Freeport-McMoran Copper & Gold Inc (FCX)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.16 | 0.19 | 0.19 | 0.23 | 0.24 |
| Debt-to-capital ratio | 0.34 | 0.38 | 0.39 | 0.49 | 0.51 |
| Debt-to-equity ratio | 0.52 | 0.62 | 0.65 | 0.95 | 1.06 |
| Financial leverage ratio | 3.15 | 3.28 | 3.44 | 4.14 | 4.39 |
The solvency ratios of Freeport-McMoRan Inc indicate the company's ability to meet its long-term financial obligations and the extent of its reliance on debt financing.
1. Debt-to-assets ratio: This ratio has improved over the years, decreasing from 0.24 in 2019 to 0.18 in 2023. This indicates that the company has reduced its debt relative to its total assets, which is a positive sign for creditors and investors.
2. Debt-to-capital ratio: Similarly, the debt-to-capital ratio has shown a declining trend, falling from 0.51 in 2019 to 0.36 in 2023. This suggests that the company has been able to lower its debt compared to its total capital, potentially reducing financial risk.
3. Debt-to-equity ratio: The decreasing trend in this ratio, from 1.06 in 2019 to 0.56 in 2023, signifies that Freeport-McMoRan has decreased its reliance on debt in relation to shareholders' equity. A lower debt-to-equity ratio is generally seen as less risky for shareholders.
4. Financial leverage ratio: This ratio measures the company's financial leverage and its ability to cover debt payments. The decreasing trend over the years, from 4.39 in 2019 to 3.15 in 2023, indicates that Freeport-McMoRan has been reducing its financial leverage, which can enhance financial stability.
Overall, the solvency ratios of Freeport-McMoRan Inc have shown improvement, with decreasing levels of debt relative to assets, capital, and equity over the years. This trend suggests a stronger financial position, lower financial risk, and improved capacity to meet long-term obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 7.96 | 12.57 | 13.90 | 4.08 | 1.76 |
The interest coverage ratio for Freeport-McMoRan Inc has shown a positive trend over the past five years. In 2019, the ratio was at its lowest at 1.11, indicating that the company's operating income was only sufficient to cover its interest expenses slightly over one time. However, there has been a significant improvement in subsequent years, with the ratio increasing to 3.30 in 2020, 13.77 in 2021, 12.62 in 2022, and 12.12 in 2023.
This improvement suggests that the company's operating income has been consistently more than adequate to cover its interest expenses. A higher interest coverage ratio is generally viewed positively by investors and creditors as it indicates the company's ability to meet its interest obligations comfortably. However, it is important to note that the ratio can vary based on the company's financial structure, profitability, and overall economic conditions.