Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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LyondellBasell Industries N.V. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2011
- Operating Profit Margin since 2011
- Return on Equity (ROE) since 2011
- Price to Sales (P/S) since 2011
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Solvency Ratios (Summary)
LyondellBasell Industries N.V., solvency ratios
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Debt Ratios | ||||||
| Debt to equity | ||||||
| Debt to capital | ||||||
| Debt to assets | ||||||
| Financial leverage | ||||||
| Coverage Ratios | ||||||
| Interest coverage | ||||||
| Fixed charge coverage | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Debt to equity
- The debt to equity ratio increased significantly from 0.85 in 2014 to a peak of 1.48 in 2016, indicating a rise in financial leverage and reliance on debt financing relative to equity. Following 2016, the ratio declined to 0.96 in 2017 and further to 0.92 in 2018, suggesting a move toward a more balanced capital structure and reduced relative debt levels.
- Debt to capital
- This ratio showed a similar trend, climbing steadily from 0.46 in 2014 to 0.60 in 2016, reflecting an increasing proportion of debt within total capital. Thereafter, the ratio decreased to 0.49 in 2017 and slightly to 0.48 in 2018, implying a decrease in the relative amount of debt financing.
- Debt to assets
- The debt to assets ratio also followed a rising pattern from 0.29 in 2014 to 0.38 in 2016, indicating a growing share of assets funded by debt. It stabilized at 0.33 in both 2017 and 2018, showing improvement from the 2016 peak and suggesting a reduction in the extent to which assets were leveraged with debt.
- Financial leverage
- Financial leverage increased from 2.92 in 2014 to 3.88 in 2016, consistent with the increases in debt-related ratios, signifying a greater use of debt relative to equity. A substantial reduction followed, with the ratio dropping to 2.93 in 2017 and 2.76 in 2018, indicating a decline in reliance on financial leverage.
- Interest coverage
- Interest coverage was relatively strong throughout the period but showed a decline from 21.03 in 2015 to 12.19 in 2017, reflecting a reduction in the company's ability to meet interest payments from operating earnings. In 2018, it improved to 15.75, suggesting better earnings or reduced interest expenses enhancing coverage.
- Fixed charge coverage
- The fixed charge coverage ratio followed a downward trend from 8.48 in 2014 to 6.9 in 2017, indicating decreasing capacity to cover fixed financial obligations. A slight recovery occurred in 2018 when the ratio increased to 7.2, signaling modest improvement in covering fixed charges.
Debt Ratios
Coverage Ratios
Debt to Equity
LyondellBasell Industries N.V., debt to equity calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | ||||||
| Short-term debt | ||||||
| Long-term debt, excluding current maturities | ||||||
| Total debt | ||||||
| Total Company share of stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Debt to equity1 | ||||||
| Benchmarks | ||||||
| Debt to Equity, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Debt to equity = Total debt ÷ Total Company share of stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends in the company's capital structure over the analyzed five-year period ending in 2018.
- Total Debt
- The total debt increased steadily from 7,107 million USD in 2014 to 9,387 million USD in 2018. This represents an overall rise of approximately 32%, indicating a consistent reliance on debt financing during the period. However, there was a minor decrease observed in 2017 compared to the prior year, where debt declined from 8,981 million to 8,619 million USD, before increasing again in 2018.
- Shareholders’ Equity
- The shareholders’ equity experienced a decline from 8,314 million USD in 2014 to a low of 6,048 million USD in 2016. Subsequently, it rebounded sharply, reaching 10,257 million USD by the end of 2018, which is the highest value in the timeframe. This volatility suggests periods of both equity erosion and recovery, potentially influenced by earnings volatility, capital raising activities, or other equity adjustments.
- Debt to Equity Ratio
- The debt to equity ratio reflects fluctuations corresponding to changes in both debt and equity. It increased from 0.85 in 2014 to a peak of 1.48 in 2016, indicating higher leverage and greater debt burden relative to equity. After 2016, the ratio decreased substantially to 0.92 by 2018, reflecting improved balance towards equity financing despite the continuing rise in absolute debt levels. The improvement aligns with the strong increase in shareholders’ equity in the last two years.
Overall, the data indicates a progression from increased leverage and declining equity in the initial years towards a stronger equity position and reduced relative indebtedness by the end of 2018. The company appears to have improved its capital structure health after 2016, balancing growth in debt with significant equity gains.
Debt to Capital
LyondellBasell Industries N.V., debt to capital calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | ||||||
| Short-term debt | ||||||
| Long-term debt, excluding current maturities | ||||||
| Total debt | ||||||
| Total Company share of stockholders’ equity | ||||||
| Total capital | ||||||
| Solvency Ratio | ||||||
| Debt to capital1 | ||||||
| Benchmarks | ||||||
| Debt to Capital, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The financial data reflects several notable trends in the company's leverage and capital structure over the five-year period ending December 31, 2018.
- Total Debt
- There is a general upward trend in total debt, increasing from $7,107 million in 2014 to $9,387 million in 2018. The debt rose consistently from 2014 through 2016, peaking at $8,981 million in 2016. A slight decrease occurred in 2017, but it climbed again in 2018 to the highest value in the given period.
- Total Capital
- Total capital shows a fluctuating but overall increasing pattern. Starting at $15,421 million in 2014, it dipped in 2015 to $14,578 million, then progressively increased each year afterward, reaching $19,644 million in 2018. This represents an overall strengthening of capital base despite initial decline.
- Debt to Capital Ratio
- The debt to capital ratio exhibits variability indicative of changing leverage dynamics. It increased from 0.46 in 2014 to 0.60 in 2016, signaling a rise in reliance on debt relative to capital. Subsequently, the ratio declined to 0.49 in 2017 and further to 0.48 in 2018, reflecting a reduced proportion of debt in the capital structure despite increases in total debt, likely due to stronger growth in total capital.
In summary, while total debt generally increased over the period, the company's capital growth outpaced debt growth after 2016, leading to a reduced debt to capital ratio by 2018. This suggests a strategic shift towards a more balanced or conservative capital structure in the latter years analyzed.
Debt to Assets
LyondellBasell Industries N.V., debt to assets calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current maturities of long-term debt | ||||||
| Short-term debt | ||||||
| Long-term debt, excluding current maturities | ||||||
| Total debt | ||||||
| Total assets | ||||||
| Solvency Ratio | ||||||
| Debt to assets1 | ||||||
| Benchmarks | ||||||
| Debt to Assets, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable trends in the leverage and asset base of the company over the five-year period from 2014 to 2018.
- Total Debt
- Total debt has experienced a general upward trend. Starting at $7,107 million in 2014, it increased consistently each year except in 2017 when it slightly declined to $8,619 million from $8,981 million in 2016. By the end of 2018, total debt had risen to $9,387 million, representing an overall increase of approximately 32% over the five years.
- Total Assets
- Total assets displayed more variability but an overall growth trend. After a decline from $24,283 million in 2014 to $22,757 million in 2015, total assets recovered and grew steadily to reach $28,278 million by 2018. This represents an increase of about 16.5% from the 2014 level, with the most significant growth occurring post-2015.
- Debt to Assets Ratio
- The debt to assets ratio increased from 0.29 in 2014 to 0.38 in 2016, indicating a rising leverage position relative to the asset base during the first three years. However, this ratio decreased and stabilized at 0.33 in both 2017 and 2018, reflecting a relative moderation in leverage as assets increased more notably in these later years compared to debt growth.
In summary, the company demonstrated a rising debt level over the period, outpacing asset growth initially, which increased its leverage until 2016. The subsequent years showed asset growth that helped to reduce and stabilize the debt-to-assets ratio. This suggests a potential strategic emphasis on asset accumulation or improved balance sheet management to moderate risk associated with higher leverage.
Financial Leverage
LyondellBasell Industries N.V., financial leverage calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Total assets | ||||||
| Total Company share of stockholders’ equity | ||||||
| Solvency Ratio | ||||||
| Financial leverage1 | ||||||
| Benchmarks | ||||||
| Financial Leverage, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Financial leverage = Total assets ÷ Total Company share of stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The analyzed financial data over the five-year period displays noteworthy trends in total assets, stockholders' equity, and financial leverage.
- Total Assets
- Total assets exhibit a generally upward trend, starting from US$24,283 million in 2014, experiencing a decline to US$22,757 million in 2015, followed by a modest recovery in 2016. The asset base then expands more substantially, reaching US$26,206 million in 2017 and further increasing to US$28,278 million in 2018. This progression indicates a growth in the asset base after an initial contraction.
- Total Company Share of Stockholders’ Equity
- Stockholders' equity shows a declining trend from US$8,314 million in 2014 to US$6,048 million in 2016. However, from 2016 onwards, there is a marked recovery, with equity rising significantly to US$8,949 million in 2017 and continuing upward to US$10,257 million in 2018. This suggests a strengthening of the company's equity position in the latter part of the period.
- Financial Leverage
- The financial leverage ratio follows an inverse pattern relative to equity. It increases from 2.92 in 2014 to a peak of 3.88 in 2016, indicating higher reliance on debt or liabilities relative to equity in the middle of the period. After 2016, the leverage ratio decreases to 2.93 in 2017 and further to 2.76 in 2018, reflecting a reduction in leverage and a potential improvement in financial stability.
In summary, the period analyzed reveals an initial phase characterized by asset contraction and increased leverage accompanied by falling equity, which transitions into a recovery phase marked by expanding assets, building equity, and declining leverage ratios. This pattern may indicate shifts in financial strategy, capital structure optimization, or improved profitability and balance sheet management in the latter years.
Interest Coverage
LyondellBasell Industries N.V., interest coverage calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to the Company shareholders | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Loss from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Solvency Ratio | ||||||
| Interest coverage1 | ||||||
| Benchmarks | ||||||
| Interest Coverage, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Interest coverage = EBIT ÷ Interest expense
= ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period reveals several notable trends in earnings, interest expenses, and interest coverage ratios.
- Earnings Before Interest and Tax (EBIT)
- EBIT exhibited a fluctuating pattern from 2014 to 2018. It initially increased from US$6,064 million in 2014 to a peak of US$6,519 million in 2015. Subsequently, the EBIT experienced a decline over the next two years, dropping to US$5,555 million in 2016 and then slightly recovering to US$5,984 million in 2017. In 2018, EBIT decreased again to US$5,671 million, indicating volatility with an overall downward tendency after the peak in 2015.
- Interest Expense
- The interest expense showed variability, starting at US$352 million in 2014, followed by a decrease to US$310 million in 2015. This was followed by a modest increase in 2016 to US$322 million. A significant rise occurred in 2017, reaching US$491 million, which represents a notable increase compared to previous years. In 2018, the interest expense decreased to US$360 million but remained above the pre-2017 levels, reflecting increased financing costs in the latter part of the observed period.
- Interest Coverage Ratio
- The interest coverage ratio, which measures the company’s ability to meet interest obligations from EBIT, was highest in 2015 at 21.03 times, indicating strong coverage capacity. This ratio declined consistently after 2015, falling to 17.25 in 2016 and experiencing a more pronounced drop to 12.19 in 2017, which corresponds with the spike in interest expense. In 2018, the coverage ratio improved to 15.75 but remained lower than earlier years, suggesting relatively tighter interest expense coverage compared to the peak periods.
Overall, the data suggests that while EBIT showed a decline after peaking in 2015, the company faced rising interest expenses particularly in 2017, which adversely impacted the interest coverage ratio. Although the interest coverage ratio improved somewhat in 2018, the trend indicates increased financial pressure from interest expenses compared to the earlier years. This could signal a need for monitoring debt levels and financing costs going forward to maintain healthy profitability and financial stability.
Fixed Charge Coverage
LyondellBasell Industries N.V., fixed charge coverage calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income attributable to the Company shareholders | ||||||
| Add: Net income attributable to noncontrolling interest | ||||||
| Less: Loss from discontinued operations, net of tax | ||||||
| Add: Income tax expense | ||||||
| Add: Interest expense | ||||||
| Earnings before interest and tax (EBIT) | ||||||
| Add: Rental expense | ||||||
| Earnings before fixed charges and tax | ||||||
| Interest expense | ||||||
| Rental expense | ||||||
| Fixed charges | ||||||
| Solvency Ratio | ||||||
| Fixed charge coverage1 | ||||||
| Benchmarks | ||||||
| Fixed Charge Coverage, Competitors2 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= ÷ =
2 Click competitor name to see calculations.
The financial data presents key profitability and coverage metrics over a five-year period ending in 2018. The trends indicate fluctuations in earnings and fixed charges, which impact the fixed charge coverage ratio.
- Earnings Before Fixed Charges and Tax (EBFCAT)
- The earnings before fixed charges and tax showed variability across the period. The value increased from 6,476 million US dollars in 2014 to a peak of 6,941 million US dollars in 2015. However, there was a significant decline in 2016 to 5,981 million US dollars. In the subsequent years, earnings partially recovered to 6,424 million US dollars in 2017, followed by a slight decrease to 6,167 million US dollars in 2018. Overall, the earnings exhibited moderate volatility with no consistent upward or downward trend.
- Fixed Charges
- Fixed charges experienced less variability relative to earnings. The charges slightly decreased from 764 million US dollars in 2014 to 732 million in 2015, then increased marginally to 748 million in 2016. A more notable rise occurred in 2017 when fixed charges reached 931 million US dollars, before declining again to 856 million US dollars in 2018. This indicates some fluctuations, but with a generally increasing tendency towards the middle of the period before reverting towards earlier levels.
- Fixed Charge Coverage Ratio
- The fixed charge coverage ratio, which measures the ability to cover fixed charges from earnings before fixed charges and tax, moved in response to both earnings and fixed charges movements. The ratio improved from 8.48 in 2014 to a peak of 9.48 in 2015, reflecting relatively stronger earnings and lower fixed charges. After 2015, the coverage ratio declined steadily to 8 in 2016 and further to 6.9 in 2017, indicating diminished capacity to cover fixed obligations. A slight recovery to 7.2 occurred in 2018, but coverage remained lower than in the initial years.
In summary, the period demonstrated moderate earnings volatility accompanied by fluctuating fixed charges. These dynamics contributed to a decline in fixed charge coverage after 2015, indicating a less robust position to meet fixed financial obligations over the latter part of the timeframe analyzed.