Topbuild Corp (BLD)

Topbuild Corp's solvency ratios indicate its ability to meet its long-term financial obligations.

1. Debt-to-assets ratio: This ratio shows the proportion of the company's assets financed by debt. The trend from 2020 to 2024 shows a slight increase from 0.24 to 0.28. This suggests that the company has been relying more on debt to finance its assets over the years.

2. Debt-to-capital ratio: This ratio represents the percentage of the company's capital that is financed by debt. The trend shows an increase from 0.34 in 2020 to 0.38 in 2024. This indicates that a higher proportion of the company's capital is being funded by debt over time.

3. Debt-to-equity ratio: This ratio compares the company's debt to its shareholders' equity. The ratio fluctuates over the years, reaching a peak in 2021 at 0.89 and then decreasing to 0.60 in 2024. This implies that the company's reliance on debt compared to equity has varied but is relatively stable.

4. Financial leverage ratio: This ratio measures the extent to which the company uses debt to finance its operations. The ratio has fluctuated but remained within a narrow range, indicating that the company's debt levels have been relatively consistent compared to its equity.

Overall, the analysis of Topbuild Corp's solvency ratios suggests that the company has been managing its debt levels effectively, with a moderate increase in debt utilization to fund its assets and capital over the years. The fluctuations in the debt-to-equity ratio indicate some changes in the company's capital structure, but the financial leverage ratio demonstrates a relatively stable debt usage pattern.

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Coverage ratios

The interest coverage ratio for Topbuild Corp has shown a positive trend over the years, indicating the company's ability to comfortably meet its interest obligations. In December 31, 2020, the interest coverage ratio stood at 10.95, implying that the company generated earnings nearly 11 times more than its interest expenses. This ratio increased to 15.87 by December 31, 2021, demonstrating a further improvement in the company's ability to cover interest costs.

By December 31, 2022, the interest coverage ratio remained strong at 14.09, indicating the company's continued ability to generate earnings sufficient to cover its interest expenses. However, there was a slight decrease in the ratio to 12.06 by December 31, 2023, which might be worth monitoring for potential impacts on the company's financial health.

Remarkably, by December 31, 2024, the interest coverage ratio spiked significantly to 307.65, signifying a substantial increase in the company's ability to cover its interest payments with earnings. This exceptionally high ratio suggests a strong financial position and liquidity for Topbuild Corp, indicating a healthy ability to service its debt obligations without facing significant financial strain.