CNH Industrial N.V. (CNH)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.59 | 0.58 | 3.11 | 0.53 | 0.52 |
| Debt-to-capital ratio | 0.77 | 0.77 | 0.75 | 0.84 | 0.80 |
| Debt-to-equity ratio | 3.32 | 3.29 | 3.08 | 5.18 | 4.04 |
| Financial leverage ratio | 5.62 | 5.65 | 0.99 | 9.69 | 7.69 |
The solvency ratios of CNH Industrial N.V. provide insights into the company's financial risk and ability to meet its long-term obligations.
The Debt-to-assets ratio has shown a stable trend over the years, indicating that the company's debt levels relative to its total assets have remained relatively consistent. However, the ratio saw a significant spike in 2021, which could be a cause for concern.
The Debt-to-capital ratio has also exhibited a consistent pattern, staying around the 0.75 to 0.80 range in recent years. This suggests that the company relies on debt for a significant portion of its capital structure.
The Debt-to-equity ratio has fluctuated but generally shows a decreasing trend over the years. A lower ratio indicates less reliance on debt financing and a stronger equity position. However, the ratio remains relatively high, especially in 2020 and 2021, which may indicate a higher financial risk.
The Financial leverage ratio has been volatile, with notable fluctuations year over year. This ratio reflects the extent to which the company uses debt to finance its operations. The higher the ratio, the more the company is leveraged, indicating higher financial risk. CNH Industrial N.V. has shown a high financial leverage ratio in recent years, signaling a substantial reliance on debt financing.
In conclusion, while some solvency ratios of CNH Industrial N.V. have remained relatively stable, others have exhibited significant fluctuations, suggesting a varying level of financial risk and reliance on debt in the company's capital structure. Investors and stakeholders should closely monitor these ratios to assess the company's 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 | 3.20 | 4.78 | 4.76 | 0.38 | 2.44 |
Interest coverage is a financial ratio that indicates a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the total interest payable on borrowed funds.
Looking at the trend of CNH Industrial N.V.'s interest coverage over the past five years, we observe fluctuations in the company's ability to cover its interest expenses. In 2023, the interest coverage ratio decreased to 3.20 from 4.78 in 2022, indicating a decrease in earnings relative to interest costs. Despite the decline, the company is still generating sufficient earnings to cover its interest payments.
In 2021 and 2022, CNH Industrial N.V. had a relatively stable interest coverage ratio of around 4.76, showing a consistent ability to cover its interest expenses comfortably. This indicates a healthy financial position and suggests that the company was effectively managing its debt obligations during those years.
However, in 2020, the interest coverage ratio plummeted to 0.38, signaling a significant decline in earnings relative to interest costs. This could raise concerns about the company's financial health and its ability to service its debt. The substantial decrease in the interest coverage ratio from 2019 to 2020 indicates a sharp deterioration in the company's ability to meet interest payments.
Overall, while the recent decline in the interest coverage ratio in 2023 is worth monitoring, the stable ratios in 2021 and 2022 indicate that CNH Industrial N.V. has historically been able to manage its interest obligations effectively. However, the significant dip in 2020 underscores the importance of closely monitoring the company's financial performance and debt management practices in the future.