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CAPITAL STRUCTURE FINANCIAL POLICIES | 12 Months Ended
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Dec. 31, 2020
CAPITAL STRUCTURE FINANCIAL POLICIES |
CAPITAL STRUCTURE FINANCIAL POLICIES | 28. Capital Structure Financial Policies The company's primary capital management strategy is to maintain a conservative balance sheet, which supports a solid investment grade credit rating profile. This objective affords the company the financial flexibility and access to the capital it requires to execute on its growth objectives. The company's capital is primarily monitored by reviewing the ratios of net debt to funds from operations(1) and total debt to total debt plus shareholders' equity. Net debt to funds from operations(1) is calculated as short-term debt plus total long-term debt less cash and cash equivalents, divided by funds from operations for the year then ended. Total debt to total debt plus shareholders' equity is calculated as short-term debt plus total long-term debt divided by short-term debt plus total long-term debt plus shareholders' equity. This financial covenant under the company's various banking and debt agreements shall not be greater than 65%. The company's financial covenant is reviewed regularly and controls are in place to maintain compliance with the covenant. The company complied with financial covenants for the years ended December 31, 2020 and 2019. The company's financial measures, as set out in the following schedule, were unchanged from 2019. The company believes that achieving its capital target helps to provide the company access to capital at a reasonable cost by maintaining solid investment grade credit ratings. The company operates in a fluctuating business environment and ratios may periodically fall outside of management's targets. Total debt to total debt plus shareholders' equity was 37.8% at December 31, 2020 and increased due to higher debt levels and lower shareholders' equity as a result of net losses, including impairment charges recorded during the year. The company addresses these fluctuations by capital expenditure reductions and sales of non-core assets to ensure net debt achieves management's targets.
($ millions) |  | Capital Measure Target |  | December 31 2020 |  | December 31 2019 |
Components of ratios |  |  |  |  |  |  |
| Short-term debt |  |  |  | 3 566 |  | 2 155 |
| Current portion of long-term debt |  |  |  | 1 413 |  | — |
| Current portion of long-term lease liabilities |  |  |  | 272 |  | 310 |
| Long-term debt |  |  |  | 13 812 |  | 12 884 |
| Long-term lease liabilities |  |  |  | 2 636 |  | 2 621 |
|  | Total debt |  |  |  | 21 699 |  | 17 970 |
| Less: Cash and cash equivalents |  |  |  | 1 885 |  | 1 960 |
|  | Net debt |  |  |  | 19 814 |  | 16 010 |
| Shareholders' equity |  |  |  | 35 757 |  | 42 042 |
| Total capitalization (total debt plus shareholders' equity) |  |  |  | 57 456 |  | 60 012 |
| Funds from operations(1) |  |  |  | 3 876 |  | 10 818 |
Net debt to funds from operations |  | <3.0 times |  | 5.1 |  | 1.5 |
Total debt to total debt plus shareholders' equity |  | 20% – 35% |  | 37.8% |  | 29.9% |
(1) | Funds from operations is calculated as cash flow from operating activities before changes in non-cash working capital, and is a non-GAAP financial measure.

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- Definition The disclosure of information that enables users of financial statements to evaluate the entity's objectives, policies and processes for managing capital. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Name IAS -Number 1 -IssueDate 2020-01-01 -Paragraph 134 -URI http://eifrs.ifrs.org/eifrs/xifrs-link?type=IAS&num=1&code=ifrs-tx-2020-en-r&anchor=para_134&doctype=Standard -URIDate 2020-01-01 + Details
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