Carpenter Technology Corporation (CRS)

The solvency ratios of Carpenter Technology Corporation indicate the company's ability to meet its long-term financial obligations and sustain its operations.

The debt-to-assets ratio has shown a slightly decreasing trend over the years, from 0.24 in 2022 to 0.21 in 2024. This suggests that the company has been able to reduce its reliance on debt to finance its assets, which is a positive sign for investors and creditors.

Similarly, the debt-to-capital ratio and debt-to-equity ratio have also exhibited a declining trend over the same period. The debt-to-capital ratio decreased from 0.34 in 2022 to 0.30 in 2024, while the debt-to-equity ratio decreased from 0.52 in 2022 to 0.43 in 2024. These reductions indicate that the company is becoming less leveraged and has been effectively managing its debt levels relative to its total capital and equity.

The financial leverage ratio, which measures the company's total assets relative to its equity, has shown a fluctuating pattern but has remained relatively stable around the range of 2.02 to 2.23. This ratio indicates the extent to which the company is using debt to finance its assets and shows that Carpenter Technology Corporation has maintained a moderate level of leverage over the years.

Overall, the improving trend in the debt ratios, along with the stable financial leverage ratio, suggests that Carpenter Technology Corporation has been successful in managing its debt levels and maintaining a healthy solvency position. Investors and stakeholders may view these trends positively as they indicate the company's ability to meet its financial obligations and sustain its operations in the long term.

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Coverage ratios

Carpenter Technology Corporation's interest coverage has shown significant fluctuations over the past five years. The interest coverage ratio, which indicates the company's ability to meet interest payments on its debt obligations, stood at 6.14 in June 2024, a substantial improvement from the previous year's ratio of 2.34 in June 2023. This suggests that the company's operating income is more than sufficient to cover its interest expenses.

However, looking back to June 2022, the interest coverage ratio was negative at -0.41, indicating that the company's operating income was insufficient to cover its interest payments during that period. The negative interest coverage ratio could raise concerns about the company's ability to service its debt obligations.

Furthermore, the interest coverage ratio was significantly negative in June 2021 at -8.11, showing further deterioration in the company's ability to cover interest expenses. The improvement in June 2024 is noteworthy, but investors and creditors may still be cautious given the past fluctuations in Carpenter Technology Corporation's interest coverage.

It is essential for investors and stakeholders to monitor the company's future interest coverage ratios closely to assess its financial health and ability to manage its debt obligations effectively.