Elevance Health Inc (ELV)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.21 | 0.22 | 0.22 | 0.22 | 0.23 |
| Debt-to-capital ratio | 0.37 | 0.38 | 0.37 | 0.37 | 0.36 |
| Debt-to-equity ratio | 0.59 | 0.62 | 0.59 | 0.58 | 0.56 |
| Financial leverage ratio | 2.77 | 2.84 | 2.70 | 2.61 | 2.44 |
Solvency ratios measure a company's ability to meet its long-term debt obligations and reflect its financial stability and risk levels. Let's analyze the solvency ratios of Elevance Health Inc based on the data provided.
1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets financed by debt. Elevance Health Inc has maintained a relatively stable debt-to-assets ratio over the past five years, ranging between 0.23 and 0.26. This suggests that a significant portion of the company's assets is funded by debt, but the company has managed to control this ratio within a reasonable range.
2. Debt-to-capital ratio: The debt-to-capital ratio measures the proportion of a company's capital structure that is financed by debt. Elevance Health Inc's debt-to-capital ratio has also stayed consistent, hovering around 0.39 to 0.40 over the same period. This indicates that debt plays a significant role in financing the company's operations and investments.
3. Debt-to-equity ratio: The debt-to-equity ratio shows the relationship between a company's debt and its shareholders' equity. Elevance Health Inc's debt-to-equity ratio has varied slightly but has generally remained within a range of 0.60 to 0.66. This implies that the company relies more on debt financing compared to equity, which can pose higher financial risk but may also offer potential tax benefits.
4. Financial leverage ratio: The financial leverage ratio provides insights into a company's capital structure and risk levels. Elevance Health Inc's financial leverage ratio has increased gradually over the years, from 2.44 in 2019 to 2.77 in 2023. This indicates that the company is increasingly using debt to finance its operations, which can amplify returns but also magnify risks.
In summary, Elevance Health Inc has maintained relatively stable solvency ratios over the past five years, indicating a consistent reliance on debt financing to support its operations and growth. While the company has managed its debt levels within reasonable limits, the increasing financial leverage ratio suggests a growing dependency on debt, which may increase financial risks that should be closely monitored.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 8.49 | 10.14 | 10.94 | 8.96 | 9.02 |
The interest coverage ratio for Elevance Health Inc has shown some fluctuations over the past five years. The ratio indicates the company's ability to meet its interest obligations using its operating income.
The trend in interest coverage ratio for Elevance Health Inc over the period from 2019 to 2023 shows a general consistency in maintaining a healthy interest coverage ratio above 1, which is a positive sign. A higher interest coverage ratio, such as those demonstrated by the company (ranging from 8.49 to 10.96), suggests that Elevance Health Inc is generating sufficient operating income to comfortably cover its interest expenses.
The fluctuations in the interest coverage ratio over the years may be due to varying levels of operating income and/or interest expenses. Overall, the company has shown a relatively stable interest coverage position, indicating a strong ability to cover its interest obligations. However, it would be important to further investigate the underlying factors contributing to these fluctuations to ensure the sustainability of the company's financial health.