Dow Inc (DOW)

Dow Inc's solvency ratios indicate a favorable trend over the years. The Debt-to-assets ratio has decreased from 0.34 in 2020 to 0.00 in 2023 and 2024, suggesting that the company has reduced its reliance on debt to finance its assets. Similarly, the Debt-to-capital ratio has shown a declining pattern, dropping from 0.62 in 2020 to 0.00 in 2023 and 2024, indicating a strengthening financial position.

The Debt-to-equity ratio has also improved significantly from 1.66 in 2020 to 0.00 in 2023 and 2024, demonstrating a reduced dependence on debt in relation to shareholder equity. Additionally, the Financial leverage ratio declined from 4.94 in 2020 to 2.93 in 2022 before slightly increasing to 3.30 in 2024, indicating a more efficient capital structure and lower financial risk.

Overall, Dow Inc's solvency ratios display a positive trajectory, reflecting a healthier balance sheet structure and improved financial stability over the period analyzed.

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Coverage ratios

Interest coverage is a key financial ratio that measures a company's ability to meet its interest obligations on its debt through its operating income. For Dow Inc, the interest coverage ratio has shown some variability over the years.

As of December 31, 2020, Dow Inc's interest coverage ratio stood at 3.19, indicating that the company generated sufficient operating income to cover its interest expenses approximately three times over. This suggests a moderate level of financial health in terms of meeting interest payments.

By December 31, 2021, the interest coverage ratio improved significantly to 10.85, reflecting a substantial increase in the company's ability to cover its interest costs through its operating earnings. This indicates a strong financial position and suggests improved financial stability.

The interest coverage ratio dipped in the following year, December 31, 2022, to 8.97. While this decrease could signal a slightly reduced capacity to cover interest expenses compared to the previous year, the ratio still remains relatively high, indicating continued financial strength.

However, by December 31, 2023, the interest coverage ratio dropped significantly to 1.67, suggesting a potential strain on Dow Inc's ability to cover its interest payments with its operating income. This could raise concerns about the company's financial health and its ability to service its debt obligations.

The ratio improved slightly by December 31, 2024, to 2.60, but it still remains relatively low compared to previous years, indicating that Dow Inc may still be facing challenges in meeting its interest obligations comfortably.

Overall, fluctuations in the interest coverage ratio for Dow Inc over the years highlight the importance of monitoring the company's financial performance and debt management practices to ensure sustainable financial health and stability.