AutoNation Inc (AN)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 5.42 | 4.91 | 3.76 | 3.06 | 3.33 |
Autonation Inc.'s solvency ratios paint a picture of the company's ability to meet its long-term debt obligations. The debt-to-assets ratio has been increasing over the past five years, implying that a higher proportion of Autonation's assets are funded through debt. This trend indicates a potential increase in financial risk.
Similarly, the debt-to-capital ratio has also been on the rise, suggesting that more of the company's capital structure is being financed through debt. This can signify a higher reliance on debt financing to support operations and growth initiatives.
The debt-to-equity ratio has shown significant fluctuations over the years, with a notable spike in 2020 and 2023. The increasing trend in this ratio indicates that Autonation's debt load compared to its equity has been growing, potentially exposing the company to higher financial risk and leverage.
Lastly, the financial leverage ratio, which measures the extent to which the company is using debt to finance its assets, has also been rising consistently. This indicates that Autonation is increasingly relying on debt to fund its operations and investments, which could lead to heightened financial vulnerability in the face of economic challenges or changes in interest rates.
Overall, based on the solvency ratios, Autonation Inc. appears to be taking on more debt relative to its assets, capital, equity, and overall financial leverage, which may warrant further scrutiny of its debt management and capital structure strategies to ensure sustainable long-term financial health.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 8.23 | 13.46 | 18.69 | 5.57 | 7.05 |
Autonation Inc.'s interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio decreased to 5.08 from 11.56 in 2022, indicating the company's ability to cover interest expenses with operating income has declined. However, the ratio remains above 1, suggesting the company's earnings are still sufficient to cover its interest obligations.
Looking at historical trends, Autonation Inc. had a significant improvement in interest coverage from 2019 to 2021, where the ratio increased from 3.20 to 15.86. This substantial increase reflects a more robust ability to meet interest payments from operating income during these years.
Overall, while the recent decrease in interest coverage is worth monitoring, Autonation Inc. has historically maintained a reasonable level of interest coverage, indicating a healthy financial position in terms of managing debt obligations with operating profits.