Whiting Petroleum Corp. (WLL)

[mdimport]

I looked at a couple of financial leverage ratios on $WLL's balance sheet: First was the debt-to-equity ratio to evaluate solvency and capital structure, and then equity multiplier ratio. The equity multiplier ratio is similar to the debt-to-equity ratio, but replaces debt with assets in the numerator.

Debt-to-Equity Ratio:
= Total Shareholders’ Equity / Total Liabilities
= 4,024,971 / 3,611,750
= 1.11

Typically, a D/E ratio greater than 2.0 indicates a risky scenario for an investor, so $WLL isn't at that stage yet.

Equity Multiplier Ratio:
= Total Equity / Total Assets
= 4,024,971 / 7,636,721
= 0.53

The company's ratio of 0.53 shows that assets are mostly funded with equity than debt.

If you go on to examine the total debt to capitalization ratio:

Total debt to capitalization ratio:
= (SD + LD) / (SD + LD + SE)
= (550,414 + 2,799,885) / (550,414 + 2,799,885 + 4,024,971)
= 3,350,299 / 7,375,270
= 0.45

45% of $WLL’s capital structure consists of debt. That's not too bad, however some debt conversion needs to happen.

IMO the three ratios take bankruptcy off the table, however a lower share price is likely before the re-balance is done.



https://www.sec.gov/ix?doc=/Archives/edgar/data/1255474/000125547420000007/wll-20191231x10k.htm#Item8FinancialStatementsandSupplementary