Altair Engineering Inc (ALTR)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.17 | 0.25 | 0.00 | 0.23 | 0.00 |
| Debt-to-capital ratio | 0.24 | 0.35 | 0.00 | 0.33 | 0.00 |
| Debt-to-equity ratio | 0.32 | 0.54 | 0.00 | 0.50 | 0.00 |
| Financial leverage ratio | 1.92 | 2.11 | 1.90 | 2.19 | 2.10 |
Altair Engineering Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations. Looking at the trends over the past five years:
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. Altair Engineering Inc has shown a decreasing trend in this ratio from 2019 to 2023, indicating a more conservative use of debt to finance its assets.
2. Debt-to-capital ratio: This ratio signifies the percentage of the company's capital structure that is funded by debt. Altair Engineering Inc also demonstrates a decreasing trend in this ratio over the period, again implying a more balanced capital structure with less reliance on debt.
3. Debt-to-equity ratio: This ratio compares the company's total debt to its shareholders' equity. Altair Engineering Inc has reduced its debt relative to equity from 2019 to 2023, suggesting a strengthening of its financial position and lower financial risk.
4. Financial leverage ratio: This ratio assesses the company's financial risk by measuring the extent to which it uses debt in its capital structure. Altair Engineering Inc's financial leverage ratio has fluctuated over the years, but overall, it indicates that the company has been managing its debt levels effectively.
Overall, Altair Engineering Inc's solvency ratios show an improvement in its financial health and risk management efforts, as evidenced by the decreasing trend in debt ratios and an overall stable financial leverage ratio over the past five years.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 3.06 | -5.45 | 0.98 | 1.18 | 1.53 |
Altair Engineering Inc's interest coverage ratio has shown fluctuating trends over the past five years.
In 2023, the interest coverage ratio improved significantly to 3.06, indicating the company's ability to cover its interest expenses increased. This suggests that Altair Engineering Inc generated ample operating income to cover its interest obligations comfortably.
However, in 2022, the interest coverage ratio was negative at -5.45, which indicates that the company's operating income was insufficient to cover its interest expenses during that year. This could be a red flag for investors and creditors as a negative interest coverage ratio suggests financial distress.
In 2021, the interest coverage ratio was below 1 at 0.98, which implies that Altair Engineering Inc just managed to cover its interest expenses with its operating income. While the ratio was not ideal, it was at least above 1, indicating that the company did not default on its interest payments.
Similarly, in 2020 and 2019, the interest coverage ratios were 1.18 and 1.53 respectively, indicating that Altair Engineering Inc had enough operating income to meet its interest obligations, albeit with relatively narrow margins.
Overall, it is essential for Altair Engineering Inc to consistently monitor and improve its interest coverage ratio to ensure financial stability and meet its debt obligations efficiently in the long term.