The Chefs Warehouse Inc (CHEF)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.39 | 0.43 | 0.37 | 0.41 | 0.38 |
| Debt-to-capital ratio | 0.59 | 0.62 | 0.53 | 0.54 | 0.53 |
| Debt-to-equity ratio | 1.46 | 1.63 | 1.13 | 1.16 | 1.15 |
| Financial leverage ratio | 3.75 | 3.76 | 3.07 | 2.83 | 3.02 |
The solvency ratios of The Chefs Warehouse Inc show a relatively consistent trend over the past five years. The Debt-to-assets ratio has ranged from 0.37 to 0.43, reflecting the company's ability to cover its liabilities with its assets. The decreasing trend from 2021 to 2023 indicates improved efficiency in asset management.
The Debt-to-capital ratio has fluctuated between 0.53 and 0.62, suggesting a moderate level of reliance on debt to finance the company's operations. This ratio is an indicator of financial risk and the ability to meet long-term obligations.
The Debt-to-equity ratio has shown a declining trend from 2019 to 2023, ranging from 1.13 to 1.63. This ratio signifies the proportion of debt and equity in the company's capital structure. The decreasing trend indicates a decreasing reliance on debt financing over the years.
The Financial leverage ratio has fluctuated between 2.83 and 3.76, reflecting the company's financial leverage or the use of debt to finance operations. The ratio increased in 2022 but decreased in 2023, indicating a fluctuating level of financial risk.
Overall, The Chefs Warehouse Inc has maintained a reasonable level of solvency over the years, with a gradual decrease in debt reliance and improving efficiency in asset management. However, careful monitoring of these ratios is essential to ensure sustained financial stability and growth.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.22 | 1.96 | 0.61 | -4.90 | 2.77 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. In the case of The Chefs Warehouse Inc, the trend of the interest coverage ratio over the past five years indicates fluctuations in the company's ability to cover its interest expenses.
In 2023, the interest coverage ratio improved to 2.22, indicating that the company generated 2.22 times the earnings needed to cover its interest expenses. This suggests an enhancement in the company's ability to meet its interest obligations compared to the previous year.
In 2022, the interest coverage ratio was 1.96, which also showed an improvement from 2021 but indicates that the company's earnings were able to cover its interest expenses 1.96 times.
In 2021, there was a significant increase in the interest coverage ratio to 0.61 when compared to the negative ratio of -4.90 in 2020. A ratio below 1 indicates that the company's earnings were insufficient to cover its interest expenses. Although the ratio improved from the previous year, it still suggests that the company may have been at higher risk of defaulting on its debt obligations.
In 2020, the interest coverage ratio was negative at -4.90, indicating that the company's earnings were not sufficient to cover its interest expenses. A negative ratio is a red flag as it signals a company's inability to meet its interest obligations from its earnings.
Finally, in 2019, the interest coverage ratio was 2.77, indicating that the company had strong earnings relative to its interest expenses.
Overall, fluctuations in The Chefs Warehouse Inc's interest coverage ratio over the past five years suggest varying levels of financial performance and ability to meet its interest obligations. The company's management should strive to maintain a healthy interest coverage ratio to ensure financial stability and manage debt effectively.