Chemours Co (CC)

The solvency ratios of Chemours Co indicate its ability to meet its long-term financial obligations and the extent to which it relies on debt financing.

The debt-to-assets ratio, which measures the proportion of total assets financed by debt, has shown a relatively stable trend over the past five years, hovering around 0.47 to 0.49 until a slight increase to 0.48 in 2023. This suggests that the company is moderately reliant on debt to fund its assets, with a significant portion of assets being financed through debt.

The debt-to-capital ratio, which indicates the percentage of capital structure that is debt, has exhibited a fluctuating pattern over the same period, ranging from 0.76 to 0.85. The ratio increased to 0.84 in 2023, indicating a higher reliance on debt in the capital structure compared to the previous year.

The debt-to-equity ratio, reflecting the relative contribution of creditors and shareholders to the company's capital structure, also shows variations over the years. The ratio increased to 5.41 in 2023, signifying a higher level of financial leverage compared to the prior years. This suggests that the company relies more on debt financing relative to equity.

The financial leverage ratio, which measures the company's financial risk by comparing its total assets to equity, has shown an upward trend over the five-year period, with the ratio increasing from 6.90 in 2019 to 11.20 in 2023. This indicates a significant increase in financial leverage, implying higher financial risk and reliance on debt financing.

In conclusion, the solvency ratios of Chemours Co demonstrate a consistent reliance on debt financing to support its operations and growth, with increasing levels of leverage and debt usage over the years. Investors and stakeholders should closely monitor these ratios to assess the company's financial health and ability to meet its long-term obligations.

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Coverage ratios

Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio is generally considered favorable as it shows the company has sufficient earnings to cover its interest expenses.

Looking at the historical trend of Chemours Co's interest coverage ratio, there is a noticeable fluctuation over the past five years. In 2019, the ratio was quite low at 0.40, indicating that the company's operating income was only able to cover 40% of its interest expenses. This raised concerns about its ability to meet its interest obligations.

However, there was a significant improvement in 2020, with the interest coverage ratio increasing to 1.85. This showed that the company's operating income became more sufficient to cover its interest expenses compared to the previous year.

In 2021 and 2022, the interest coverage ratio continued to improve, reaching 4.65 and 5.55, respectively. These higher ratios demonstrate a strong ability by Chemours Co to comfortably meet its interest payments using its operating income.

The latest figure for 2023 shows a decline in the interest coverage ratio to -0.53, indicating that the company's operating income fell short of covering its interest expenses. A negative interest coverage ratio is a red flag as it suggests the company is not generating enough operating income to cover its interest obligations, potentially leading to financial difficulties.

Overall, while there have been improvements in Chemours Co's interest coverage ratio in recent years, the sharp decline in 2023 is a cause for concern and may warrant further investigation into the company's financial health and ability to meet its debt obligations.