ESCO Technologies Inc (ESE)

ESCO Technologies Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations.

The Debt-to-assets ratio has remained relatively stable over the past five years, ranging from 0.03 in 2020 to 0.08 in 2022 and 2021, before decreasing slightly to 0.06 in 2024. This suggests that ESCO Technologies maintains a low level of debt compared to its total assets, indicating a conservative capital structure.

The Debt-to-capital and Debt-to-equity ratios also show a similar trend, with slight fluctuations over the years but generally remaining at manageable levels. The Debt-to-capital ratio has ranged from 0.04 in 2020 to 0.12 in 2021, while the Debt-to-equity ratio has varied from 0.04 in 2020 to 0.13 in 2021 and 2022. These ratios indicate that the company relies less on debt financing compared to its capital and equity, which is typically viewed favorably by investors and creditors.

The Financial leverage ratio has also remained relatively consistent, ranging from 1.43 in 2020 to 1.58 in 2022. This ratio indicates the proportion of the company's assets that are financed with debt versus equity. ESCO Technologies' financial leverage ratio of around 1.5 indicates a moderate level of leverage, suggesting that the company has a balanced capital structure.

Overall, ESCO Technologies Inc's solvency ratios demonstrate a prudent approach to managing its long-term debt obligations, with a focus on maintaining a healthy balance between debt, capital, and equity in its capital structure.

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Coverage ratios

ESCO Technologies Inc's interest coverage has fluctuated over the past five years, but has consistently remained at a level that indicates the company has the ability to cover its interest expenses. The interest coverage ratio, calculated as earnings before interest and taxes (EBIT) divided by interest expense, provides insight into the company's ability to meet its interest payments.

In 2024, the interest coverage ratio stands at 9.55, indicating that the company's EBIT is 9.55 times its interest expense for the year. While this is lower compared to the previous year, it still shows that ESCO Technologies Inc is generating sufficient earnings to cover its interest obligations.

The trend over the past five years shows that ESCO Technologies Inc's interest coverage ratio peaked in 2021 at 37.67, indicating a strong ability to cover interest expenses. This ratio dropped in the subsequent year, but remained relatively high compared to historical levels.

Overall, ESCO Technologies Inc's interest coverage ratio demonstrates that the company has been effectively managing its interest expenses and generating enough earnings to comfortably cover its interest payments. It is essential to monitor this ratio to ensure the company's financial health and ability to meet its debt obligations.