Cabot Corporation (CBT)

Cabot Corporation's solvency ratios reflect its ability to meet its long-term debt obligations and the extent of its financial leverage over the past five years.

1. Debt-to-assets ratio:
- Cabot has been effective in managing its debt in relation to its assets. The decreasing trend in the debt-to-assets ratio from 0.39 in 2020 to 0.29 in 2024 indicates that the company's reliance on debt to finance its assets has been declining.

2. Debt-to-capital ratio:
- The trend in the debt-to-capital ratio shows a fluctuation but a general decreasing trend from 0.61 in 2020 to 0.43 in 2024. This indicates that Cabot has been reducing its reliance on debt to fund its operations and investments compared to its capital structure.

3. Debt-to-equity ratio:
- Cabot's debt-to-equity ratio has shown significant fluctuations over the years, with a high of 1.58 in 2020 and a low of 0.76 in 2021 and 2024. This suggests that the company's debt levels in relation to its equity have been volatile, reflecting changes in its capital structure.

4. Financial leverage ratio:
- The financial leverage ratio measures the extent of a company's financial leverage. Cabot's ratio has been gradually decreasing from 4.02 in 2020 to 2.62 in 2024. This indicates that the company has been reducing its reliance on debt to finance its operations and investments, which may lower financial risk.

Overall, Cabot Corporation's solvency ratios demonstrate a favorable trend towards lower debt levels relative to assets, capital, equity, and overall financial leverage. These improvements suggest that the company has been managing its debt effectively and enhancing its financial stability over the years.

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Coverage ratios

The interest coverage ratio for Cabot Corporation has shown variability over the past five years. In 2024, Cabot Corporation's interest coverage ratio improved to 7.06, indicating the company's ability to cover its interest expenses by its operating profits. This improvement is a positive sign as it suggests that the company's earnings are sufficient to handle its interest obligations comfortably.

Comparing this to the previous years, in 2023 and 2022, the interest coverage ratios were 5.63 and 6.55 respectively, showing a somewhat lower ability to cover interest expenses than in 2024. However, these ratios still indicate a reasonable level of interest coverage.

The most significant improvement in interest coverage ratio was seen in 2021, where the ratio spiked to 8.61, indicating a robust ability to meet interest payments from operating income. This suggests that Cabot Corporation's profitability improved significantly in 2021.

On the other hand, in 2020, Cabot Corporation had a notably low interest coverage ratio of 0.11, indicating that its operating profits were insufficient to cover its interest expenses, presenting a potential risk for the company's financial health.

Overall, the trend in Cabot Corporation's interest coverage ratio over the past five years shows fluctuations, with improvements in some years and weaknesses in others. It is essential for investors and stakeholders to monitor this ratio continuously to assess the company's ability to meet its interest obligations and manage its debt effectively.