Avantor Inc (AVTR)

The solvency ratios of Avantor Inc show the company's ability to meet its long-term financial obligations and assess the level of financial risk it carries.

1. Debt-to-assets ratio:
- Avantor's debt-to-assets ratio has shown a decreasing trend over the past five years, declining from 0.51 in 2019 to 0.41 in 2023. This indicates that the company has been relying less on debt financing relative to its total assets.

2. Debt-to-capital ratio:
- The debt-to-capital ratio has also decreased over the years, implying a lower dependence on debt to finance its operations. The ratio declined from 0.67 in 2019 to 0.50 in 2023, showing a positive trend.

3. Debt-to-equity ratio:
- Avantor's debt-to-equity ratio has improved consistently from 2.04 in 2019 to 1.00 in 2023, indicating that the company is relying less on debt and has a stronger equity position to support its operations.

4. Financial leverage ratio:
- The financial leverage ratio, which measures the extent of debt used in a company's capital structure, has also decreased steadily over the years from 3.97 in 2019 to 2.47 in 2023. A lower financial leverage ratio suggests a reduced financial risk for the company.

In summary, Avantor Inc has demonstrated a positive trend in its solvency ratios over the years, reflecting a decreased reliance on debt financing and a stronger financial position. This indicates improved financial stability and lower risk of default in meeting its long-term obligations.

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Coverage ratios

Interest coverage is a financial ratio that indicates a company's ability to pay its interest expenses on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses. Comparing Avantor Inc's interest coverage over the past five years, we can see a fluctuating trend.

In 2023, Avantor Inc's interest coverage ratio was 2.44, representing a decrease from the previous year. This suggests that the company's ability to cover its interest expenses declined in 2023 compared to 2022. However, the ratio remained above 1, indicating that the company's earnings were still sufficient to cover its interest payments.

In 2022 and 2021, the interest coverage ratios were 4.20 and 4.46, respectively, showing a strong ability to cover interest expenses with earnings. These ratios indicate a healthy financial position and ability to comfortably meet interest payment obligations.

In contrast, the interest coverage ratios in 2020 and 2019 were lower at 1.20 and 1.09, respectively. These lower ratios raise concerns about Avantor Inc's ability to cover its interest expenses with its earnings during those years. It suggests a potential strain on the company's financial position and ability to service its debt obligations.

Overall, fluctuations in Avantor Inc's interest coverage ratio over the past five years indicate varying levels of financial strength and ability to meet interest payment obligations. Investors and creditors may closely monitor this ratio to assess the company's financial health and stability.