Air Products and Chemicals Inc (APD)
Solvency ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 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 | 2.24 | 2.07 | 1.98 | 2.08 | 1.71 |
The solvency ratios of Air Products & Chemicals Inc. provide insight into the company's ability to meet its long-term financial obligations. Let's analyze each solvency ratio based on the given data:
Debt-to-assets ratio:
- The debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. The ratio has increased from 0.18 in 2019 to 0.32 in 2023, indicating a higher reliance on debt to finance its assets. This may suggest a decreased ability to cover its obligations using its assets alone.
Debt-to-capital ratio:
- The debt-to-capital ratio signifies the percentage of the company's capital structure that is funded by debt. The increase in the ratio from 0.23 in 2019 to 0.42 in 2023 indicates a significant rise in the proportion of debt in the company's overall capital structure, potentially raising concerns about the company's financial risk and leverage.
Debt-to-equity ratio:
- The debt-to-equity ratio evaluates the level of financial leverage by comparing the company's total debt to its equity. The ratio has risen from 0.30 in 2019 to 0.72 in 2023, signifying a substantial increase in the company's debt relative to equity. This surge in leverage may indicate a higher financial risk for the company.
Financial leverage ratio:
- The financial leverage ratio measures the extent to which a company's operations are funded by equity. The increase in the ratio from 1.71 in 2019 to 2.24 in 2023 indicates a greater reliance on debt financing, potentially leading to increased financial risk and reduced financial flexibility.
Overall, the trend across all the solvency ratios suggests a substantial increase in the company's reliance on debt financing over the years, which may elevate its financial risk and reduce its ability to cover long-term obligations using its own resources. As a result, stakeholders should closely monitor the company's solvency position and its ability to manage its debt levels effectively.
Coverage ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 17.06 | 22.54 | 19.07 | 22.64 | 17.35 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of meeting its interest payment obligations. Here is the detailed analysis of Air Products & Chemicals Inc.'s interest coverage ratio based on the provided data:
1. Sep 30, 2023: The interest coverage ratio for 2023 stands at 18.64, indicating that the company's EBIT is 18.64 times the amount of interest expenses. This suggests a strong ability to cover interest payments.
2. Sep 30, 2022: In 2022, the interest coverage ratio improved to 22.17, reflecting an even stronger ability to cover interest expenses compared to 2023.
3. Sep 30, 2021: The interest coverage ratio for 2021 was 17.69, suggesting a slightly lower ability to cover interest expenses compared to the prior year. However, it still indicates a relatively healthy coverage ratio.
4. Sep 30, 2020: The interest coverage ratio increased to 21.99 in 2020, indicating a strong improvement in the company's ability to cover interest expenses compared to the previous year.
5. Sep 30, 2019: The interest coverage ratio for 2019 was 17.05, showing a lower ability to cover interest expenses compared to 2020, but still at a reasonable level.
Overall, the trend in Air Products & Chemicals Inc.'s interest coverage ratio demonstrates consistent and strong coverage of interest expenses over the years. The company has displayed a capacity to comfortably meet its interest payment obligations, which is a positive indication of its financial stability and ability to service its debt.