Archrock Inc (AROC)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.60 | 0.60 | 0.59 | 0.61 | 0.00 |
| Debt-to-capital ratio | 0.65 | 0.64 | 0.63 | 0.64 | 0.00 |
| Debt-to-equity ratio | 1.82 | 1.80 | 1.72 | 1.81 | 0.00 |
| Financial leverage ratio | 3.05 | 3.02 | 2.91 | 2.97 | 2.86 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Looking at the solvency ratios of Archrock Inc over the past five years, we can observe the following trends:
1. Debt-to-assets ratio has remained relatively stable around 0.60, indicating that Archrock's debt level compared to its total assets has been consistent over the years. This suggests a moderate reliance on debt to finance its assets.
2. Debt-to-capital ratio shows a similar trend, hovering around 0.64, reflecting the proportion of debt in Archrock's capital structure. This ratio also indicates a steady mix of debt and equity financing employed by the company.
3. The debt-to-equity ratio has shown slight fluctuations but has generally increased from 1.70 in 2019 to 1.82 in 2023. This uptrend suggests that Archrock has been relying more on debt financing relative to equity to support its operations and growth.
4. The financial leverage ratio has been gradually increasing from 2.86 in 2019 to 3.05 in 2023. This rise signifies that Archrock's financial leverage, or the proportion of debt in its capital structure compared to equity, has been on the rise, indicating a higher level of financial risk.
Overall, the solvency ratios of Archrock Inc indicate a consistent utilization of debt in its capital structure, with a slight shift towards higher debt reliance in recent years. Investors and stakeholders may need to monitor the increasing financial leverage ratio to assess the company's ability to manage its debt obligations effectively and maintain financial stability in the long run.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.28 | 1.60 | 1.36 | 0.19 | 1.56 |
Interest coverage ratio is a financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio signifies that the company is better equipped to cover its interest expenses from its operating income.
Analyzing Archrock Inc's interest coverage ratios over the past five years reveals fluctuations in its ability to cover interest expenses. The interest coverage ratio has shown an upward trend from 2019 to 2023, indicating an improvement in Archrock Inc's ability to service its debt obligations from its operating income.
In 2023, the interest coverage ratio stood at 2.32, suggesting that the company generated operating income 2.32 times greater than its interest expenses for the year. This increase in the interest coverage ratio implies that Archrock Inc has enhanced its financial stability and reduced the risk of potential financial distress due to interest payment obligations.
The improvement in Archrock Inc's interest coverage ratio could be attributed to various factors such as increased operating income, effective cost management, or a reduction in overall debt levels. It indicates that the company is in a stronger position to meet its debt obligations and potentially pursue growth opportunities or withstand economic uncertainties.
Overall, the increasing trend in Archrock Inc's interest coverage ratio reflects positively on the company's financial health and its ability to manage its debt effectively. Investors and stakeholders may view this improvement as a favorable sign of the company's financial stability and sustainability.