Aecom Technology Corporation (ACM)
Solvency ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| 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 | 5.08 | 4.50 | 4.33 | 3.95 | 3.94 |
Sure, I'd be happy to analyze AECOM's solvency ratios based on the provided data.
1. Debt-to-assets ratio:
The debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. In the case of AECOM, this ratio has remained relatively stable over the past five years, ranging from 0.16 in 2020 to 0.24 in 2019. As of September 30, 2023, the ratio stands at 0.20. A lower debt-to-assets ratio indicates that the company relies less on debt to finance its assets, which can be seen as a positive sign for solvency.
2. Debt-to-capital ratio:
The debt-to-capital ratio shows the proportion of a company's capital that is financed by debt. AECOM's debt-to-capital ratio has also shown stability over the years, with a range of 0.39 to 0.50. This ratio has increased slightly over the years, suggesting that the company has been relying more on debt to finance its operations. This trend is worth monitoring as it may indicate an increased financial risk.
3. Debt-to-equity ratio:
The debt-to-equity ratio compares a company's total debt to its shareholders' equity. AECOM's debt-to-equity ratio has shown an increasing trend in recent years, with the ratio reaching 1.00 as of September 30, 2023. This indicates that the company has been financing a larger portion of its operations through debt compared to equity. While a higher debt-to-equity ratio can increase financial leverage, it can also pose greater risks in terms of solvency and financial stability.
4. Financial leverage ratio:
The financial leverage ratio measures the extent to which a company relies on debt to finance its assets. AECOM's financial leverage ratio has shown a steady increase from 3.92 in 2019 to 5.08 as of September 30, 2023. This indicates a rising reliance on debt, which can amplify the impact of fluctuations in earnings on shareholder returns. A higher financial leverage ratio suggests a higher level of financial risk and may raise concerns about the company's ability to meet its debt obligations.
In summary, AECOM's solvency ratios indicate a relatively stable debt-to-assets ratio, increasing debt-to-capital and debt-to-equity ratios, and a rising financial leverage ratio. While a stable debt-to-assets ratio may indicate a strong asset base, the increasing reliance on debt to fund operations suggests a potential increase in financial risk. This trend should be carefully monitored to assess the company's ability to manage its debt obligations and maintain its solvency in the long term.
Coverage ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 43.22 | 91.10 | 51.60 | 52.25 | 37.02 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a more comfortable position in terms of meeting interest obligations. Let's analyze AECOM's interest coverage over the past five years:
1. Sep 30, 2023: The interest coverage ratio is 4.30. This indicates that AECOM's operating income is 4.30 times its interest expense. While this is a positive sign, it is lower than the previous year's ratio of 6.84.
2. Sep 30, 2022: The interest coverage ratio is 6.84. This signifies a strong ability to cover interest payments, as the operating income is nearly 7 times the interest expense. This represents an improvement from the prior year.
3. Sep 30, 2021: The interest coverage ratio is 2.85. This is a lower ratio compared to the previous year, signaling a decrease in AECOM's ability to meet interest obligations from operating income.
4. Sep 30, 2020: The interest coverage ratio is 3.56. This shows a slight improvement compared to the prior year, indicating AECOM's ability to cover interest payments from operating income.
5. Sep 30, 2019: The interest coverage ratio is 3.30. This represents a stable position in terms of covering interest expenses, similar to the ratio in 2020.
Overall, while AECOM's interest coverage ratio fluctuated over the years, it generally indicates that the company has been able to cover its interest payments comfortably. However, the decrease in the ratio in 2021 raises some concern and may warrant further investigation into the factors driving this change.