Avanos Medical Inc (AVNS)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.13 | 0.08 | 0.00 | 0.14 |
| Debt-to-capital ratio | 0.00 | 0.15 | 0.09 | 0.00 | 0.16 |
| Debt-to-equity ratio | 0.00 | 0.18 | 0.10 | 0.00 | 0.19 |
| Financial leverage ratio | 1.37 | 1.38 | 1.26 | 1.33 | 1.41 |
The solvency ratios of Avanos Medical Inc indicate the company's ability to meet its long-term financial obligations.
The debt-to-assets ratio shows the proportion of the company's assets that are financed by debt. Avanos Medical has shown a generally decreasing trend in this ratio from 2019 to 2023, which indicates that the company has been relying less on debt to finance its assets over the years.
The debt-to-capital ratio measures the percentage of the company's capital that is financed by debt. Avanos Medical also shows a decreasing trend in this ratio from 2019 to 2023, implying that the company is relying less on debt to fund its operations in relation to the total capital.
The debt-to-equity ratio reflects the extent to which the company is using debt to finance its operations compared to its equity. Avanos Medical has been reducing this ratio over the years, indicating a lower reliance on debt financing in relation to equity.
The financial leverage ratio measures the extent of the company's financial leverage, with a higher ratio indicating higher financial risk. Avanos Medical has shown a decreasing trend in this ratio, suggesting that the company has been managing its financial leverage effectively, leading to a lower financial risk over the years.
Overall, based on these solvency ratios, Avanos Medical Inc appears to have improved its financial stability and reduced its reliance on debt for financing its operations over the years, which is generally a positive indication of its solvency.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -2.99 | 7.52 | 3.21 | -3.03 | -3.27 |
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt using its earnings before interest and taxes (EBIT). A higher ratio indicates stronger financial health and a greater ability to meet interest obligations.
Analyzing the trend for Avanos Medical Inc's interest coverage over the past five years, we observe fluctuations. In 2023, the interest coverage ratio stands at 1.45, indicating that the company is generating sufficient earnings to cover its interest expenses, albeit at a lower level compared to the previous years.
In 2022 and 2021, the interest coverage ratios were 8.81 and 10.23, respectively, reflecting a robust ability to meet interest payments with comfortable margins. This suggests that Avanos had significant earnings relative to its interest obligations during these years.
However, the interest coverage ratio dropped significantly to 0.40 in 2020, indicating a potential strain on Avanos' ability to cover interest expenses with its earnings. Furthermore, in 2019, the company had a negative interest coverage ratio of -4.17, indicating that its EBIT was insufficient to cover its interest payments.
Overall, Avanos Medical Inc's interest coverage ratio has shown fluctuations over the past five years, with 2023 reflecting a moderate ability to cover interest expenses. Investors and creditors may view these fluctuations as a sign of varying financial health and risk associated with the company's debt obligations.