Cleveland-Cliffs Inc (CLF)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.18 | 0.23 | 0.28 | 0.32 | 0.60 |
| Debt-to-capital ratio | 0.28 | 0.35 | 0.49 | 0.73 | 0.86 |
| Debt-to-equity ratio | 0.40 | 0.55 | 0.95 | 2.67 | 5.91 |
| Financial leverage ratio | 2.22 | 2.41 | 3.46 | 8.31 | 9.79 |
The solvency ratios of Cleveland-Cliffs Inc have shown a favorable trend over the past five years, indicating an improving financial position in terms of its ability to meet its long-term financial obligations.
The debt-to-assets ratio has decreased steadily from 0.60 in 2019 to 0.18 in 2023, reflecting the company's reduced reliance on debt to finance its assets. This trend suggests that Cleveland-Cliffs Inc has become more conservative in managing its debt levels in relation to its total assets.
Similarly, the debt-to-capital ratio has shown a declining trend from 0.86 in 2019 to 0.28 in 2023. This indicates that the company has been able to decrease its debt relative to its total capital, which is a positive sign for its overall financial health.
The debt-to-equity ratio has also improved significantly, decreasing from 5.91 in 2019 to 0.40 in 2023. This reduction indicates that Cleveland-Cliffs Inc has decreased its reliance on debt in comparison to its equity, enhancing its solvency and financial stability.
Lastly, the financial leverage ratio has exhibited a consistent downward trend, declining from 9.79 in 2019 to 2.22 in 2023. This decreasing trend indicates that the company has been successful in reducing its financial leverage, which reflects positively on its ability to manage its debt levels effectively.
Overall, the improving solvency ratios of Cleveland-Cliffs Inc suggest that the company has been making sound financial decisions and has enhanced its ability to meet its long-term financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 29.43 | 114.06 | 267.47 | -2.49 | 17.30 |
The interest coverage ratio for Cleveland-Cliffs Inc has fluctuated over the past five years. In 2023, the interest coverage ratio stood at 2.82, indicating that the company's operating income was 2.82 times its interest expenses for the year. This ratio has decreased compared to the previous two years, where in 2022 it was 7.44 and in 2021 it was 12.20, suggesting a potential decline in the company's ability to cover its interest obligations from operating income.
The significant drop from 2021 to 2020, where the interest coverage ratio was a mere 0.03, indicates a critical period where the company had minimal operating income relative to its interest expenses. However, the company managed to improve its interest coverage ratio in 2020 and 2019, with ratios of 4.51 and 4.51, respectively, showing a more comfortable position in covering its interest payments with operating income during those years.
Overall, a lower interest coverage ratio could imply an increased financial risk for Cleveland-Cliffs Inc, as it may indicate a reduced ability to meet interest obligations from operating earnings. Monitoring this ratio over time can provide insight into the company's financial health and its ability to service its debt.