Abercrombie & Fitch Company (ANF)

Abercrombie & Fitch Company's solvency ratios indicate the company's ability to meet its long-term debt obligations and financial leverage over the past five years.

The debt-to-assets ratio has shown a decreasing trend from 0.11 in 2023 to 0.07 in 2024. This implies that the company has reduced its reliance on debt to finance its assets, which is a positive indicator of financial stability.

Similarly, the debt-to-capital ratio and debt-to-equity ratio have also decreased over the years, indicating that Abercrombie & Fitch has been progressively leveraging less debt compared to its total capital and equity. This signifies a stronger financial position and reduced financial risk.

The financial leverage ratio, which measures the extent of a company's debt financing, decreased gradually from 3.90 in 2023 to 2.87 in 2024. A lower financial leverage ratio suggests less dependence on debt to fund operations, which can lead to a decreased risk of insolvency during economic downturns.

Overall, Abercrombie & Fitch's solvency ratios reflect a positive trend towards decreased leverage, improved financial stability, and reduced financial risk.

---

Coverage ratios

The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.

Looking at Abercrombie & Fitch Company's interest coverage over the past five years, we see fluctuations in the ratio. In 2024, the interest coverage ratio of 16.72 shows a significant improvement from the previous year, indicating that the company's earnings are sufficient to cover its interest payments nearly 17 times. This is a positive sign of financial health and indicates a lower risk of default on debt.

In 2023, the interest coverage ratio was 3.06, which suggests that the company's earnings were able to cover its interest payments three times over. While still adequate, this is a decrease compared to the prior year.

The interest coverage ratio in 2022 was 9.04, indicating a strong ability to meet interest expenses. However, in 2021, the interest coverage ratio was negative at -0.70, which implies that the company's earnings were insufficient to cover its interest payments. This raises concerns about the company's ability to service its debt obligations during that period.

In 2020, the interest coverage ratio improved to 3.85, indicating a better ability to cover interest expenses compared to the previous year.

Overall, Abercrombie & Fitch's interest coverage has experienced fluctuations over the past five years, with a mix of strong and weaker performance. Investors and creditors should closely monitor the company's interest coverage ratio to assess its financial stability and ability to manage debt effectively.