BorgWarner Inc (BWA)

The solvency ratios of BorgWarner Inc demonstrate the company's ability to meet its long-term financial obligations and fund its operations through a combination of debt and equity.

The Debt-to-assets ratio, which indicates the proportion of the company's assets financed by debt, has remained relatively stable over the last five years, ranging from 0.20 in 2019 to 0.26 in 2023. This suggests that BorgWarner has maintained a conservative approach to debt financing relative to its total assets.

The Debt-to-capital ratio, which shows the extent of the company's capital structure that is comprised of debt, has also exhibited consistency over the same period, fluctuating between 0.29 in 2019 and 0.39 in 2023. This indicates that BorgWarner has maintained a balanced mix of debt and equity in its overall capital structure.

The Debt-to-equity ratio, revealing the proportion of the company's financing that comes from debt versus equity, has shown an increasing trend from 0.42 in 2019 to 0.65 in 2023. This indicates a higher reliance on debt funding relative to equity, which could potentially raise concerns about the company's leverage and financial risk going forward.

The Financial leverage ratio, which measures the company's level of financial risk by comparing its total assets to shareholders' equity, has also displayed an upward trajectory over the period, ranging from 2.06 in 2019 to 2.48 in 2023. This indicates an increasing level of financial leverage, signifying a higher degree of risk associated with the company's debt obligations.

In conclusion, BorgWarner Inc's solvency ratios suggest a stable debt-to-assets and debt-to-capital structure, but an increasing reliance on debt financing compared to equity, leading to a rising level of financial leverage and potential risk for the company's long-term financial health.

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Coverage ratios

BorgWarner Inc's interest coverage has shown a generally positive trend over the past five years, indicating the company's ability to meet its interest obligations from its operating income. The interest coverage ratio has increased from 29.30 in 2019 to 33.74 in 2023, reaching its highest point in the last five years. This suggests that BorgWarner Inc's earnings before interest and taxes (EBIT) are sufficient to cover its interest expenses by a significant margin. The company's strong interest coverage ratio reflects a healthy financial position and a reduced risk of default on its debt obligations. Overall, BorgWarner Inc's interest coverage has improved significantly over the years, highlighting its financial stability and ability to manage its debt effectively.