Calculating Debt-to-Equity with Short- and Long-Term Debt

Summary

The document resolves a discrepancy between a debt-to-equity calculation and a financial data provider’s reported figure for Boeing. The original calculation divides a broad annual debt figure by shareholder equity and produces a much larger ratio. The answer instead defines the numerator as short-term plus long-term debt, then divides that sum by the stated shareholder equity. This definition reproduces the provider’s figure.

The example shows why ratio comparisons require consistent accounting inputs and definitions: a headline debt total may not match the specific short- and long-term debt components used by a data source, and equity figures can also differ across reported values. The answer demonstrates the arithmetic for one company and reporting period, but does not explain the underlying data-source conventions, reconciliation of the differing balance-sheet values, or whether the ratio is appropriate for broader valuation or credit analysis. Analysts should check the source and period of every input before comparing ratios.

Key ideas

• Debt-to-equity divides a defined debt measure by shareholders’ equity.
• A provider’s ratio may use short-term and long-term debt components rather than a broader debt figure.
• Differences in input definitions and reported values can explain apparently inconsistent ratios.
• The example resolves one reported discrepancy but does not provide a general accounting reconciliation method.

Tags

# Boeing's Debt-to-Equity Ratio


# Boeing's Debt-to-Equity Ratio












Background

I was quickly investigating Boeing's (BA) Debt-to-Equity ratio and received a very high number. I looked around online and have confirmed that BA has recently taken on a lot of debt, but am not reaching the same calculations as Morningstar or YCharts.

INPUTS

2016 Annual Debt: 89120.0

2016 Annual Shareholder Equity: 877.0

Calculation

Debt-to-Equity = 89120 / 877 = 101.6

Question

Ycharts shows a Debt-to-Equity ratio of [12.01]. This should be a simple calculation so how am I getting different numbers?

## Answer by msitt (score 0, accepted)

https://quant.stackexchange.com/a/33764

The ratio is calculated using $$ \dfrac{\text{Short and Long Term Debt}}{\text{Shareholders' Equity}} = \dfrac{327 + 9487}{817} = 12.01 $$

So the value matches your other source.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.