Element Solutions Inc (ESI)

The analysis of Element Solutions Inc.’s solvency ratios based on the provided data reveals a consistent financial profile characterized by minimal leverage and a conservative capital structure. The key ratios indicate the following:

1. Debt-to-Assets Ratio: Across all periods from June 2020 through March 2025, the debt-to-assets ratio remains at 0.00. This implies that the company has not reported any debt relative to its total assets during this timeframe, suggesting a debt-free or zero-debt financial stance within the observed period.

2. Debt-to-Capital Ratio: Similar to the debt-to-assets ratio, the debt-to-capital ratio remains at 0.00 throughout the entire period. This denotes the absence of debt in relation to total capital, further emphasizing the company's reliance on equity or internal funds without external debt financing.

3. Debt-to-Equity Ratio: The debt-to-equity ratio also remains at 0.00 for all recorded dates, reinforcing the conclusion that the company's capital structure does not incorporate any debt component relative to equity. This indicates a completely equity-financed capital base, with no leverage from borrowed funds.

4. Financial Leverage Ratio: In contrast to the other ratios, the financial leverage ratio maintains values well above 1, ranging from approximately 1.88 to a peak of 2.23. This ratio signifies the extent to which assets are financed through shareholders’ equity versus debt. The consistent ratios above 1 suggest the presence of some form of leverage, possibly through other liabilities not classified as debt or through operational leverage, but it does not appear linked to traditional debt instruments given the other ratios.

Overall, the data indicates that Element Solutions Inc. operates with an essentially debt-free capital structure, with zero reported leverage in terms of debt ratios. The relatively stable financial leverage ratios imply reliance on internal funds or non-debt liabilities to support asset levels, though the lack of debt suggests a conservative approach to capital management. The absence of debt-related ratios highlights prudent risk management and possibly a strategic choice to maintain financial flexibility and stability.

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Coverage ratios

The interest coverage ratio for Element Solutions Inc. exhibits notable fluctuations over the analyzed period from June 30, 2020, through March 31, 2025. Initially, the ratio stood at 3.80 in June 2020, indicating that the company's operating income was 3.80 times its interest expenses. Throughout the subsequent periods, the ratio experienced an overall upward trend, reaching a peak of approximately 6.23 in September 2021. This increase suggests an improvement in the company's ability to generate sufficient earnings to cover its interest obligations during that timeframe.

Following the peak, the ratio generally remained above 5.0, reflecting a strong capacity to meet interest payments relative to operating income. However, a decline was observed starting in late 2022, with the ratio decreasing to approximately 3.41 in September 2023. This notable drop indicates a relative weakening in the company's capacity to cover interest expenses, possibly due to reduced earnings or increased interest expenses.

Subsequently, the ratio demonstrated evidence of recovery, rising to over 6.0 by September 2024, which reverted to a more comfortable level of 7.03 by March 2025. This positive trend indicates an improvement in earnings relative to interest obligations, enhancing financial stability.

Overall, the interest coverage ratio for Element Solutions Inc. suggests that the company maintained a generally healthy margin of safety in covering interest payments during most of the analyzed period, with a recent decline in 2023 raising potential concerns about short-term earnings volatility. Nonetheless, the trend toward recovery indicates an underlying strength in its earnings capacity relative to interest expenses.