Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Price to Sales (P/S) since 2010
- Analysis of Revenues
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Solvency Ratios (Summary)
Kinder Morgan Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
The financial ratios over the series of quarters indicate a general improvement in the company's debt management and interest coverage capacity, reflecting stronger financial stability.
- Debt to Equity
- This ratio exhibits a decreasing trend from 1.25 in the first quarter of 2016 to a low around 1.02 in the fourth quarter of 2019, followed by a slight increase to 1.06 in early 2020. The decline suggests the company has been gradually reducing its reliance on debt relative to equity, improving its capital structure.
- Debt to Capital
- Stable reduction is observed from 0.55 at the start of 2016 to 0.50 by late 2019, indicating a modest decrease in debt as a proportion of total capital. This trend implies enhanced capital efficiency and a conservative approach to leverage over the studied period.
- Debt to Assets
- The ratio diminishes from 0.52 early in 2016 to 0.46 by the end of 2019, showing a reduction in debt financing relative to the company's asset base. A slight rise to 0.48 in early 2020 is noted but does not offset the overall downward movement.
- Financial Leverage
- Financial leverage decreased from 2.39 to 2.20 over the five-year span, illustrating a consistent decline in the extent to which the company employs debt to finance assets. This decrease aligns with the observed improvements in debt ratios.
- Interest Coverage
- Interest coverage displays a generally positive trend, increasing significantly from 1.30 in early 2016 to levels above 2.0 from 2017 onwards, peaking at 2.84 near the end of 2019. A slight decline to 2.24 occurs in early 2020 but remains robust. This improvement implies enhanced ability to meet interest obligations from operating earnings, reflecting greater earnings stability or reduced interest expense.
Overall, the data suggest that the company has steadily improved its debt-related metrics, reducing leverage and enhancing its capacity to cover interest expenses. These trends may point to strengthened financial health and more prudent capital management over the period analyzed.
Debt Ratios
Coverage Ratios
Debt to Equity
Kinder Morgan Inc., debt to equity calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Current portion of debt | |||||||||||||||||||||||
| Long-term debt, excluding current portion | |||||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Total Kinder Morgan, Inc.’s stockholders’ equity | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Debt to equity1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Debt to Equity, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | |||||||||||||||||||||||
| ConocoPhillips | |||||||||||||||||||||||
| Exxon Mobil Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Debt to equity = Total debt ÷ Total Kinder Morgan, Inc.’s stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends regarding the company's capital structure over the examined quarters.
- Total Debt
- Total debt shows a general decreasing trend over the analyzed period. Starting from approximately $43,807 million in the first quarter of 2016, it gradually declines to around $34,945 million by the first quarter of 2020. Although some fluctuations occur, such as minor increases between certain quarters (e.g., from Q3 to Q4 2019), the overall trajectory suggests consistent debt reduction efforts during this time frame.
- Total Stockholders’ Equity
- Stockholders’ equity remains relatively stable, with minor fluctuations around the mid-$30 billion mark. The values begin close to $35,180 million in early 2016 and experience slight decreases and increases throughout the quarters, ending near $33,106 million at the start of 2020. This indicates limited significant equity growth or dilution activities during the period, reflecting a stable shareholder base or retained earnings balance.
- Debt to Equity Ratio
- The debt to equity ratio demonstrates a declining trend, moving from 1.25 at the beginning of 2016 down to approximately 1.06 by the first quarter of 2020. This decreasing ratio, combined with the reduction in total debt and relatively stable equity, indicates a gradual improvement in the company’s leverage position. The company appears to be deleveraging or balancing its capital structure more conservatively over time.
In summary, the data points to a strategic reduction in overall debt levels, maintaining steady equity figures, and an improving debt to equity ratio. These trends suggest enhanced financial stability and potentially a lower risk profile related to leverage over the observed periods.
Debt to Capital
Kinder Morgan Inc., debt to capital calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Current portion of debt | |||||||||||||||||||||||
| Long-term debt, excluding current portion | |||||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Total Kinder Morgan, Inc.’s stockholders’ equity | |||||||||||||||||||||||
| Total capital | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Debt to capital1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Debt to Capital, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | |||||||||||||||||||||||
| ConocoPhillips | |||||||||||||||||||||||
| Exxon Mobil Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
- Total Debt
- Over the observed period, total debt showed a general declining trend. Starting at approximately $43.8 billion at the end of Q1 2016, it decreased to about $34.9 billion by Q1 2020. Despite minor fluctuations, including slight increases in some quarters, there was a consistent effort to reduce debt levels over the nearly four-year period.
- Total Capital
- Total capital also exhibited a downward trend, moving from around $79.0 billion in Q1 2016 down to approximately $68.1 billion by Q1 2020. The decline was gradual, with some quarters showing small rebounds, but the overall path points towards a moderate reduction in total capital.
- Debt to Capital Ratio
- The debt to capital ratio remained relatively stable, fluctuating narrowly between 0.50 and 0.55 throughout the period. It started at 0.55 in early 2016, dipped to a low of 0.50 by the end of 2019, and slightly increased to 0.51 in Q1 2020. This stability indicates a consistent capital structure strategy, maintaining debt at roughly half of the total capital value.
- Overall Insights
- The company demonstrated a consistent approach toward debt reduction while maintaining a stable capital base proportionally. The decrease in total debt was proportionate to the decrease in total capital, resulting in a relatively unchanged leverage ratio. The data suggests a focus on careful financial management, balancing debt obligations with capital investment to sustain a consistent debt to capital ratio over the examined periods.
Debt to Assets
Kinder Morgan Inc., debt to assets calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Current portion of debt | |||||||||||||||||||||||
| Long-term debt, excluding current portion | |||||||||||||||||||||||
| Total debt | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Debt to assets1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Debt to Assets, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | |||||||||||||||||||||||
| ConocoPhillips | |||||||||||||||||||||||
| Exxon Mobil Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several notable trends concerning debt levels, asset base, and leverage over the examined periods.
- Total Debt
- The total debt exhibited a general declining trend starting from approximately 43.8 billion USD at the end of the first quarter of 2016 to about 34.9 billion USD by the first quarter of 2020. There were minor fluctuations within this timeframe, particularly between the third quarter of 2019 and the first quarter of 2020, where total debt slightly increased after a prolonged decrease. This downward trend suggests a strategic effort to reduce debt obligations over the five-year span.
- Total Assets
- Total assets experienced a gradual decrease from roughly 84.2 billion USD at the beginning of 2016 to approximately 73.5 billion USD by early 2020. The asset base remained relatively stable within certain years but showed an overall contraction by the end of the period analyzed. This decline could indicate asset disposals, depreciation, or other factors impacting asset values.
- Debt to Assets Ratio
- The debt to assets ratio demonstrated a steady decline from 0.52 in March 2016 to a low of 0.46 in December 2019, indicating improving leverage and potentially enhanced financial stability. However, the ratio rose slightly back to 0.48 by March 2020, possibly reflecting the minor increase in debt relative to assets in that quarter. Overall, the company's leverage decreased over the period, suggesting prudent management of debt in relation to its asset base.
In summary, the financial data portrays a consistent reduction in both total debt and total assets over the analyzed quarters, with a corresponding decline in debt to assets ratio indicative of reduced leverage. This pattern suggests an emphasis on deleveraging and maintaining a conservative financial structure, although recent slight increases warrant observation for potential changes in financial posture.
Financial Leverage
Kinder Morgan Inc., financial leverage calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Total Kinder Morgan, Inc.’s stockholders’ equity | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Financial leverage1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Financial Leverage, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | |||||||||||||||||||||||
| ConocoPhillips | |||||||||||||||||||||||
| Exxon Mobil Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Financial leverage = Total assets ÷ Total Kinder Morgan, Inc.’s stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data over the given periods reveals several notable trends in the company's total assets, stockholders' equity, and financial leverage ratio.
- Total Assets
- Total assets exhibit a general decreasing trend from the beginning to the end of the period. Starting at approximately $84.2 billion at the end of March 2016, total assets fluctuate slightly but show a gradual decline overall. By the end of March 2020, total assets have decreased to approximately $73.5 billion, representing a reduction of roughly 13% over the course of the examined periods. This decline suggests a potential asset divestiture, depreciation, or other factors leading to shrinking asset base.
- Stockholders’ Equity
- The total stockholders' equity remains relatively stable throughout the periods, fluctuating between $33 billion and $35.1 billion. Initially at about $35.2 billion in March 2016, equity shows minor fluctuations but trends slightly downward, ending near $33.1 billion as of March 2020. This stability indicates that the company has maintained its equity base despite the decline in total assets, which may reflect controlled dividend payouts, retention of earnings, or recapitalizations.
- Financial Leverage Ratio
- The financial leverage ratio, calculated as total assets divided by stockholders' equity, shows a gradual reduction over the analyzed timeframe. Initially, the ratio is around 2.39 in March 2016, decreasing steadily to approximately 2.22 by March 2020. This declining leverage indicates a reduction in the proportion of debt financing relative to equity or improvements in equity levels against assets. It could suggest an effort toward deleveraging, reduced debt levels, or strategic financial management aimed at improving financial stability and lowering risk exposure.
In summary, the company has experienced a contraction in total assets, a largely stable equity base, and a decrease in financial leverage over the periods examined. These patterns suggest a conservative financial strategy potentially focused on risk reduction and balance sheet strengthening, despite facing a shrinking asset base.
Interest Coverage
Kinder Morgan Inc., interest coverage calculation (quarterly data)
| Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||
| Net income (loss) attributable to Kinder Morgan, Inc. | |||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | |||||||||||||||||||||||
| Add: Income tax expense | |||||||||||||||||||||||
| Add: Interest, net | |||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | |||||||||||||||||||||||
| Solvency Ratio | |||||||||||||||||||||||
| Interest coverage1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Interest Coverage, Competitors2 | |||||||||||||||||||||||
| Chevron Corp. | |||||||||||||||||||||||
| ConocoPhillips | |||||||||||||||||||||||
| Exxon Mobil Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31).
1 Q1 2020 Calculation
Interest coverage
= (EBITQ1 2020
+ EBITQ4 2019
+ EBITQ3 2019
+ EBITQ2 2019)
÷ (Interest expenseQ1 2020
+ Interest expenseQ4 2019
+ Interest expenseQ3 2019
+ Interest expenseQ2 2019)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several important trends in the company's operational earnings and interest management over the examined periods.
- Earnings before Interest and Tax (EBIT)
- The EBIT values demonstrate notable volatility across the quarters. Initially, EBIT showed fluctuations, with peaks early in 2017 reaching above 1100 million USD, followed by some decline towards the end of 2017. Throughout 2018 and 2019, EBIT mostly maintained levels above 1000 million USD, including a few substantial increases such as the peak of 1674 million in the third quarter of 2018 and 1524 million in the fourth quarter of 2019. However, a sharp decline to 205 million USD occurred in the first quarter of 2020, indicating a significant drop in operating profit within that period. This considerable decrease may warrant further investigation into operational challenges or external factors impacting earnings.
- Interest Expense, Net
- The net interest expense remained relatively stable over the examined quarters, fluctuating narrowly between around 422 million USD and 516 million USD. While there were slight increases during the mid-2018 period, the interest cost persisted at a consistent level, suggesting a stable financing cost structure without major changes in debt levels or interest rates during the timeframe.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the company's ability to meet its interest obligations from operating earnings, generally improved over time. Starting from a low of around 1.3 in early 2016, this ratio rose steadily, surpassing 2.0 from early 2017 and reaching a high of approximately 2.84 in the second quarter of 2019. The improved coverage indicates that operating profit increased relative to interest expenses, enhancing financial flexibility. Despite the sharp decline in EBIT in the first quarter of 2020, the interest coverage ratio remained above 2.0, which still reflects adequate capacity to cover interest costs during that quarter.
In summary, the company maintained steady interest expenses alongside generally improving profitability metrics until early 2020 when EBIT significantly contracted. The improved interest coverage ratio highlights strengthened financial performance and borrowing capacity in most periods, although the recent EBIT decline signals potential risks that should be monitored.