Smith AO Corporation (AOS)

Smith AO Corporation's solvency ratios show varying degrees of debt utilization over the years. The Debt-to-assets ratio has shown fluctuations, increasing from 0.03 in 2020 to 0.10 in 2022, before declining to 0.04 in 2023 and slightly rising to 0.06 in 2024. This indicates that the company's debt relative to its total assets has shown inconsistent patterns over time.

Similarly, the Debt-to-capital ratio has displayed an upward trend, rising from 0.05 in 2020 to 0.16 in 2022, before decreasing to 0.09 in 2024. This suggests that the proportion of debt in relation to the company's total capital has increased significantly in 2022 but subsequently moderated in the following years.

The Debt-to-equity ratio also exhibited fluctuations, climbing from 0.06 in 2020 to 0.19 in 2022, before decreasing to 0.10 in 2024. This ratio indicates the extent to which the company relies on debt financing compared to equity, with a notable increase in 2022 followed by a decline in 2024.

Furthermore, the Financial leverage ratio, reflecting the company's total assets relative to shareholder equity, stayed relatively stable over the years, ranging from 1.71 in 2020 to 1.91 in 2022, before settling at 1.72 in 2024. This ratio highlights the company's ability to use debt to generate returns for shareholders.

Overall, Smith AO Corporation's solvency ratios indicate a mixed picture of debt utilization and financial structure over the years, with some fluctuations in the levels of leverage and debt reliance. It is important for stakeholders to closely monitor these ratios to assess the company's solvency and financial health accurately.

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Coverage ratios

Smith AO Corporation has exhibited a fluctuating trend in its interest coverage over the past five years. As of December 31, 2020, the interest coverage ratio was 61.81, indicating that the company's operating income was more than sufficient to cover its interest expenses. This improved significantly by the end of 2021 to 146.49, reflecting a stronger ability to meet interest obligations.

However, there was a notable decline in the interest coverage ratio by the end of 2022 to 24.80, signaling potential challenges in meeting interest payments with current operating income levels. The ratio recovered in 2023 to 62.12, showing some improvement in the company's capacity to cover interest expenses. By the end of 2024, the interest coverage ratio increased to 105.63, indicating a healthier financial position compared to the previous year.

Overall, it is essential for Smith AO Corporation to consistently monitor and manage its interest coverage ratio to ensure sustainable financial health and meet its debt obligations effectively.