Avis Budget Group Inc (CAR)

Avis Budget Group Inc's solvency ratios provide insights into the company's ability to meet its long-term financial obligations. The debt-to-assets ratio has been gradually increasing over the past five years, reaching 0.73 in 2023 from 0.63 in 2019, indicating that a higher proportion of the company's assets are financed by debt.

Similarly, the debt-to-capital ratio has fluctuated slightly but remained relatively stable, standing at 1.01 in 2023 compared to 0.96 in 2019. This ratio measures the extent to which debt is used to finance the company's operations relative to its total capitalization.

The absence of data for the debt-to-equity ratio in recent years suggests that the company may have been relying on debt to a significant extent for its capital structure. The financial leverage ratio, which indicates the proportion of debt in the capital structure relative to equity, was particularly high in 2019 at 35.25, implying a high level of financial risk.

Overall, Avis Budget Group Inc's solvency ratios show a trend of increasing reliance on debt financing, which could potentially raise concerns about the company's financial stability and ability to manage debt effectively in the long run.

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Coverage ratios

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates a company is more capable of meeting its interest obligations.

Avis Budget Group Inc's interest coverage has fluctuated over the past five years. In 2023, the interest coverage ratio was 2.88, indicating the company generated 2.88 times the earnings needed to cover its interest payments. This represents a decrease from the previous year (6.61 in 2022), suggesting a potential decrease in the company's ability to meet its interest obligations efficiently.

The interest coverage ratio was 4.60 in 2021, which showed a moderate decline from 2020 when it was -0.50. The negative interest coverage in 2020 indicates that the company's earnings were insufficient to cover its interest expenses during that period, posing a risk of financial distress.

However, in 2019, the company's interest coverage improved to 1.75, indicating a better ability to cover interest payments compared to 2020 but still below optimal levels.

Overall, while the recent interest coverage ratio of 2.88 in 2023 suggests some improvement from previous years, it may be important for Avis Budget Group Inc to continue monitoring and managing its interest expenses to ensure sustainable financial health.