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GuruFocus has detected 2 Warning Signs with Rio Tinto PLC \$RIO.
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Rio Tinto PLC (NYSE:RIO)
Debt-to-Equity
0.45 (As of Dec. 2016)

Rio Tinto PLC's current portion of long-term debt for the quarter that ended in Dec. 2016 was \$717 Mil. Rio Tinto PLC's long-term debt for the quarter that ended in Dec. 2016 was \$16,913 Mil. Rio Tinto PLC's total equity for the quarter that ended in Dec. 2016 was \$39,290 Mil. Rio Tinto PLC's debt to equity for the quarter that ended in Dec. 2016 was 0.45.

A high debt to equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense.

Definition

Debt to Equity measures the financial leverage a company has.

Rio Tinto PLC's Debt to Equity Ratio for the fiscal year that ended in Dec. 2016 is calculated as

 Debt to Equity = Total Debt / Total Equity = (Current Portion of Long-Term Debt + Long-Term Debt) / Total Equity = (717 + 16913) / 39290 = 0.45

Rio Tinto PLC's Debt to Equity Ratio for the quarter that ended in Dec. 2016 is calculated as

 Debt to Equity = Total Debt / Total Equity = (Current Portion of Long-Term Debt + Long-Term Debt) / Total Equity = (717 + 16913) / 39290 = 0.45

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Explanation

In the calculation of Debt to Equity, we use the total of Current Portion of Long-Term Debt and Long-Term Debt divided by Total Equity. In some calculations, Total Liabilities is used to for calculation.

Be Aware

Because a company can increase its Return on Equity by having more financial leverage, it is important to watch the leverage ratio when investing in high Return on Equity companies.

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Rio Tinto PLC Annual Data

 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 deb2equity 1.89 1.93 0.53 0.26 0.42 0.57 0.11 0.54 0.62 0.45

Rio Tinto PLC Semi-Annual Data

 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 deb2equity 0.38 0.57 0.66 0.11 0.53 0.54 0.60 0.62 0.58 0.45
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