Axalta Coating Systems Ltd (AXTA)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.47 | 0.48 | 0.52 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.64 | 0.67 | 0.72 | 0.00 | 0.00 |
| Debt-to-equity ratio | 1.78 | 2.01 | 2.53 | 0.00 | 0.00 |
| Financial leverage ratio | 3.79 | 4.21 | 4.86 | 4.83 | 4.99 |
Axalta Coating Systems Ltd's solvency ratios provide insight into the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. Axalta's debt-to-assets ratio has increased steadily from 0.00 in 2020 and 2021 to 0.52 in 2022, 0.48 in 2023, and 0.47 in 2024. This suggests that over time, a larger portion of the company's assets is being funded through debt.
2. Debt-to-capital ratio: This ratio evaluates the proportion of the company's capital structure that is financed by debt. Axalta's debt-to-capital ratio has shown an increasing trend from 0.00 in 2020 and 2021 to 0.72 in 2022, 0.67 in 2023, and 0.64 in 2024. This indicates that the company's reliance on debt to fund its operations and investments has been on the rise.
3. Debt-to-equity ratio: This ratio compares the company's total debt to its total equity, reflecting the degree of financial leverage. Axalta's debt-to-equity ratio has also demonstrated an upward trend, increasing from 0.00 in 2020 and 2021 to 2.53 in 2022, 2.01 in 2023, and 1.78 in 2024. This rise signifies a higher level of debt financing relative to equity.
4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to finance its assets. Axalta's financial leverage ratio has decreased gradually from 4.99 in 2020 to 3.79 in 2024. A declining trend indicates that the company is relying less on debt to support its operations and investments.
Overall, the increasing debt-to-assets, debt-to-capital, and debt-to-equity ratios suggest that Axalta Coating Systems Ltd has been utilizing more debt in its capital structure, potentially increasing its financial risk. However, the decreasing financial leverage ratio signals a reduction in the company's reliance on debt financing over the years. It is essential for stakeholders to monitor these solvency ratios to assess 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 | 176.50 | 2.66 | 2.84 | 3.53 | 1.81 |
Based on the provided data, the interest coverage ratio for Axalta Coating Systems Ltd has varied over the past five years.
As of December 31, 2020, the interest coverage ratio was 1.81, indicating that the company's earnings were just enough to cover its interest expenses. It suggests a lower margin of safety for meeting interest payments.
By December 31, 2021, the interest coverage ratio improved to 3.53, showing a positive trend as the company's earnings were sufficient to cover its interest expenses more than three times over.
In the following years, the interest coverage ratio remained above 2, with values of 2.84 as of December 31, 2022, and 2.66 as of December 31, 2023. These values indicate that the company continued to have adequate earnings to cover its interest obligations, although the coverage decreased slightly.
There was a significant spike in the interest coverage ratio to 176.50 by December 31, 2024. This exceptionally high ratio may be due to various factors such as a significant increase in earnings or a decrease in interest expenses.
Overall, the trend in Axalta Coating Systems Ltd's interest coverage ratio shows fluctuations but generally indicates the company's ability to meet its interest payments, with a noteworthy improvement in 2021 and a substantial increase in 2024. An interest coverage ratio above 1 is typically seen as favorable, as it suggests that the company is generating enough earnings to cover its interest costs.