Question

Based upon your review, would you argue that KMB’s debt-to-capital ratio deteriorated or improved from 2014 to 2015; did it deteriorate or improve from 2015 to 2016? What conclusion would you offer from this review concerning KMB's financial health?

Kimberly-Clark Corp., debt and solvency ratios
	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
Debt to equity	–	–	9.54
Debt to capital	1.01	1.02	0.91
Interest coverage	10.85	6.03	9.45
Source: Based on data from Kimberly-Clark Corp. Annual Reports

Answer 1

The debt to capital ratio has deteriorated from 2014 to 2015. This ratio has increased implying that the proportion of debt in the total capital has increased. The ratio improved from 2015 to 2016. The ratio decreases implying that the proportion of debt in total capital decreased which is a positive sign.

Since the debt to capital ratio is greater than 1, it means that the equity is negative. This is a discouraging sign for the stakeholders of the company.