Armstrong World Industries Inc (AWI)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.27 | 0.34 | 0.39 | 0.35 | 0.40 |
| Debt-to-capital ratio | 0.40 | 0.49 | 0.55 | 0.54 | 0.60 |
| Debt-to-equity ratio | 0.66 | 0.95 | 1.22 | 1.17 | 1.53 |
| Financial leverage ratio | 2.43 | 2.83 | 3.15 | 3.29 | 3.81 |
Armstrong World Industries Inc's solvency ratios show a positive trend over the years, indicating improved financial health and stability. The Debt-to-assets ratio has decreased from 0.40 in 2020 to 0.27 in 2024, signifying a lower proportion of assets financed by debt. This suggests a better ability to cover debt obligations using company assets.
Similarly, the Debt-to-capital ratio has declined from 0.60 in 2020 to 0.40 in 2024, showing a decreasing reliance on debt to finance operations. The reduced ratio indicates that a larger proportion of the company's capital is sourced from equity, boosting financial resilience.
The Debt-to-equity ratio has exhibited a downward trend, falling from 1.53 in 2020 to 0.66 in 2024. This highlights a decreasing debt burden relative to equity, indicating a stronger financial position and lower financial risk for the company.
Lastly, the Financial leverage ratio has decreased steadily from 3.81 in 2020 to 2.43 in 2024. This decline signifies a reduction in the company's reliance on debt financing, thereby enhancing financial flexibility and reducing the risk associated with debt.
Overall, the decreasing trend in Armstrong World Industries Inc's solvency ratios reflects an improving financial stability and a sound debt management strategy, contributing positively to the company's long-term financial health and sustainability.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 9.72 | 9.45 | 10.62 | 11.51 | -4.88 |
Interest coverage is an important financial ratio that measures a company's ability to cover its interest expenses with its operating income.
Looking at the trend in Armstrong World Industries Inc's interest coverage from 2020 to 2024, we can see notable fluctuations. In 2020, the interest coverage ratio was negative, indicating that the company did not have enough operating income to cover its interest expenses. This is a concerning sign as it suggests potential financial distress.
However, there has been a substantial improvement in the company's interest coverage ratio in the following years. The ratio increased to 11.51 in 2021, showing a significant improvement in Armstrong's ability to cover its interest payments with its operating income. This positive trend continued in the subsequent years, with the ratio ranging from 9.45 to 10.62, indicating a healthy level of interest coverage.
Overall, Armstrong World Industries Inc's interest coverage has shown a positive trajectory over the years, moving from a negative position to a more stable and healthy level. This suggests that the company has been able to generate sufficient operating income to comfortably cover its interest expenses, reducing the risk of financial distress.