Albemarle Corp (ALB)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.19 | 0.19 | 0.21 | 0.18 | 0.26 |
| Debt-to-capital ratio | 0.24 | 0.27 | 0.29 | 0.26 | 0.39 |
| Debt-to-equity ratio | 0.31 | 0.38 | 0.40 | 0.36 | 0.65 |
| Financial leverage ratio | 1.67 | 1.94 | 1.94 | 1.95 | 2.45 |
Albemarle Corp's solvency ratios indicate the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio has shown a decreasing trend from 0.26 in 2020 to 0.19 in 2024. This suggests that the company has been reducing its reliance on debt to finance its assets.
2. Debt-to-capital ratio has also exhibited a downward trend, declining from 0.39 in 2020 to 0.24 in 2024. This indicates that Albemarle Corp has been successfully reducing its debt relative to its total capital.
3. Debt-to-equity ratio has shown a consistent decrease from 0.65 in 2020 to 0.31 in 2024. This signifies that the company's reliance on debt relative to equity has been decreasing over the years.
4. Financial leverage ratio has also demonstrated a downward trajectory, falling from 2.45 in 2020 to 1.67 in 2024. A decreasing financial leverage ratio suggests a decline in the firm's reliance on debt to fund its operations.
Overall, the decreasing trend in Albemarle Corp's solvency ratios indicates improved financial health and reduced financial risk over the years. The company appears to be managing its debt levels effectively and strengthening its solvency position.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | -36.26 | 3.24 | 71.38 | 15.06 | 15.29 |
Based on the data provided, the interest coverage ratio of Albemarle Corp has shown fluctuations over the past years. In 2020 and 2021, the company had healthy interest coverage ratios of 15.29 and 15.06 respectively, indicating its ability to cover interest expenses comfortably.
However, the interest coverage ratio significantly increased to 71.38 in 2022, implying a strong buffer to meet interest obligations. This could be attributed to higher earnings relative to interest expenses during that period.
In contrast, the interest coverage ratio dropped sharply to 3.24 in 2023, suggesting a potential strain in meeting interest payments with operating income. This decline could be due to various factors such as increased interest expenses or reduced operating income.
Moreover, the interest coverage ratio turned negative at -36.26 in 2024, which is a concerning sign as it indicates that the company's operating income might not be sufficient to cover its interest expenses. A negative interest coverage ratio raises red flags about the company's financial health and its ability to service its debt obligations.
In conclusion, while Albemarle Corp had strong interest coverage ratios in some years, the significant fluctuations and the negative interest coverage ratio in 2024 highlight the importance of closely monitoring the company's financial performance and debt management.