Smith AO Corporation (AOS)

Solvency ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Debt-to-assets ratio 0.06 0.03 0.04 0.03 0.04 0.04 0.06 0.10 0.10 0.09 0.09 0.08 0.05 0.03 0.03 0.03 0.03 0.04 0.09 0.11
Debt-to-capital ratio 0.09 0.05 0.06 0.06 0.06 0.06 0.09 0.16 0.16 0.14 0.14 0.14 0.09 0.05 0.05 0.05 0.05 0.06 0.14 0.17
Debt-to-equity ratio 0.10 0.06 0.07 0.06 0.06 0.06 0.10 0.18 0.19 0.16 0.16 0.16 0.10 0.05 0.05 0.05 0.06 0.06 0.17 0.21
Financial leverage ratio 1.72 1.65 1.67 1.69 1.74 1.70 1.72 1.86 1.91 1.85 1.85 1.90 1.90 1.74 1.73 1.68 1.71 1.70 1.80 1.85

Smith AO Corporation's solvency ratios indicate the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio: This ratio shows the proportion of the company's assets financed by debt. The trend shows a gradual increase from 0.03 in December 2021 to 0.06 in June 2023, before declining slightly to 0.04 by December 2024. Overall, the company has maintained a relatively low debt-to-assets ratio, indicating a strong ability to cover its obligations with its assets.

2. Debt-to-capital ratio: This ratio reveals the proportion of the company's capital that is financed by debt. The trend fluctuates between 0.05 and 0.16 over the reporting periods. The ratio peaked at 0.16 in March 2023 before gradually declining to 0.09 by June 2024. The company's debt-to-capital ratio indicates a moderate level of debt utilization in its capital structure.

3. Debt-to-equity ratio: This ratio shows the company's leverage and financial risk by comparing its debt to its equity. The ratio varies between 0.05 and 0.19 throughout the periods. It increased from 0.05 in March 2021 to 0.10 in December 2021, before stabilizing around 0.06 to 0.07 for the remainder of the reporting periods. Smith AO Corporation's debt-to-equity ratio suggests a balanced mix of debt and equity in its financing.

4. Financial leverage ratio: This ratio measures the extent to which the company relies on debt financing. The trend ranges from 1.65 to 1.91 from September 2024 to December 2022. The financial leverage ratio reached its peak in December 2022 at 1.91, suggesting a higher reliance on debt financing at that point. However, it gradually decreased to 1.67 by June 2024, indicating a slight reduction in leverage. Overall, the company's financial leverage has shown some fluctuations but remains within a manageable range.

In conclusion, based on the solvency ratios analysis of Smith AO Corporation, the company appears to have maintained a sound financial position with a reasonable mix of debt and equity in its capital structure, as well as a relatively low level of leverage.

Coverage ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Interest coverage 105.63 136.70 120.46 84.88 62.12 22.94 20.72 21.03 24.80 88.62 112.68 137.69 146.49 153.74 126.91 83.34 61.81 47.31 38.18 39.23

Smith AO Corporation's interest coverage ratio has shown significant fluctuations over the analyzed period. Starting at a robust level of 39.23 times in March 31, 2020, the company's ability to cover its interest expenses improved steadily, peaking at 153.74 times in September 30, 2021. This demonstrates a strong capacity to meet its interest obligations through its operating income.

However, from that point forward, there was a notable decline in the interest coverage ratio, dropping to 24.80 times by December 31, 2022. This sharp decrease indicates a potential weakening in the company's ability to cover its interest payments using its earnings.

The ratio further decreased to 20.72 times by June 30, 2023, before gradually recovering to 120.46 times in June 30, 2024. This rebound suggests an improvement in the company's ability to generate earnings sufficient to cover its interest expenses.

Overall, the fluctuations in Smith AO Corporation's interest coverage ratio reflect variations in its operating performance and ability to manage its debt obligations. Monitoring this metric closely can provide valuable insights into the company's financial health and risk profile.