Allegiant Travel Company (ALGT)

Allegiant Travel's solvency ratios provide insight into the company's ability to meet its financial obligations in the long term. The debt-to-assets ratio has remained relatively stable over the past five years, ranging from 0.44 to 0.51, indicating that a significant portion of the company's assets are financed by debt.

The debt-to-capital ratio also shows consistency, hovering around 0.59 to 0.70 during the same period. This ratio indicates the proportion of the company's capital structure that is funded by debt, with Allegiant Travel relying moderately on debt for its capital requirements.

The debt-to-equity ratio shows some fluctuation over the years, with the lowest ratio of 1.42 in 2021 and the highest of 2.37 in 2020. This ratio suggests the extent to which the company relies on debt financing relative to its equity. Allegiant Travel's increasing debt-to-equity ratio in 2020 may indicate a higher financial risk, but it improved in 2021.

The financial leverage ratio, which measures the company's total assets relative to equity, has also shown variability over the years. A lower financial leverage ratio indicates a lower level of financial risk, while a higher ratio may imply increased risk due to higher debt levels. Allegiant Travel's financial leverage ratio peaked in 2020 at 4.66, reflecting the company's high leverage that year. However, the ratio decreased in subsequent years, indicating a more conservative financial structure.

Overall, Allegiant Travel's solvency ratios suggest a moderate reliance on debt financing, with some fluctuations in certain years. The company's ability to manage its debt levels and maintain an optimal balance between debt and equity will be crucial for its long-term financial health and stability.

---

Coverage ratios

Allegiant Travel's interest coverage ratio has shown fluctuations over the past five years. In 2023, the interest coverage ratio improved significantly to 4.06, indicating the company's ability to cover its interest expenses more than four times over with its operating income. This represents a positive trend compared to the previous years, where the ratios were lower, especially in 2020 when it was negative at -8.51, suggesting financial distress and an inability to cover interest payments with operating income. The significant improvement in 2023 reflects better financial performance and enhanced ability to meet interest obligations. However, it is important to closely monitor this ratio in the future to ensure sustained financial health and stability.