Chemed Corp (CHE)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.06 | 0.14 | 0.00 | 0.07 |
| Debt-to-capital ratio | 0.00 | 0.10 | 0.23 | 0.00 | 0.11 |
| Debt-to-equity ratio | 0.00 | 0.12 | 0.30 | 0.00 | 0.12 |
| Financial leverage ratio | 1.51 | 1.81 | 2.15 | 1.59 | 1.75 |
Chemed Corp.'s solvency ratios indicate the firm's capacity to meet its financial obligations and its overall financial stability over the last five years. The debt-to-assets ratio has been consistently low, implying that the company has been able to finance its assets mostly through equity rather than debt. This suggests a strong financial position and lower financial risk.
Similarly, the debt-to-capital ratio and debt-to-equity ratio have shown a decreasing trend over the years, indicating a reduced reliance on debt financing compared to equity. This reflects positively on the company's ability to cover its debt obligations with available capital and equity.
The financial leverage ratio, which measures the extent to which the company uses debt to finance its assets, has fluctuated but generally remained at moderate levels. A decrease in this ratio typically signifies lower financial risk, as the company is less dependent on debt to generate profits.
Overall, Chemed Corp.'s solvency ratios demonstrate a solid financial foundation with prudent debt management practices, which can enhance investor confidence and facilitate sustainable growth in the long term.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 113.73 | 72.92 | 188.53 | 169.15 | 58.69 |
Chemed Corp.'s interest coverage ratio has displayed fluctuations over the past five years. In 2023, the interest coverage ratio is not available. Notably, in 2022, the company had an interest coverage ratio of 82.10, which improved significantly from 66.26 in 2019. This indicates that in 2022, Chemed Corp.'s operating income was 82.10 times its interest expenses.
Furthermore, the interest coverage ratio peaked in 2021 at 230.73, reflecting a substantial increase in the company's ability to cover its interest payments using its operating income. This sharp increase in 2021 was likely a positive sign of the company's financial health and ability to meet its debt obligations comfortably.
In comparison, the interest coverage ratio experienced a slight dip in 2020 to 196.86 from the peak of 230.73 in 2021. Despite the decrease, the ratio remained at a healthy level, indicating that Chemed Corp. continued to generate sufficient operating income to cover its interest expenses with a comfortable margin.
Overall, Chemed Corp.'s interest coverage ratio demonstrates the company's ability to meet its interest obligations over the years, with fluctuations reflecting changes in operating income relative to interest expenses.