Advance Auto Parts Inc (AAP)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 4.98 | 4.87 | 4.61 | 3.90 | 3.33 |
The solvency ratios of Advance Auto Parts Inc indicate a strong financial position with minimal reliance on debt.
1. Debt-to-assets ratio remained at 0.00 across the years, suggesting that the company has no debt relative to its total assets. This indicates that the company's assets are primarily funded through equity.
2. Debt-to-capital ratio also stood at 0.00 consistently over the years, indicating that the company's capital structure is not reliant on debt financing.
3. Debt-to-equity ratio remained at 0.00 throughout the years, indicating that the company's equity is sufficient to cover any existing debt obligations.
4. The financial leverage ratio increased from 3.33 in 2020 to 4.98 in 2024. This indicates a rising trend in the company's financial leverage, which may suggest increased reliance on debt financing over the years.
In conclusion, Advance Auto Parts Inc's solvency ratios reflect a strong financial position with low debt levels. However, the increasing trend in the financial leverage ratio should be monitored to ensure the company maintains a healthy balance between debt and equity financing.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | -8.48 | 1.36 | 12.84 | 22.33 | 14.89 |
Interest coverage ratio is a key financial metric that indicates a company's ability to cover its interest expenses with its operating income.
Looking at the data provided for Advance Auto Parts Inc, it is observed that the interest coverage ratio has fluctuated over the years.
As of December 31, 2020, the interest coverage ratio was 14.89, indicating that the company's operating income was sufficient to cover its interest expenses nearly 15 times over. This was a healthy sign of financial stability.
By December 31, 2021, the interest coverage ratio further improved to 22.33, reflecting a stronger ability to meet interest obligations comfortably.
However, there was a notable decline by December 31, 2022, with the interest coverage dropping to 12.84. This might suggest a slight decrease in the company's ability to cover its interest expenses compared to the previous year.
The interest coverage ratio took a significant downturn by December 31, 2023, falling to 1.36. This sharp decline raises concern as it indicates that the company's operating income might not be sufficient to cover its interest payments, potentially signaling financial distress.
The situation worsened drastically by December 31, 2024, with the interest coverage ratio plummeting to -8.48. A negative interest coverage ratio is a serious red flag, implying that the company's operating income is insufficient to cover its interest expenses.
In conclusion, the analysis of Advance Auto Parts Inc's interest coverage ratio reveals fluctuations over the years, with a concerning decline in more recent periods. Investors and stakeholders should closely monitor this ratio to assess the company's financial health and ability to meet its debt obligations.