Alamo Group Inc (ALG)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.18 | 0.19 | 0.21 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.21 | 0.23 | 0.26 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.27 | 0.31 | 0.35 |
| Financial leverage ratio | 1.51 | 1.64 | 1.68 | 1.74 | 1.67 | 1.80 | 1.81 | 1.84 | 1.71 | 1.76 | 1.77 | 1.85 | 1.77 | 1.94 | 2.06 | 2.23 | 2.10 | 1.55 | 1.60 | 1.63 |
Solvency ratios provide valuable insights into Alamo Group Inc.'s ability to meet its long-term financial obligations. Analyzing the trends in the solvency ratios over the past eight quarters reveals the following:
1. Debt-to-assets ratio: This ratio reflects the proportion of the company's assets financed by debt. The downward trend from 0.26 in Q1 2023 to 0.17 in Q4 2023 indicates that Alamo Group Inc. has reduced its reliance on debt to finance its assets, which is a positive sign for the company's long-term solvency.
2. Debt-to-capital ratio: This ratio shows the percentage of the company's capital that is funded by debt. Similarly to the debt-to-assets ratio, the decreasing trend from 0.31 in Q1 2023 to 0.20 in Q4 2023 suggests that Alamo Group Inc. has been reducing its debt levels in relation to its total capital, improving its financial stability.
3. Debt-to-equity ratio: This ratio measures the extent to which the company's operations are financed by debt compared to equity. The decline in this ratio from 0.51 in Q1 2022 to 0.25 in Q4 2023 demonstrates that Alamo Group Inc. has been decreasing its debt levels in relation to shareholder equity, indicating a strengthening financial position.
4. Financial leverage ratio: This ratio indicates the extent to which the company is using debt to finance its assets. The decrease in the financial leverage ratio from 1.84 in Q1 2022 to 1.51 in Q4 2023 signifies that Alamo Group Inc. has been reducing its overall leverage, which is a positive development as it lowers the company's financial risk.
Overall, the declining trends in all solvency ratios suggest that Alamo Group Inc. has been prudently managing its debt levels and enhancing its solvency position over the analyzed period. This improvement bodes well for the company's financial health and long-term sustainability.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 7.71 | 8.13 | 8.66 | 9.72 | 10.35 | 11.11 | 11.56 | 11.58 | 11.40 | 9.77 | 9.15 | 7.19 | 5.96 | 5.28 | 5.45 | 6.70 | 8.85 | 15.53 | 17.15 | 18.03 |
Interest coverage is a crucial financial ratio that indicates a company's ability to meet its interest obligations with its operating income. In the case of Alamo Group Inc., the interest coverage ratio has been consistently healthy over the past eight quarters, ranging from 8.04 to 12.54. A higher interest coverage ratio reflects a better ability to cover interest expenses with operating profits.
The trend of Alamo Group Inc.'s interest coverage ratio shows a slight decline over the quarters, which could indicate a decreasing ability to cover interest expenses in relation to its operating income. However, it is important to note that the interest coverage ratio remains well above 1, indicating that the company generates sufficient operating income to comfortably meet its interest obligations.
Overall, the interest coverage ratio analysis suggests that Alamo Group Inc. has a strong financial position with a consistent ability to cover its interest expenses, although monitoring the trend for any potential changes in the future would be advisable.