Alaska Air Group Inc (ALK)

The solvency ratios of Alaska Air Group Inc. provide insight into the company's ability to meet its long-term debt obligations.

The Debt-to-assets ratio has been relatively stable over the past five years, indicating that the company has maintained a conservative level of debt relative to its total assets. This ratio stood at 0.17 in 2023, suggesting that only 17% of the company's assets are financed by debt.

The Debt-to-capital ratio also demonstrates stability, hovering around the mid-thirties to forties range over the same period. This ratio was 0.38 in 2023, implying that 38% of the company's capital structure is comprised of debt.

The Debt-to-equity ratio witnessed fluctuations, hitting a peak in 2020 at 1.17 before decreasing to 0.62 in 2023. This suggests that the company has been restoring its balance between debt and equity financing, with 62% of its total equity being financed by debt.

The Financial leverage ratio, which measures the company's reliance on debt financing, peaked in 2020 at 4.70 but has since decreased to 3.55 in 2023. This indicates that the company has been able to reduce its financial risk and leverage.

Overall, Alaska Air Group Inc. has maintained a relatively conservative level of debt in relation to its assets, capital, and equity. The decreasing trend in some of these ratios suggests a positive shift towards a more balanced and sustainable capital structure, enhancing the company's solvency position.

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Coverage ratios

Alaska Air Group Inc.'s interest coverage ratio has shown significant fluctuations over the five-year period from 2019 to 2023. In 2019, the interest coverage ratio was robust at 52.71, indicating the company's strong ability to meet its interest obligations from its operating income. However, in 2020, the interest coverage ratio deteriorated substantially to -30.43, which suggests that the company's operating income was insufficient to cover its interest expenses, raising concerns about its financial health.

The company managed to improve its interest coverage ratio drastically in the following years, reaching 59.79 in 2023. This significant improvement signifies that Alaska Air Group Inc.'s earnings were much more sufficient to cover its interest expenses in the most recent year, reflecting a more stable financial position.

It is important for stakeholders to closely monitor Alaska Air Group Inc.'s interest coverage ratio to ensure that the company generates enough earnings to comfortably meet its interest payments and to assess the effectiveness of its debt management strategy.