What Is The Typical Debt / Equity Ratio Of Companies In The Chemical Sector?

 

The debt-to-equity ratio is equal to the ratio between total assets and total equity. It is a leverage ratio that measures how many suppliers and creditors have committed to a company versus the obligation of shareholders. Chemical companies occupy several sectors within the base materials sector, and the average debt / equity varies per chemical industry. As of May 2015, the average debt / equity for all US-based chemical companies is 0.67, and the average debt / equity for chemical companies with a large market capitalization is 0. 93.

A large chemical industry is a large number of diversified chemicals. The median debt / equity ratio between US member firms is 0.9, while the ratio between large-cap industry members is 1. 09. Some notable large diversified chemical producers are Air Products and Chemicals (NYSE: APD), Celanese (NYSE: CE), Dow Chemical (NYSE: DOW), LSB Industries (NYSE: LXU), Praxair (NYSE: PX) and Eastman Chemical (NYSE: EMN). Air Products and Chemicals has the lowest debt / equity ratio in this group at 0. 63, while Eastman has the highest at 2. 15.

Special chemicals is another important industry. The median debt / equity ratio between member firms is 0. 58, while large-cap member firms have an average debt / equity of 0. 62. Notable specialist chemical companies are Sigma Aldrich (NASDAQ: SIAL), Westlake Chemical ( NYSE: WLK), International Flavors and Fragrances (NYSE: IFF), PPG Industries (NYSE: PPG) and Sherwin-Williams (NYSE: SHW). Of this group, Sigma Aldrich has the lowest debt / equity at 0.14, and Sherwin-Williams has the highest at 5.39.

 

Agricultural chemicals is the last important chemical industry. The average debt / equity in this sector is 0. 38 for all US companies and 0. 96 for large caps. Major agrochemicals include Mosaic Co. (NYSE: MOS), DuPont (NYSE: DD), Monsanto (NYSE: MON) and CF Industries (NYSE: CF). Of this group, Mosaic has the lowest debt / equity ratio at 0. 36, while CF Industries is the highest at 1. 09.

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