Transocean’s (RIG) current assets as of December 31, 2015, are $4.7 billion, and its current liabilities are $2.6 billion. The company’s current assets far exceed its current liabilities, giving a current ratio of 1.79. This has fallen from last quarter’s ratio of 2.68.
Transocean will not have any problem repaying its short-term liabilities. In this part of the series, we’ll also analyze the company’s long-term liabilities.
As of December 2015, Transocean has total debt of $8.4 billion on its books. Of this, $1.1 billion is in the form of short-term debt. The remaining $7.4 billion is in the form of long-term debt.
The company’s debt has fallen from last quarter’s $8.7 billion. The company’s debt-to-equity ratio has also fallen to 57% from last quarter’s 62%. Other offshore drillers’ (XLE) debt-to-equity ratios are as follows:
In 2016, of Transocean’s total debt of $8.4 billion, it’s obligated to repay 13%, or $1.1 billion. In 2017, it’s obligated to repay $686 million, and in 2018, it’s obligated to repay another $1.1 billion.
Transocean has a cash balance of $2.3 billion, which is greater than its 2016 debt repayment. Earlier, we saw that analysts expect a negative free cash flow for Transocean in 2016. This tells us that the company will need to eat its cash reserves to service its debt repayments.
Transocean’s credit rating was downgraded in October 2015 from “Ba2” to “Ba1” by Moody’s.