Corporate America Is In Fantastic Financial Shape

Two measures of business debt levels have plunged to multi-year lows since the financial crisis.

Deutsche Bank’s David Bianco published two charts in a research note Sunday that show how much S&P 500 companies (excluding financials) have deleveraged their balance sheets, or reduced their debt.

First,the percentage of net sales that companies use to pay interest accrued on their debt, or the interest expense to sales ratio, has fallen significantly. According to the chart, its at the lowest level since the start of the great inflation of the 1970s.

Similarly, there’s been a decline in the net debt to market cap ratio, which is how liabilities compare to market cap.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.