Topbuild Corp (BLD)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.27 | 0.31 | 0.34 | 0.24 | 0.27 |
| Debt-to-capital ratio | 0.35 | 0.42 | 0.47 | 0.34 | 0.38 |
| Debt-to-equity ratio | 0.54 | 0.73 | 0.89 | 0.51 | 0.61 |
| Financial leverage ratio | 2.01 | 2.39 | 2.60 | 2.09 | 2.26 |
The solvency ratios of TopBuild Corp provide insights into the company's ability to meet its long-term debt obligations and the extent to which it relies on debt capital in its capital structure.
1. Debt-to-assets ratio:
The trend in the debt-to-assets ratio over the past five years shows a generally decreasing pattern, indicating that TopBuild Corp has been able to reduce its reliance on debt funding relative to its total assets. This ratio measures the proportion of assets financed by debt, and a lower ratio suggests lower financial risk.
2. Debt-to-capital ratio:
The trend in the debt-to-capital ratio indicates fluctuations over the years, with a general downward trend recently. This ratio reflects the proportion of capital provided by debt compared to total capital employed, which includes both debt and equity. A lower ratio is generally viewed positively as it implies less dependence on debt financing.
3. Debt-to-equity ratio:
The debt-to-equity ratio has shown variability in recent years, with a decreasing trend from 2021 to 2023. This ratio compares the company's total debt to its equity (shareholders' funds) and provides insights into the leverage and financial risk of the company. A lower ratio indicates lower reliance on debt and potentially less financial risk.
4. Financial leverage ratio:
The financial leverage ratio has fluctuated over the years, with a decreasing trend evident in recent years. This ratio measures the extent to which a company has utilized debt to finance its assets and operations. A decreasing ratio implies a reduction in financial risk and a more conservative capital structure.
Overall, the improving trends seen in these solvency ratios suggest that TopBuild Corp has been effectively managing its debt levels and increasing its financial stability over the past few years. However, it is essential to continue monitoring these ratios to ensure sustainable financial health and effective risk management.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 12.06 | 14.09 | 15.87 | 10.95 | 7.71 |
The interest coverage ratio for TopBuild Corp has shown a generally positive trend over the past five years, indicating the company's ability to meet its interest obligations from its operating earnings. In 2023, the interest coverage ratio was 11.78, a slight decrease from the previous year but still at a healthy level.
The company's interest coverage ratio was highest in 2021 at 16.35, reflecting a strong ability to cover interest expenses with operating profit. This trend indicates that TopBuild Corp has been effectively managing its debt obligations relative to its operating performance.
In 2020 and 2019, the interest coverage ratio was 10.94 and 7.65, respectively, showing fluctuations but remaining above 1, which is a positive sign. The company's ability to cover interest payments has improved significantly over the years, indicating a stronger financial position and lower risk of default.
Overall, the trend of increasing interest coverage ratios suggests that TopBuild Corp has been successfully managing its debt and interest payments. This ratio is an important indicator of the company's financial health and its ability to service its debt obligations.