Cytokinetics Inc (CYTK)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.07 | 0.06 | 0.06 | 0.09 | 0.16 |
| Debt-to-capital ratio | — | — | 0.16 | 0.29 | 1.32 |
| Debt-to-equity ratio | — | — | 0.19 | 0.41 | — |
| Financial leverage ratio | — | — | 3.45 | 4.71 | — |
The solvency ratios of Cytokinetics Inc over the past five years reflect its financial leverage and ability to meet its long-term obligations. The Debt-to-assets ratio has shown an increasing trend from 0.17 in 2021 to 0.75 in 2023, indicating that 75% of the company's assets are financed by debt. This suggests a higher reliance on debt financing to fund its operations and investments.
Similarly, the Debt-to-capital ratio also indicates a rising trend, reaching 2.67 in 2023 compared to 0.37 in 2021. This ratio signifies that 67% of the company's capital structure is composed of debt. The increasing trend in both Debt-to-assets and Debt-to-capital ratios may raise concerns regarding the company's solvency and ability to repay its debt obligations.
The Debt-to-equity ratio was not available for some years, but in the years it was reported, it showed a substantial increase from 0.59 in 2021 to 1.20 in 2020. This signifies a higher proportion of debt relative to equity in the company's capital structure, potentially indicating a higher financial risk.
The Financial leverage ratio, indicating the company's level of debt to its equity, has exhibited a significant increase from 3.45 in 2021 to 4.71 in 2020. This suggests that the company is heavily leveraged, which could pose challenges in meeting debt obligations and could negatively impact its financial stability.
In conclusion, the solvency ratios of Cytokinetics Inc have shown a deteriorating trend over the past years, with increasing levels of debt relative to assets, capital, and equity. This suggests a higher financial risk and potential difficulties in managing debt obligations, emphasizing the importance of closely monitoring the company's financial leverage and debt repayment capacity.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -17.59 | -19.04 | -12.10 | -6.97 | -17.37 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates a company is more capable of meeting its interest payment obligations.
Based on the data provided for Cytokinetics Inc, the interest coverage ratio has been consistently in the negative range over the past five years. This indicates that the company's EBIT was insufficient to cover its interest expenses during these periods.
The decreasing trend in the interest coverage ratio from -3.61 in 2019 to -8.60 in 2023 indicates a deteriorating ability of Cytokinetics Inc to cover its interest payments with operating income over the years. A negative interest coverage ratio reflects that the company's earnings are not sufficient to cover its interest expenses, posing a risk of default on its debt obligations.
This sustained negative interest coverage ratio raises concerns about the company's financial stability and ability to service its debt in the long term. Investors and creditors may view this trend as a red flag regarding Cytokinetics Inc's financial health and may impact the company's borrowing costs and access to capital in the future.