Baker Hughes Co (BKR)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| 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 | 2.27 | 2.40 | 2.37 | 2.38 | 2.95 |
Based on the provided data for Baker Hughes Co, the solvency ratios indicate a strong financial position in terms of debt management and leverage:
1. Debt-to-assets ratio: This ratio shows the proportion of the company's assets financed by debt. The data indicates that Baker Hughes Co had a debt-to-assets ratio of 0.00 for each year from 2020 to 2024. This suggests that the company effectively manages its debt levels in relation to its total assets, resulting in a low risk of insolvency due to debt obligations.
2. Debt-to-capital ratio: This ratio assesses the proportion of the company's capital structure that is funded by debt. Similar to the debt-to-assets ratio, Baker Hughes Co maintained a debt-to-capital ratio of 0.00 across the years from 2020 to 2024. This indicates a conservative approach to using debt in the company's capital structure.
3. Debt-to-equity ratio: The debt-to-equity ratio measures the extent to which a company is using debt to finance its operations relative to its equity. Baker Hughes Co's data shows a consistent debt-to-equity ratio of 0.00 for the years 2020 to 2024. This suggests a healthy balance between debt and equity financing and a low financial risk stemming from excessive debt.
4. Financial leverage ratio: The financial leverage ratio provides insight into the company's financial risk by showing how much of its operations are funded by debt. Despite fluctuations over the years, with a range between 2.27 and 2.95, the data indicates that Baker Hughes Co has maintained a relatively stable financial leverage position. A decreasing trend in this ratio over time may imply improved financial stability and lower risk associated with debt financing.
In summary, based on the solvency ratios provided, Baker Hughes Co appears to have a prudent debt management strategy, maintaining low levels of debt relative to its assets, capital, and equity. The company's financial leverage ratio suggests a manageable level of debt, contributing to its overall solvency and financial health.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 15.56 | 10.73 | 4.70 | 4.38 | -60.52 |
The interest coverage ratio for Baker Hughes Co has displayed a significant improvement trend over the past few years. In December 31, 2020, the interest coverage was -60.52, indicating a negative coverage where the company's earnings were not sufficient to cover its interest expenses. However, the company managed to turn this around with a substantial increase to 4.38 by December 31, 2021, signaling that the company's operating income was able to cover its interest expenses 4.38 times.
The positive trend continued with the interest coverage ratio further improving to 4.70 by December 31, 2022, and to 10.73 by December 31, 2023, suggesting a healthier financial position where the company's earnings comfortably covered its interest obligations. Finally, by December 31, 2024, Baker Hughes Co achieved an interest coverage ratio of 15.56, demonstrating a strong ability to meet its interest payments with its operating income more than 15 times.
Overall, the steady improvement in the interest coverage ratio reflects a positive trend for Baker Hughes Co, indicating a strengthening financial position and the ability to meet its debt obligations through its operating earnings.