Analysis of Debt
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- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
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Total Debt (Carrying Amount)
Monsanto Co., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
- Short-term debt, including current portion of long-term debt
- The short-term debt experienced a substantial increase from 36 million US dollars in 2012 to 615 million US dollars in 2015. This was followed by another sharp rise reaching a peak of 1,587 million in 2016. However, in 2017, the short-term debt decreased significantly to 870 million US dollars. This pattern indicates a period of escalating short-term obligations, culminating in 2016, before a reduction in the most recent year.
- Long-term debt, excluding current portion
- The long-term debt showed relative stability in the range of approximately 2,000 million US dollars through 2013. It then surged dramatically in 2014 to 7,528 million, continuing to increase to 8,429 million in 2015. Afterward, the long-term debt decreased gradually to 7,453 million in 2016 and further to 7,254 million in 2017. This trend suggests a significant long-term borrowing event around 2014, followed by a moderate deleveraging in subsequent years.
- Total debt (carrying amount)
- Total debt followed a similar trajectory to that of the individual debt components. It rose markedly from 2,074 million in 2012 to a peak of 9,044 million in 2015. The total debt remained almost constant in 2016 at 9,040 million before declining to 8,124 million in 2017. This pattern reflects the aggregate increase driven by both short-term and long-term debt increases through 2015, with a slight reduction in the last recorded period.
- Overall analysis
- The data reveals a period of extensive debt accumulation between 2013 and 2015, particularly notable in both short-term and long-term obligations. The spike in debt levels suggests significant financing activity or strategic investments during these years. Post-2015, a discernible reduction in debt amounts, especially in the short-term portion, indicates efforts toward deleveraging or improved debt management. Despite this reduction, total debt remains significantly higher in 2017 compared to the 2012 base, highlighting a sustained higher leverage level than in the earlier years.
Total Debt (Fair Value)
| Aug 31, 2017 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Short-term debt, including current portion of long-term debt | |
| Long-term debt, excluding current portion | |
| Total debt (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2017-08-31).
Weighted-average Interest Rate on Debt
Weighted average interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2017-08-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Monsanto Co., interest costs incurred
US$ in millions
| 12 months ended: | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||||
| Interest capitalized on construction | |||||||||||||
| Interest cost incurred |
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
The analysis of the annual interest costs over the six-year period reveals several notable trends and changes. Interest expense, measured in millions of US dollars, exhibits a fluctuating yet overall increasing pattern. Starting at 191 million in 2012, the expense decreased slightly to 172 million in 2013 but then rose significantly to 248 million in 2014 and continued to increase sharply to 433 million in 2015. From 2015 onwards, the interest expense showed a marginal increase each year, reaching 452 million by 2017.
Interest capitalized on construction demonstrates a steadier upward trend throughout the period. Beginning at 21 million in 2012, this figure increased gradually each year, reaching 44 million by 2017. The growth in capitalized interest indicates a consistent investment in construction-related activities, with the amount nearly doubling over the six years.
Combining these two components, the total interest cost incurred also rises notably. After a slight dip from 212 million in 2012 to 195 million in 2013, the total interest cost surged to 275 million in 2014 and then sharply to 460 million in 2015. Post-2015, the total interest cost continued its upward trajectory, reaching 496 million in 2017. This overall increase reflects both rising interest expenses and greater capitalization on construction.
- Summary of Trends
- Interest expense shows some variability but an overall increase, particularly marked between 2013 and 2015.
- Interest capitalized on construction steadily increases each year, suggesting ongoing capital investment.
- Total interest cost incurred follows a similar pattern to interest expense but magnified by the addition of capitalized interest, resulting in a marked upward trend.
- The sharp rise in interest-related costs between 2013 and 2015 is the most significant development, indicating either increased borrowing costs or higher debt levels during this period.
- From 2015 onward, the cost increases are more gradual but consistent, reflecting sustained financing activities and capital investment.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
2017 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest cost incurred
= ÷ =
- Interest Coverage Ratio (without capitalized interest)
- The interest coverage ratio demonstrates a declining trend over the six-year period from August 31, 2012, to August 31, 2017. Starting at a high level of 16.64 in 2012, the ratio increased to a peak of 20.94 in 2013, indicating a strong ability to cover interest expenses. However, a notable decline follows, dropping to 16.43 in 2014 and then more sharply to 8.3 in 2015. The downward trend continues, reaching the lowest point of 5.57 in 2016 before a slight recovery to 7.38 in 2017. This pattern suggests a weakening capacity over time to meet interest obligations from operating earnings, particularly pronounced from 2014 onwards.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- The adjusted interest coverage ratio, which considers capitalized interest, mirrors the pattern observed in the non-adjusted ratio but at slightly lower levels throughout the period. It starts at 15 in 2012, experiences an increase to 18.47 in 2013, then declines consistently to 14.82 in 2014, followed by a steep drop to 7.81 in 2015. The ratio further deteriorates to 5.19 in 2016, marking the lowest point, with a marginal recovery to 6.73 in 2017. This declining trend underscores an overall reduction in the company's earnings capacity relative to interest expenses when capitalized interest is taken into account, reinforcing the observed weakening financial coverage over time.
- General Insights
- Both ratios reveal a significant downward trajectory in the company's ability to cover interest expenses from operational earnings across the timeframe, particularly after 2013. The peak in 2013 indicates a period of strong financial health in terms of interest coverage, but the subsequent decline suggests increasing financial strain or growing interest expenses. The slight uptick in 2017 may signal some stabilization or improvement efforts but remains substantially lower than earlier years. The parallel movement of the two metrics confirms the persistence of this trend regardless of capitalized interest adjustments.