Adapthealth Corp (AHCO)

Adapthealth Corp's solvency ratios demonstrate its ability to meet its financial obligations and maintain a healthy capital structure over the years.

1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. Adapthealth's debt-to-assets ratio has been relatively stable, with a slight decrease from 0.43 in 2020 to 0.41 in 2022, indicating efficient asset management.

2. Debt-to-capital ratio: This ratio reveals the percentage of the company's capital that is financed by debt. Adapthealth's debt-to-capital ratio has shown a decreasing trend from 0.69 in 2020 to 0.56 in 2024, suggesting a lower reliance on debt for funding its operations.

3. Debt-to-equity ratio: The debt-to-equity ratio signifies the company's leverage and risk exposure. Adapthealth's debt-to-equity ratio decreased significantly from 2.19 in 2020 to 1.00 in 2022, indicating a more balanced mix of debt and equity in its capital structure.

4. Financial leverage ratio: This ratio assesses the company's total debt relative to its equity. Adapthealth's financial leverage ratio also displayed a declining trend from 5.11 in 2020 to 2.86 in 2024, reflecting lower financial risk and improved financial stability.

Overall, Adapthealth Corp's solvency ratios indicate effective debt management and a sound financial position that has been improving over the years, contributing to the company's overall financial strength and stability.

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Coverage ratios

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt using its operating income. A higher ratio indicates a company is more capable of meeting its interest obligations.

Analyzing Adapthealth Corp's interest coverage from 2020 to 2024, we observe fluctuations in the ratio. In December 2020, the interest coverage stood at -3.19, indicating that the company's operating income was insufficient to cover its interest expenses, raising concerns about its ability to service its debt obligations.

By December 2021, the interest coverage improved significantly to 2.99, signaling that Adapthealth Corp's operating income had increased sufficiently to cover its interest payments. This positive trend continued into 2022, with the interest coverage ratio at 1.86.

However, in December 2023, the interest coverage ratio declined to -4.59, reverting to a concerning level where the company's operating income was insufficient to cover its interest expenses, potentially indicating financial distress.

By December 2024, the interest coverage ratio recovered slightly to 2.11, showing an improvement in the company's ability to cover its interest payments compared to the previous year but still below the ideal levels.

In conclusion, the fluctuating nature of Adapthealth Corp's interest coverage ratio over the years indicates variability in its ability to meet interest obligations, suggesting the need for careful monitoring of the company's financial health and debt management strategies.