Advance Auto Parts Inc (AAP)

Advance Auto Parts Inc's solvency ratios show a consistent picture of the company's financial leverage and ability to meet its long-term obligations. The Debt-to-assets ratio has gradually increased from 0.07 in 2019 to 0.15 in 2023, indicating that the company's reliance on debt relative to its total assets has increased over the years.

The Debt-to-capital ratio has also shown a similar trend, increasing from 0.17 in 2019 to 0.41 in 2023. This indicates that a higher proportion of the company's capital structure is financed by debt.

The Debt-to-equity ratio has increased from 0.21 in 2019 to 0.71 in 2023, showing an increasing reliance on debt financing relative to equity over the period.

The Financial leverage ratio has also seen a consistent increase from 3.17 in 2019 to 4.87 in 2023, signaling that the company's level of debt relative to equity has been on the rise.

Overall, the trend in these solvency ratios suggests that Advance Auto Parts Inc's leverage position has been increasing over the years. Investors and creditors may monitor these ratios closely to assess the company's ability to service its debt obligations and manage its financial risk effectively.

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Coverage ratios

Advance Auto Parts Inc's interest coverage ratio has varied significantly over the past five years. In 2019, the company had a robust interest coverage of 16.97, indicating a comfortable ability to cover its interest expenses with operating income. This ratio dropped slightly to 15.99 in 2020 but remained at a healthy level.

However, in 2021, Advance Auto Parts Inc's interest coverage ratio increased significantly to 22.19, indicating a substantial improvement in the company's ability to cover its interest payments. This trend continued into 2022, with the interest coverage ratio further improving to 13.99, suggesting a strong financial position.

Unfortunately, in 2023, the interest coverage ratio experienced a significant decline to 1.30. This sharp drop may raise concerns as it indicates that the company's ability to cover its interest expenses with operating income has weakened substantially.

Overall, Advance Auto Parts Inc's interest coverage ratio has shown volatility over the years, with 2023 standing out as a year of particular concern due to the sharp decrease in the ratio. Further analysis of the company's financial health and future outlook would be necessary to fully understand the implications of this decline in interest coverage.