Cars.com Inc (CARS)

Cars.com's solvency ratios provide insight into the company's ability to meet its financial obligations and manage its debt.

The debt-to-assets ratio has shown a decreasing trend from 2019 to 2023, indicating that the proportion of assets financed by debt has been decreasing over the years. This suggests that the company has been relying less on debt to fund its assets.

The debt-to-capital ratio also shows a declining trend over the same period, further indicating a reduction in the company's reliance on debt for financing its operations. A lower debt-to-capital ratio generally signifies a healthier capital structure.

The debt-to-equity ratio fluctuated over the years, but the ratio has been on a downward trend since 2021. This means that the company has been reducing its reliance on debt in relation to equity, which typically indicates improved financial health and lower risk.

The financial leverage ratio demonstrates the extent to which the company's operations are financed by debt. The ratio has been decreasing steadily since 2019, indicating that the company has been reducing its level of financial leverage over time. A lower financial leverage ratio implies lower financial risk and greater stability in the company's capital structure.

Overall, the solvency ratios for Cars.com show a positive trend with decreasing leverage and reduced reliance on debt for financing, suggesting improved financial health and risk management.

---

Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher ratio indicates a stronger ability to cover interest expenses.

Looking at the trend in Cars.com's interest coverage ratio from 2019 to 2023, we observe fluctuations in the ratio:

- In 2019 and 2020, the interest coverage ratio was relatively low at 0.50 and 0.49 respectively, indicating that Cars.com had limited ability to cover its interest expenses with its operating income.

- The ratio improved in 2021 to 1.25, showing a better ability to meet interest obligations compared to the previous years.

- However, in 2022 and 2023, the interest coverage ratio decreased to 1.87 and 1.67 respectively. While still above 1, indicating that Cars.com is able to cover its interest expenses with its operating income, the decreasing trend suggests a slight weakening in the company's ability to cover interest payments.

Overall, Cars.com's interest coverage ratio has shown volatility over the years, with fluctuations in its ability to cover interest expenses. It would be important for the company to closely monitor and manage its interest obligations to ensure financial stability and sustainability.