ChampionX Corporation (CHX)

ChampionX Corp.'s solvency ratios reflect its ability to meet its long-term financial obligations and manage its debt levels effectively. The trends observed in the data show improvements in the company's financial leverage over the years.

The debt-to-assets ratio has remained relatively stable around 0.19 to 0.20 in recent years, indicating that ChampionX Corp. has been able to maintain a healthy level of assets relative to its debt obligations.

Similarly, the debt-to-capital ratio has shown a decreasing trend from 0.36 in 2021 to 0.26 in 2023, suggesting that the company has been able to finance its operations with a lower proportion of debt relative to its total capital.

The debt-to-equity ratio has also been decreasing over the years, indicating that ChampionX Corp. has been reducing its reliance on debt financing in favor of equity financing, which can improve its financial stability and reduce financial risk.

Furthermore, the financial leverage ratio has shown a declining trend from 2.14 in 2020 to 1.93 in 2023. A lower financial leverage ratio indicates that the company relies less on debt funding and has a stronger equity base to support its operations.

Overall, based on the solvency ratios analyzed, ChampionX Corp. appears to have managed its debt levels effectively and improved its financial leverage position over the years, which may signal a more stable and sustainable financial position for the company.

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Coverage ratios

The interest coverage ratio for ChampionX Corp. has seen fluctuations over the past five years. In 2023, the interest coverage ratio improved to 9.28, indicating that the company's earnings before interest and taxes (EBIT) were sufficient to cover the interest expense by approximately 9.28 times. This improvement from the previous year suggests a stronger ability to meet interest obligations.

In 2022, the interest coverage ratio was 6.78, showing a slightly lower but still healthy coverage ratio. The ratio further improved in 2021 to 3.33, indicating that the company's earnings were able to cover its interest expense more than three times.

However, the interest coverage ratio was negative in 2020 (-1.06), indicating that the company's earnings were not sufficient to cover its interest expense during that period. This could raise concerns about the company's ability to meet its debt obligations using its operating income.

In 2019, the interest coverage ratio was 2.57, showing a moderate ability to cover interest expenses. Overall, while the company has shown improvements in its interest coverage ratio in recent years, the negative ratio in 2020 raises a red flag, and it is important for ChampionX Corp. to closely monitor and manage its interest obligations going forward.