Carter’s Inc (CRI)

Solvency ratios provide insight into a company's ability to meet its long-term financial obligations. Looking at Carter’s Inc's solvency ratios over the past five years, we observe a generally positive trend in terms of the company's leverage and financial health.

The debt-to-assets ratio, which measures the proportion of a company's assets financed by debt, has decreased from 0.31 in 2021 to 0.21 in 2023. This indicates that Carter’s has reduced its reliance on debt to finance its assets, which is a positive sign for the company's long-term stability.

The debt-to-capital and debt-to-equity ratios also reflect a decreasing trend over the same period. The debt-to-capital ratio has decreased from 0.51 in 2021 to 0.37 in 2023, while the debt-to-equity ratio has decreased from 1.04 to 0.59 over the same period. These reductions suggest that Carter’s is becoming less leveraged and more reliant on equity financing, which can enhance its financial flexibility and reduce financial risk.

Lastly, the financial leverage ratio, which indicates the proportion of a company's assets that are financed by debt, has also shown a decreasing trend from 3.62 in 2020 to 2.81 in 2023. This decline indicates that Carter’s has been using less debt to finance its operations, which may lead to lower interest expenses and improved financial stability in the long run.

Overall, the decreasing trend in Carter’s solvency ratios over the past five years indicates a strengthening financial position, with the company reducing its reliance on debt and improving its long-term financial stability.

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Coverage ratios

Interest coverage is a financial ratio that measures a company's ability to meet its interest obligations on outstanding debt. The ratio is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

Based on the data provided for Carter’s Inc, we observe the following trend in interest coverage ratios over the past five years:
- Dec 31, 2023: 9.90
- Dec 31, 2022: 8.40
- Dec 31, 2021: 8.27
- Dec 31, 2020: 3.41
- Dec 31, 2019: 9.72

A higher interest coverage ratio indicates that the company is more capable of meeting its interest payments. In the case of Carter’s Inc, the interest coverage ratio has shown fluctuation over the years. The significant drop in 2020 to 3.41 may indicate a period of higher financial risk or increased interest obligations relative to earnings. However, the ratio has since improved in the subsequent years, with the ratio in 2023 at a relatively healthier level of 9.90.

Overall, the trend in Carter’s Inc interest coverage suggests varying levels of financial risk and debt servicing capabilities over the past five years, with recent improvements indicating enhanced ability to cover interest obligations with operating earnings.