Eaton Corporation PLC (ETN)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.02 | 2.03 | 2.05 | 2.04 | 2.06 | 2.14 | 2.15 | 2.12 | 2.07 | 2.14 | 2.39 | 2.27 | 2.13 | 2.14 | 2.14 | 2.17 | 2.04 | 2.01 | 1.98 | 1.95 |
Eaton Corporation plc's solvency ratios indicate its ability to meet its long-term financial obligations. The debt-to-assets ratio has remained relatively stable around 0.25, suggesting that 25% of the company's assets are financed by debt. This indicates a healthy balance between debt and assets.
The debt-to-capital ratio has also remained consistent at around 0.33 to 0.34, showing that about one-third of the company's capital is derived from debt. This indicates a moderate level of leverage in the company's capital structure.
The debt-to-equity ratio has fluctuated between 0.49 and 0.52, with the latest value at 0.50. This implies that for every dollar of equity, the company has approximately 50 cents in debt. The decreasing trend in this ratio indicates a decreasing reliance on debt financing over time.
The financial leverage ratio has also shown consistency, hovering around 2.04 to 2.06. This ratio indicates that the company has $2.04 to $2.06 in assets for every dollar of equity. A higher ratio signifies higher financial leverage, which should be considered in the context of the industry and economic conditions.
Overall, Eaton Corporation plc's solvency ratios illustrate a balanced approach to debt financing and a stable financial position, with the company maintaining a reasonable level of leverage to support its operations and growth.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 22.00 | 18.71 | 16.13 | 15.61 | 17.27 | 13.86 | 18.09 | 18.58 | 16.86 | 17.50 | 13.57 | 9.56 | 11.19 | 14.50 | 14.47 | 17.93 | 15.38 | 15.61 | 15.70 | 35.31 |
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations on its outstanding debt. It is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense.
Based on the data provided for Eaton Corporation plc, we can see that the interest coverage ratio has been relatively stable over the past eight quarters, ranging from a low of 18.24 in Q1 2022 to a high of 25.73 in Q4 2023. This indicates that the company has consistently generated enough operating income to cover its interest payments, with a higher ratio suggesting a stronger ability to meet its financial commitments.
The trend in interest coverage for Eaton Corporation plc shows a generally positive picture, with the ratio staying comfortably above 1 (typically considered the minimum acceptable level) in all quarters. This indicates that the company's earnings are sufficient to cover its interest expenses, reducing the risk of default on its debt obligations.
Overall, the consistent and relatively high interest coverage ratios for Eaton Corporation plc suggest a strong financial position and ability to manage its debt obligations effectively. However, it would be important to monitor this ratio going forward to ensure that the company continues to generate enough operating income to comfortably cover its interest payments, especially in the face of any potential changes in market conditions or company performance.