Archer-Daniels-Midland Company (ADM)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.15 | 0.13 | 0.14 | 0.16 | 0.17 |
| Debt-to-capital ratio | 0.28 | 0.26 | 0.27 | 0.28 | 0.36 |
| Debt-to-equity ratio | 0.39 | 0.34 | 0.36 | 0.39 | 0.56 |
| Financial leverage ratio | 2.55 | 2.65 | 2.53 | 2.49 | 3.19 |
Archer-Daniels-Midland Company has demonstrated a consistent improvement in its solvency ratios over the past five years. The debt-to-assets ratio has decreased from 0.17 in 2019 to 0.15 in 2023, indicating that the company has reduced its reliance on debt to finance its assets.
Similarly, the debt-to-capital ratio has improved from 0.36 in 2019 to 0.28 in 2023, showcasing a more favorable debt-to-capital structure. The debt-to-equity ratio has also shown a declining trend, decreasing from 0.56 in 2019 to 0.39 in 2023, indicating a lower level of debt relative to equity.
Furthermore, the financial leverage ratio has decreased from 3.19 in 2019 to 2.55 in 2023, signaling a reduction in the company's overall financial leverage and potential financial risk.
Overall, these improving solvency ratios suggest that Archer-Daniels-Midland Company has been managing its debt levels effectively, enhancing its financial stability and resilience.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 7.66 | 14.15 | 13.40 | 6.53 | 4.95 |
Archer-Daniels-Midland Company's interest coverage ratio has displayed some fluctuations over the past five years. The trend indicates that the company's ability to cover its interest expenses from its earnings has generally improved from 2019 to 2022, with significantly higher ratios in 2022 (14.15) and 2021 (13.40). This suggests a strong capability to meet its interest obligations comfortably during those years.
However, there was a notable decrease in the interest coverage ratio in 2023 to 7.66, indicating a possible reduction in the company's ability to cover its interest expenses with its operating income for that year. It is essential for stakeholders to monitor this trend to understand the reasons behind the decline and assess the potential impact on the company's financial health and liquidity.
Overall, while the interest coverage ratio fluctuated, Archer-Daniels-Midland Company generally demonstrated a satisfactory ability to service its interest payments in the past five years, with the exception of the decline in 2023, warranting further investigation into the underlying factors influencing this ratio.