Cognizant Technology Solutions Corp Class A (CTSH)

Cognizant Technology Solutions Corp Class A's solvency ratios paint a picture of the company's ability to meet its long-term financial obligations.

The Debt-to-assets ratio remained relatively stable over the years, with a slight decrease from 0.04 in 2020 to 0.03 in 2023, suggesting a conservative level of debt relative to the company's total assets.

The Debt-to-capital ratio and Debt-to-equity ratio both showed a decreasing trend from 2020 to 2023, indicating that the company relied less on debt financing compared to its capital and equity as it progressed through the years.

The Financial leverage ratio also decreased steadily from 1.56 in 2020 to 1.39 in 2024, implying that the company became less reliant on debt to finance its operations and investments over time.

Overall, these solvency ratios demonstrate a favorable financial position for Cognizant Technology Solutions Corp Class A, reflecting prudent debt management and a strong financial footing to support its long-term sustainability and growth.

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Coverage ratios

Interest coverage ratio is a key financial metric that indicates a company's ability to meet its interest obligations from its operating income. A higher interest coverage ratio is generally considered more favorable as it suggests that the company is more capable of servicing its debt payments.

Analyzing the interest coverage ratios for Cognizant Technology Solutions Corp Class A from 2020 to 2024, we observe a fluctuating trend. In 2020, the interest coverage ratio was 88.33, indicating that the company's operating income was 88.33 times its interest expenses. This suggests a strong ability to cover interest costs.

The interest coverage ratio significantly improved in 2021 to 315.44, reflecting a substantial increase in the company's ability to cover interest expenses. This sharp increase is indicative of a healthier financial position, with operating income significantly exceeding interest payments.

In 2022, the interest coverage ratio decreased to 159.95, though it remained at a relatively comfortable level. This could signify a slight reduction in the company's ability to cover interest costs compared to the previous year but still reflects a solid financial position.

The interest coverage ratio further declined in 2023 to 69.15, dropping below the levels seen in the previous years. This decrease may raise concerns about the company's ability to comfortably service its interest payments from operating income.

By the end of 2024, the interest coverage ratio fell even lower to 53.56, indicating a continued decline in the company's ability to cover interest expenses. This suggests a potential strain on the company's financial health in terms of meeting its interest obligations from operating income.

Overall, the fluctuating trend in Cognizant Technology Solutions Corp Class A's interest coverage ratios highlights the importance of monitoring the company's ability to comfortably meet its interest payments over time. It is essential for investors and stakeholders to assess the company's financial stability and risk associated with its debt obligations based on these ratios.