CVS Health Corp (CVS)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.29 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.50 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 1.01 |
| Financial leverage ratio | 3.27 | 3.19 | 3.10 | 3.32 | 3.48 |
The solvency ratios of CVS Health Corp indicate the company's ability to meet its long-term financial obligations and manage its debt levels effectively.
1. Debt-to-assets ratio: This ratio has shown a general trend of improvement over the past five years, decreasing from 0.31 in 2019 to 0.25 in 2023. A lower debt-to-assets ratio signifies that CVS Health Corp relies less on borrowed funds to finance its assets, indicating a stronger financial position and lower risk of insolvency.
2. Debt-to-capital ratio: The debt-to-capital ratio also demonstrates a decreasing trend from 0.52 in 2019 to 0.45 in 2023. This ratio indicates the percentage of the company's capital that is financed through debt. A declining trend suggests that CVS Health Corp is relying less on debt funding and increasingly using equity to finance its operations.
3. Debt-to-equity ratio: The debt-to-equity ratio has shown improvement over the years, decreasing from 1.07 in 2019 to 0.81 in 2023. A lower debt-to-equity ratio indicates that the company is less reliant on debt financing in comparison to equity. This reduction reflects a healthier balance between debt and equity in the company's capital structure.
4. Financial leverage ratio: The financial leverage ratio has fluctuated over the past five years, with a peak in 2019 at 3.48 and a decline to 3.27 in 2023. This ratio measures the extent to which the company uses debt to finance its operations. A lower financial leverage ratio suggests lower financial risk and a healthier financial position.
Overall, the solvency ratios of CVS Health Corp have exhibited positive trends, reflecting improved financial stability, decreased reliance on debt financing, and strengthened ability to meet its long-term obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 5.19 | 3.45 | 5.17 | 4.35 | 3.97 |
Interest coverage ratio is a financial metric 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 expense.
For CVS Health Corp, the interest coverage ratio has shown a positive trend over the past five years, indicating an improving ability to cover interest payments. In 2019, the interest coverage ratio was 3.95, and it has consistently increased since then to reach 5.49 in 2023. This suggests that CVS Health Corp's earnings have been able to cover its interest expenses more comfortably over the years.
A higher interest coverage ratio is generally favorable as it signifies that the company is generating sufficient earnings to meet its interest obligations. The upward trend in CVS Health Corp's interest coverage ratio indicates a strengthening financial position and reduced risk of defaulting on debt payments.