Churchill Downs Incorporated (CHDN)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 6.71 | 7.78 | 11.25 | 9.72 | 7.32 |
Churchill Downs Incorporated demonstrates strong solvency ratios based on the provided data. The Debt-to-assets ratio, Debt-to-capital ratio, and Debt-to-equity ratio remain consistently at 0.00 from December 31, 2020, to December 31, 2024, indicating that the company has no debt relative to its assets, capital, or equity during this period.
However, the Financial leverage ratio shows fluctuations over the years, with a significant increase from 7.32 in 2020 to 11.25 in 2022, before decreasing to 6.71 in 2024. Despite these fluctuations, the company's financial leverage remains at moderate levels, suggesting that Churchill Downs Incorporated relies more on equity financing rather than debt to support its operations and growth.
Overall, the consistently low debt ratios and moderate financial leverage ratio reflect Churchill Downs Incorporated's solid financial position and ability to meet its financial obligations through a healthy balance of debt and equity financing.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.98 | 3.09 | 5.13 | 5.06 | 1.10 |
Interest coverage is a financial ratio that indicates a company's ability to cover its interest expenses with its operating income. Looking at the data provided for Churchill Downs Incorporated from 2020 to 2024, we observe a fluctuation in the interest coverage ratio. In 2020, the interest coverage ratio was only 1.10, implying that the company's operating income was barely sufficient to cover its interest expenses.
Over the subsequent years, the interest coverage ratio improved significantly reaching 5.06 in 2021, 5.13 in 2022, and then slightly decreased to 3.09 in 2023, before falling further to 2.98 in 2024. The notable improvement from 2020 to 2022 indicates that the company had considerably higher earnings relative to its interest expenses during this period.
However, the decline in the interest coverage ratio in 2023 and 2024 suggests that the company's ability to cover its interest payments weakened during these years compared to the peak in 2022. A ratio below 1 would typically raise concerns about the company's ability to meet its interest obligations.
Overall, while Churchill Downs Incorporated showed an improvement in its interest coverage ratio from 2020 to 2022, the decline in the ratio in 2023 and 2024 points toward the importance of continuous monitoring of the company's financial health, specifically its ability to service its debt obligations with its operating income. It would be beneficial for the company to focus on sustaining higher operating income levels to ensure sufficient coverage of its interest expenses in the future.