Diodes Incorporated (DIOD)

The solvency ratios of Diodes, Inc. provide insights into the company's ability to meet its long-term financial obligations and its overall financial risk profile.

1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. Diodes, Inc. consistently maintained a low debt-to-assets ratio over the past five years, ranging from 0.03 to 0.23. A lower ratio suggests lower financial risk and a stronger ability to cover debts using assets.

2. Debt-to-capital ratio: This ratio measures the percentage of the company's capital structure that is financed by debt. Diodes, Inc. saw fluctuations in its debt-to-capital ratio from 0.03 to 0.32 over the same period. A lower ratio indicates a lower reliance on debt financing and a healthier financial position.

3. Debt-to-equity ratio: This ratio compares the company's total debt to its shareholders' equity. Diodes, Inc. exhibited a decreasing trend in its debt-to-equity ratio, indicating a strengthening financial position. The ratio decreased from 0.47 in 2020 to 0.04 in 2023, signaling improved solvency and a reduced dependency on external borrowing.

4. Financial leverage ratio: This ratio evaluates the extent to which the company is using debt to finance its operations. Diodes, Inc. demonstrated a decreasing financial leverage ratio from 2.05 in 2020 to 1.36 in 2023. A declining trend signifies a reduction in financial risk and improved financial stability.

Overall, Diodes, Inc.'s solvency ratios depict a positive trend towards lower debt levels, reduced reliance on debt financing, and enhanced financial health over the years. The company's ability to effectively manage its debt and maintain a strong balance between debt and equity contributes to its long-term sustainability and financial stability.

---

Coverage ratios

Diodes, Inc.'s interest coverage ratio has shown fluctuations over the past five years. In 2022, the interest coverage ratio improved significantly to 87.04, indicating the company's strong ability to cover its interest expenses with its operating income. This improvement suggests that Diodes, Inc. had a substantial increase in operating income relative to its interest expenses in 2022.

Looking at the historical trend, in 2021, the interest coverage ratio was 63.47, which was also a strong indicator of the company's ability to meet its interest obligations. However, in 2020 and 2019, the interest coverage ratios were 12.69 and 30.89, respectively, which were relatively lower compared to the more recent years. This could suggest higher interest expenses or lower operating income during those years, impacting the company's ability to cover its interest payments effectively.

Overall, the trend in Diodes, Inc.'s interest coverage ratio indicates fluctuations in the company's ability to cover its interest expenses over the years, with 2022 showing a notable improvement in this financial metric.