Avery Dennison Corp (AVY)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 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 | 3.86 | 3.91 | 4.14 | 4.10 | 4.56 |
Avery Dennison Corp has consistently maintained a low level of debt relative to its assets, capital, and equity over the past five years, as indicated by its debt-to-assets, debt-to-capital, and debt-to-equity ratios all at 0.00. This suggests that the company relies more on equity financing rather than taking on debt to fund its operations and investments.
However, the financial leverage ratio has decreased slightly from 4.56 in 2019 to 3.86 in 2023. This indicates that the company's level of financial leverage, which measures the proportion of the company's assets that are financed by debt, has decreased over the years. A lower financial leverage ratio can sometimes indicate a lower level of financial risk for the company, as it is relying less on debt to fund its operations.
Overall, based on the solvency ratios analyzed, Avery Dennison Corp appears to have a strong financial position with a conservative approach to debt management, which can be seen as a positive indicator of the company's ability to meet its financial obligations and weather economic downturns.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 6.84 | 12.88 | 15.08 | 11.48 | 4.26 |
Avery Dennison Corp's interest coverage ratio has shown some fluctuations over the five years provided. The interest coverage ratio indicates the company's ability to meet its interest payment obligations from its operating earnings.
In 2023, the interest coverage ratio stands at 6.84, indicating a decline from the previous year. While the ratio is still above 1, suggesting that the company's operating earnings are sufficient to cover its interest expenses, the decrease from the previous year could imply a decrease in earnings relative to its interest charges.
Comparing to the ratios in 2022 (12.88) and 2021 (15.08), where the company demonstrated strong ability to cover its interest payments with operating earnings, the recent ratio shows a relative weakening in 2023.
The ratio in 2020 (11.48) was also relatively high, indicating a healthy coverage of interest expenses. However, in 2019, the interest coverage ratio was lower at 4.26, which could have raised concerns about the company's ability to meet its interest obligations.
Overall, while Avery Dennison Corp has historically maintained a solid interest coverage ratio, the recent decline in 2023 suggests a potential need for monitoring the company's ability to generate sufficient earnings to cover its interest expenses.