Eagle Materials Inc (EXP)

Eagle Materials Inc has consistently maintained a very strong solvency position over the past five years, as indicated by its solvency ratios.

The Debt-to-assets ratio has remained at 0.00% throughout the period, reflecting that the company's total debt level is negligible compared to its total assets. This suggests that Eagle Materials Inc has very little financial risk stemming from debt obligations in relation to its asset base.

Similarly, the Debt-to-capital ratio and Debt-to-equity ratio have also been 0.00% across the years, highlighting that the company relies minimally on debt financing relative to its total capital and equity. This indicates a conservative financial structure and a high level of financial stability.

The Financial leverage ratio has fluctuated slightly between 2.09 in 2021 and 2.35 in 2023, but has generally trended around the 2.25 mark in recent years. This ratio indicates the proportion of a company's assets that are financed by debt rather than equity. The consistent level around 2.25 suggests that Eagle Materials Inc has maintained a moderate level of financial leverage, balancing its debt and equity components effectively.

Overall, based on the solvency ratios, Eagle Materials Inc appears to have a robust financial position with minimal reliance on debt, indicating a strong ability to meet its financial obligations and withstand economic challenges.

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Coverage ratios

The interest coverage ratio for Eagle Materials Inc has exhibited a generally positive trend over the years, indicating the company's improving ability to cover its interest expenses with operating income.

As of March 31, 2021, the interest coverage ratio stood at 10.55, suggesting that the company generated operating income sufficient to cover its interest expenses approximately 10.55 times over.

Subsequently, the interest coverage ratio improved significantly to 15.30 by March 31, 2022, indicating a stronger financial position and a more comfortable ability to meet interest obligations.

By March 31, 2023, the interest coverage ratio further increased to 16.65, reflecting an even better capacity to service the company's debt through its operating profits.

However, there seems to be an anomaly in the data as the interest coverage ratio dropped to 15.27 by March 31, 2024, before sharply falling to 0.00 by March 31, 2025. This sudden decline to 0.00 in 2025 raises concerns about the company's ability to cover its interest payments with its operating income during that period and warrants further investigation to understand the reasons behind this significant decrease.

In conclusion, while the interest coverage ratios for Eagle Materials Inc have generally shown positive trends, the abrupt drop to 0.00 in 2025 necessitates a thorough evaluation of the company's financial health and sustainability in meeting its interest obligations.