,518 million, but this was followed by a return to growth, with total assets reaching 15,283 million in 2019 and a more significant increase to 17,523 million in 2020. This pattern indicates an expansion in the company’s asset base, especially notable in the last recorded year.
- Debt to Assets Ratio (including operating lease liability)
- The debt to assets ratio remained relatively stable throughout the period, fluctuating modestly between 0.49 and 0.53. Starting at 0.52 in 2016, it saw a decrease to 0.49 in 2017, then rose to 0.51 in 2018 and further increased to 0.53 in 2019. By 2020, the ratio decreased again slightly to 0.51. These changes indicate that despite the increase in both debt and assets, the relative leverage of the company remained fairly consistent, suggesting balanced growth in both financing and resource accumulation.
Financial Leverage
Kimberly-Clark Corp., financial leverage calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | 17,523) | 15,283) | 14,518) | 15,151) | 14,602) | |
| Total Kimberly-Clark Corporation stockholders’ equity | 626) | (33) | (287) | 629) | (102) | |
| Solvency Ratio | ||||||
| Financial leverage1 | 27.99 | — | — | 24.09 | — | |
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Procter & Gamble Co. | 2.59 | 2.44 | — | — | — | |
| Financial Leverage, Industry | ||||||
| Consumer Staples | 3.76 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Financial leverage = Total assets ÷ Total Kimberly-Clark Corporation stockholders’ equity
= 17,523 ÷ 626 = 27.99
2 Click competitor name to see calculations.
The financial data reveals several key trends over the five-year period ending December 31, 2020.
- Total assets
- Total assets show a general upward trend, increasing from US$14,602 million in 2016 to US$17,523 million in 2020. There was a slight decline in 2018 to US$14,518 million from US$15,151 million in 2017, but the overall movement is positive, with a notable increase in 2020, suggesting growth in the company's asset base.
- Total stockholders’ equity
- Stockholders' equity values are markedly volatile and include negative figures in 2016, 2018, and 2019. The equity stood at a negative US$102 million in 2016, declined further to negative US$287 million in 2018, and slightly improved to negative US$33 million in 2019. However, there was a substantial positive recovery in 2017 and the final year 2020, with values of US$629 million and US$626 million respectively. This fluctuation indicates periods of financial strain or accounting adjustments, followed by recovery phases.
- Financial leverage ratio
- Financial leverage data is only available for 2017 and 2020, showing an increase from 24.09 in 2017 to 27.99 in 2020. This suggests the company may have increased its reliance on debt relative to equity in the latter year, potentially to finance expansion or manage liquidity, which aligns with the growth in total assets.
Interest Coverage
Kimberly-Clark Corp., interest coverage calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Kimberly-Clark Corporation | 2,352) | 2,157) | 1,410) | 2,278) | 2,166) | |
| Add: Net income attributable to noncontrolling interest | 44) | 40) | 35) | 41) | 53) | |
| Add: Income tax expense | 676) | 576) | 471) | 776) | 922) | |
| Add: Interest expense | 252) | 261) | 263) | 318) | 319) | |
| Earnings before interest and tax (EBIT) | 3,324) | 3,034) | 2,179) | 3,413) | 3,460) | |
| Solvency Ratio | ||||||
| Interest coverage1 | 13.19 | 11.62 | 8.29 | 10.73 | 10.85 | |
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Procter & Gamble Co. | 35.05 | 12.92 | — | — | — | |
| Interest Coverage, Industry | ||||||
| Consumer Staples | 11.62 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Interest coverage = EBIT ÷ Interest expense
= 3,324 ÷ 252 = 13.19
2 Click competitor name to see calculations.
The analysis of the financial data over the five-year period reveals several important trends related to earnings before interest and tax (EBIT), interest expense, and interest coverage.
- Earnings Before Interest and Tax (EBIT)
- The EBIT figures demonstrate variability across the years. Starting at 3460 million US dollars in 2016, the EBIT slightly decreased to 3413 million in 2017, followed by a significant decline to 2179 million in 2018. However, EBIT rebounded in the subsequent years, increasing to 3034 million in 2019 and further to 3324 million in 2020. This pattern suggests a notable dip in profitability in 2018, with recovery phases in 2019 and 2020, although EBIT did not surpass the 2016 level by the end of the period.
- Interest Expense
- The interest expense shows a steady decreasing trend over the five years. From 319 million US dollars in 2016, it gradually declined each year to 318 million in 2017, 263 million in 2018, 261 million in 2019, and finally to 252 million in 2020. This decline in interest charges may indicate effective debt management, refinancing at lower rates, or reduced debt levels over time.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the company's ability to meet interest obligations from operating earnings, exhibits some fluctuations but overall improvement. The ratio started at 10.85 in 2016, slightly decreasing to 10.73 in 2017. In 2018, the ratio dropped significantly to 8.29, reflecting the impact of the lower EBIT in that year. The coverage ratio then improved to 11.62 in 2019 and further increased to 13.19 in 2020, indicating stronger earnings relative to interest expenses and enhanced financial stability.
In summary, the period analyzed shows a temporary decline in operating profitability and interest coverage in 2018, followed by recovery and improvement in subsequent years. Simultaneously, the consistent reduction in interest expense contributed positively to the company’s ability to cover interest obligations, culminating in the highest interest coverage ratio observed in 2020. These trends may reflect strategic financial management and operational adjustments aimed at improving earnings and reducing financing costs.
Fixed Charge Coverage
Kimberly-Clark Corp., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to Kimberly-Clark Corporation | 2,352) | 2,157) | 1,410) | 2,278) | 2,166) | |
| Add: Net income attributable to noncontrolling interest | 44) | 40) | 35) | 41) | 53) | |
| Add: Income tax expense | 676) | 576) | 471) | 776) | 922) | |
| Add: Interest expense | 252) | 261) | 263) | 318) | 319) | |
| Earnings before interest and tax (EBIT) | 3,324) | 3,034) | 2,179) | 3,413) | 3,460) | |
| Add: Operating lease cost | 370) | 307) | 280) | 281) | 271) | |
| Earnings before fixed charges and tax | 3,694) | 3,341) | 2,459) | 3,694) | 3,731) | |
| Interest expense | 252) | 261) | 263) | 318) | 319) | |
| Operating lease cost | 370) | 307) | 280) | 281) | 271) | |
| Fixed charges | 622) | 568) | 543) | 599) | 590) | |
| Solvency Ratio | ||||||
| Fixed charge coverage1 | 5.94 | 5.88 | 4.53 | 6.17 | 6.32 | |
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Procter & Gamble Co. | 14.54 | 5.85 | — | — | — | |
| Fixed Charge Coverage, Industry | ||||||
| Consumer Staples | 7.19 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 2020 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 3,694 ÷ 622 = 5.94
2 Click competitor name to see calculations.
- Earnings before fixed charges and tax
- The earnings before fixed charges and tax display a fluctuating pattern over the five-year period. Beginning at 3,731 million US dollars in 2016, this figure slightly decreased to 3,694 million in 2017. A significant decline occurred in 2018, where earnings dropped to 2,459 million. However, a recovery trend is observed in subsequent years, with earnings rising to 3,341 million in 2019 and further increasing to 3,694 million by 2020, matching the level of 2017.
- Fixed charges
- Fixed charges have shown relatively minor variations across the years. Starting at 590 million US dollars in 2016, fixed charges slightly increased to 599 million in 2017. There was a decrease to 543 million in 2018, followed by a gradual increase in 2019 and 2020, recorded at 568 million and 622 million respectively. The overall trend suggests a moderate rise in fixed charges towards the end of the period.
- Fixed charge coverage
- The fixed charge coverage ratio exhibits a decreasing trend from 2016 to 2018, moving from 6.32 to 4.53. This trend aligns with the decrease in earnings before fixed charges and tax observed in 2018. Subsequently, the ratio improves over the next two years, increasing to 5.88 in 2019 and slightly increasing further to 5.94 in 2020. The ratio indicates stronger coverage of fixed charges by earnings in the later years, approaching the levels observed at the beginning of the period.