Amentum Holdings Inc. (AMTM)

Amentum Holdings Inc. has consistently shown strong solvency ratios, indicating a healthy financial position. The Debt-to-assets ratio, Debt-to-capital ratio, and Debt-to-equity ratio have all remained at 0.00 throughout the periods from September 30, 2023, to December 31, 2024. This suggests that the company has no significant debt relative to its assets, capital, or equity, indicating a low risk of financial distress due to debt obligations.

However, the Financial leverage ratio has fluctuated over the same periods, starting at 17.10 on September 30, 2023, then significantly decreasing to 1.26 for the remaining quarters of 2023 and the first quarter of 2024. It then rose to 2.68 on September 30, 2024, before slightly decreasing to 2.66 on December 31, 2024. This ratio indicates the proportion of the company's total assets that are financed by debt. The decrease from 17.10 to 1.26 is noteworthy and could indicate a significant reduction in debt levels or an increase in equity, contributing to a more balanced capital structure.

Overall, Amentum Holdings Inc. exhibits strong financial stability with minimal debt and low reliance on debt for financing its operations, with fluctuations in the Financial leverage ratio possibly reflecting strategic financial decisions or changing capital structures.

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Coverage ratios

Interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Based on the provided data for Amentum Holdings Inc., we observe fluctuations in the interest coverage ratio over the recent quarters. As of December 31, 2023, the interest coverage ratio stood at 3.10, suggesting that the company generated enough operating income to cover its interest expenses 3.10 times over. This demonstrates a healthy ability to meet debt obligations.

The interest coverage ratio improved slightly in the following quarters, reaching 3.28 on March 31, 2024, and then decreasing to 3.25 on June 30, 2024. However, there was a significant decline in the interest coverage ratio in the subsequent quarters. The ratio dropped to 1.66 on September 30, 2024, indicating that the company's operating income was only 1.66 times its interest expenses. This decline raises concerns about the company's ability to comfortably meet its interest payments.

The situation worsened by the end of the year, with the interest coverage ratio falling to 0.62 as of December 31, 2024. This sharp decrease indicates that the company's operating income may not be sufficient to cover its interest expenses, raising red flags regarding its financial health and ability to service its debt.

In summary, the trend in Amentum Holdings Inc.'s interest coverage ratio shows initial stability followed by a significant decline, indicating potential challenges in meeting interest obligations. It will be crucial for the company to closely monitor and improve its interest coverage ratio to ensure sustainable financial health.