American Axle & Manufacturing (AXL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.52 | 0.53 | 0.55 | 0.59 | 0.00 |
| Debt-to-capital ratio | 0.82 | 0.82 | 0.87 | 0.90 | 0.00 |
| Debt-to-equity ratio | 4.62 | 4.62 | 6.81 | 9.41 | 0.00 |
| Financial leverage ratio | 8.85 | 8.72 | 12.31 | 15.97 | 6.80 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. For American Axle & Manufacturing Holdings Inc, the trend analysis of the solvency ratios from 2019 to 2023 reveals some important observations:
1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. The trend shows a gradual decrease from 0.55 in 2019 to 0.52 in 2023. This indicates that the company has been relying less on debt to finance its assets over the years.
2. Debt-to-capital ratio: This ratio reflects the extent to which a company is reliant on debt to fund its operations. Despite minor fluctuations, the ratio has remained relatively stable around 0.82 to 0.90 from 2019 to 2023. This suggests that the company has maintained a consistent balance between debt and equity in its capital structure.
3. Debt-to-equity ratio: This ratio signifies the level of financial risk a company carries due to debt financing. The significant decrease in this ratio from 9.33 in 2020 to 4.58 in 2023 indicates that the company has reduced its reliance on debt in comparison to equity for funding its operations.
4. Financial leverage ratio: This ratio measures the company's use of debt to finance its assets. The trend shows a decrease from 15.97 in 2020 to 8.85 in 2023, reflecting a significant reduction in financial leverage over the years.
In conclusion, American Axle & Manufacturing Holdings Inc has shown improvements in its solvency ratios over the years, indicating a stronger financial position and a reduced dependence on debt for its long-term financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 0.88 | 1.38 | 1.01 | -1.88 | -1.45 |
American Axle & Manufacturing Holdings Inc's interest coverage has fluctuated over the past five years, ranging from a low of 0.91 in 2020 to a high of 2.09 in 2019. The interest coverage ratio indicates the company's ability to meet its interest obligations with its operating income. A lower ratio suggests that the company may have difficulty meeting its interest payments from its earnings, while a higher ratio indicates a stronger ability to cover interest expenses.
In 2023, the interest coverage ratio decreased to 0.98, which may raise concerns about the company's ability to cover its interest expenses with its operating income. This decrease from the previous year's ratio of 1.74 could indicate increased financial risk or a decline in profitability. It is important for stakeholders to closely monitor the company's financial performance and assess the factors contributing to this decrease in interest coverage.