Axalta Coating Systems Ltd (AXTA)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.48 | 0.52 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.67 | 0.72 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 2.01 | 2.53 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 4.21 | 4.86 | 4.83 | 4.99 | 5.03 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Looking at Axalta Coating Systems Ltd's solvency ratios over the past five years, we see a general trend of improvement in its solvency position.
The debt-to-assets ratio has shown a declining trend from 0.56 in 2019 to 0.48 in 2023. This indicates that the company has been able to reduce its reliance on debt to finance its assets over the years, which is a positive sign for creditors and investors.
Similarly, the debt-to-capital ratio has decreased from 0.74 in 2019 to 0.67 in 2023. This indicates that the proportion of debt in Axalta's capital structure has decreased, suggesting a more balanced capital mix and reduced financial risk.
The debt-to-equity ratio has also shown improvement, declining from 2.83 in 2019 to 2.03 in 2023. This trend indicates that the company has been able to lower its debt levels relative to equity, which is beneficial for shareholders as it signifies lower financial leverage.
The financial leverage ratio, which indicates the extent to which a company relies on debt financing, has also shown a decreasing trend from 5.03 in 2019 to 4.21 in 2023. This suggests that Axalta Coating Systems Ltd's financial risk has decreased over the years as it has reduced its reliance on debt to fund its operations.
Overall, the improving trend in Axalta's solvency ratios reflects a strengthening financial position, as the company has shown a prudent approach to managing its debt levels and enhancing its financial stability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.66 | 2.84 | 3.53 | 1.81 | 3.01 |
The interest coverage ratio measures the ability of a company to meet its interest payments on outstanding debt. A higher ratio indicates a stronger ability to cover interest expenses.
In the case of Axalta Coating Systems Ltd, the interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio was 2.75, which indicates that the company generated 2.75 times the amount needed to cover its interest expenses for that year. This ratio decreased from the previous year, where it was 3.03, suggesting a slight decrease in the company's ability to cover interest payments with its operating income.
Comparing to previous years, the interest coverage ratio was 3.45 in 2021, 2.04 in 2020, and 3.00 in 2019. The ratios in 2023 and 2020 are lower than the ratios in 2021 and 2019, indicating potential fluctuations in the company's ability to cover interest expenses over the years.
Overall, although Axalta Coating Systems Ltd's interest coverage ratio has varied, it is important for investors and creditors to monitor this ratio over time to assess the company's financial health and ability to meet its debt obligations.