Zoetis Inc., balance sheet: debt

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term borrowings	3)	2)	—)	4)	—)
Current portion of long-term debt	—)	1,350)	—)	600)	500)
Finance lease liabilities, current	1)	—)	—)	—)	—)
Long-term debt, net of discount and issuance costs, excluding current portion	6,564)	6,552)	6,592)	6,595)	5,947)
Finance lease liabilities, noncurrent	8)	—)	—)	—)	—)
Total debt and finance lease liabilities (carrying amount)	6,576)	7,904)	6,592)	7,199)	6,447)

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Debt item	Description	The company
Total debt and finance lease liabilities (carrying amount)	Sum of the carrying values as of the balance sheet date of all debt plus capital lease obligations.	Zoetis Inc. total debt increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

	Dec 31, 2023
Selected Financial Data (US$ in millions)
Short-term borrowings	3)
Long-term debt, including current portion	6,319)
Finance lease liabilities	9)
Total debt and finance lease liabilities (fair value)	6,331)
Financial Ratio
Debt, fair value to carrying amount ratio	0.96

Weighted-average interest rate on debt and finance lease liabilities: 4.09%

Interest rate	Debt amount¹	Interest rate × Debt amount
4.50%	750)	34)
5.40%	600)	32)
3.00%	750)	23)
3.90%	500)	20)
2.00%	750)	15)
5.60%	750)	42)
4.70%	1,150)	54)
3.95%	500)	20)
4.45%	400)	18)
3.00%	500)	15)
4.99%	9)	—)
Total	6,659)	272)
4.09%

¹ US$ in millions

² Weighted-average interest rate = 100 × 272 ÷ 6,659 = 4.09%

Zoetis Inc., interest costs incurred

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Interest expense, net of capitalized interest	239)	221)	224)	231)	223)
Capitalized interest expense	27)	21)	20)	17)	13)
Interest costs incurred	266)	242)	244)	248)	236)

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Debt item	Description	The company
Interest expense, net of capitalized interest	Amount of the cost of borrowed funds accounted for as interest expense for debt.	Zoetis Inc. interest expense, net of capitalized interest decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Capitalized interest expense	Amount of interest costs capitalized disclosed as an adjusting item to interest costs incurred.	Zoetis Inc. capitalized interest expense increased from 2021 to 2022 and from 2022 to 2023.
Interest costs incurred	Total interest costs incurred during the period and either capitalized or charged against earnings.	Zoetis Inc. interest costs incurred decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Net income attributable to Zoetis Inc.	2,344)	2,114)	2,037)	1,638)	1,500)
Add: Net income attributable to noncontrolling interest	(4)	(3)	(3)	(2)	—)
Add: Income tax expense	596)	545)	454)	360)	301)
Add: Interest expense, net of capitalized interest	239)	221)	224)	231)	223)
Earnings before interest and tax (EBIT)	3,175)	2,877)	2,712)	2,227)	2,024)

Interest costs incurred	266)	242)	244)	248)	236)
Financial Ratio With and Without Capitalized Interest
Interest coverage ratio (without capitalized interest)¹	13.28	13.02	12.11	9.64	9.08
Adjusted interest coverage ratio (with capitalized interest)²	11.94	11.89	11.11	8.98	8.58

2023 Calculations

¹ Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of capitalized interest
= 3,175 ÷ 239 = 13.28

² Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 3,175 ÷ 266 = 11.94

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Solvency ratio	Description	The company
Adjusted interest coverage ratio	A solvency ratio calculated as EBIT divided by interest payments (including capitalized interest).	Zoetis Inc. adjusted interest coverage ratio improved from 2021 to 2022 and from 2022 to 2023.

Zoetis Inc. (NYSE:ZTS)

Analysis of Debt