Allegro Microsystems Inc (ALGM)

Allegro Microsystems Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations. The trend in the ratios over the past four years shows consistency and stability in the company's financial leverage structure.

The Debt-to-assets ratio has increased from 0.02 in 2023 to 0.16 in 2024, indicating that Allegro Microsystems is increasingly using debt financing to fund its assets. This may suggest a higher level of financial risk, as a higher debt-to-assets ratio implies a greater reliance on debt to finance operations.

Similarly, the Debt-to-capital ratio has increased from 0.03 in 2023 to 0.18 in 2024, indicating that a larger portion of Allegro's capital structure is financed by debt. A higher debt-to-capital ratio may imply more financial leverage and increased risk to the company's financial stability.

The Debt-to-equity ratio has also increased from 0.03 in 2023 to 0.22 in 2024, indicating that Allegro Microsystems is increasingly relying on debt financing relative to equity. This higher ratio could imply higher financial risk for the company as it indicates a larger proportion of debt in the capital structure compared to equity.

The Financial leverage ratio has shown a slight increase from 1.22 in 2023 to 1.35 in 2024, indicating that Allegro's assets are being funded more by debt than equity. A higher financial leverage ratio signifies a higher level of financial risk as it suggests that the company has more debt relative to equity in its capital structure, causing higher volatility in earnings and potential financial distress.

Overall, while Allegro Microsystems Inc's solvency ratios show a stable and consistent trend over the past four years, the increasing trend in debt ratios may indicate a higher level of financial risk and leverage in the company's capital structure. Investors and stakeholders should closely monitor these ratios to ensure the company's long-term financial health and stability.

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Coverage ratios

The interest coverage ratio for Allegro Microsystems Inc has shown significant fluctuations over the past four years. In 2024, the interest coverage ratio stands at 19.08, indicating that the company's operating income is 19.08 times higher than its interest expenses for the year. This suggests a strong ability to meet interest obligations.

In contrast, in 2021, the interest coverage ratio was merely 0.58, signaling that the company's operating income was just sufficient to cover its interest expenses. This level raises concerns about the company's financial health and its ability to cover debt obligations.

The substantial increase in the interest coverage ratio from 2021 to 2022 and further improvement in 2023 suggest a positive trend in the company's ability to manage its debt burden. However, the sharp decline in 2024 compared to the prior years raises the need for closer monitoring of Allegro Microsystems Inc's financial performance and capital structure in the future.