Archrock Inc (AROC)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.57 | 0.60 | 0.60 | 0.59 | 0.61 |
| Debt-to-capital ratio | 0.62 | 0.65 | 0.64 | 0.63 | 0.64 |
| Debt-to-equity ratio | 1.66 | 1.82 | 1.80 | 1.72 | 1.81 |
| Financial leverage ratio | 2.89 | 3.05 | 3.02 | 2.91 | 2.97 |
Based on the provided data, we can analyze Archrock Inc's solvency ratios as follows:
1. Debt-to-assets ratio:
- The debt-to-assets ratio indicates the proportion of a company's assets financed by debt. Archrock Inc's debt-to-assets ratio has experienced a slight decrease from 0.61 in 2020 to 0.57 in 2024. This suggests that the company has been able to reduce its reliance on debt to finance its assets over the years.
2. Debt-to-capital ratio:
- The debt-to-capital ratio measures the proportion of a company's capital that is funded by debt. Archrock Inc's debt-to-capital ratio has fluctuated between 0.62 and 0.65 over the years, showing a relatively stable trend. This ratio indicates that the company uses debt as a component of its capital structure but has not seen significant changes in recent years.
3. Debt-to-equity ratio:
- The debt-to-equity ratio highlights the extent to which a company is financed by debt relative to shareholders' equity. Archrock Inc's debt-to-equity ratio has varied between 1.66 and 1.82, showing a moderate level of debt compared to equity. The decrease in this ratio from 2020 to 2024 indicates a slight reduction in the company's reliance on debt financing over time.
4. Financial leverage ratio:
- The financial leverage ratio reflects the proportion of a company's assets that are financed by debt. Archrock Inc's financial leverage ratio has ranged from 2.89 to 3.05, indicating the company's use of debt to magnify returns for shareholders. The decrease in this ratio from 2020 to 2024 suggests that the company has managed to maintain a relatively stable financial position while slightly reducing its debt leverage.
In conclusion, Archrock Inc's solvency ratios demonstrate a mixed picture of the company's reliance on debt financing over the years. While there are fluctuations in certain ratios, the overall trend indicates a manageable level of debt and a potential improvement in the company's financial health.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 46.82 | 2.28 | 1.60 | 1.36 | 0.19 |
The interest coverage ratio for Archrock Inc has shown a fluctuating trend over the years, indicating the company's ability to meet its interest payments from its operating income.
As of December 31, 2020, the interest coverage was notably low at 0.19, suggesting a potential strain on the company's ability to cover its interest expenses with its operating earnings.
However, there has been a significant improvement in the interest coverage ratio in subsequent years. By December 31, 2024, the interest coverage ratio surged to 46.82, indicating a substantial increase in the company's ability to service its debt obligations with its operating profits.
Overall, the upward trend in the interest coverage ratio reflects a positive development in Archrock Inc's financial position, indicating an enhanced capacity to cover interest expenses and potentially reduce financial risk.