Flex Ltd (FLEX)
Solvency ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.18 | 0.17 | 0.17 | 0.22 | 0.20 |
| Debt-to-capital ratio | 0.38 | 0.40 | 0.44 | 0.51 | 0.49 |
| Debt-to-equity ratio | 0.61 | 0.66 | 0.79 | 1.02 | 0.95 |
| Financial leverage ratio | 3.43 | 4.00 | 4.68 | 4.61 | 4.84 |
Flex Ltd'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 0.17 to 0.22, suggesting that Flex has maintained a conservative level of debt compared to its total assets.
The debt-to-capital ratio shows a slight decrease from 0.51 in 2021 to 0.38 in 2024, indicating that Flex has reduced its reliance on debt to fund its operations and investments. This is a positive trend as a lower debt-to-capital ratio generally implies less financial risk.
Flex's debt-to-equity ratio has also improved over the years, declining from 1.02 in 2021 to 0.61 in 2024. This signifies that the company has reduced its debt levels relative to shareholders' equity, which can enhance financial stability and reduce the risk of financial distress.
The financial leverage ratio, a measure of the company's total assets to shareholders' equity, has fluctuated over the years, ranging from 3.43 to 4.84. While this ratio indicates the extent to which Flex is using debt to finance its assets, a decreasing trend would generally be viewed positively as it suggests a reduced reliance on debt financing.
Overall, Flex Ltd's solvency ratios demonstrate a positive trend towards a stronger financial position and decreased reliance on debt, which may enhance the company's long-term financial stability and ability to weather economic uncertainties.
Coverage ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 4.86 | 5.15 | 6.35 | 5.30 | 23.08 |
Flex Ltd's interest coverage ratio has shown a declining trend over the past five years, decreasing from 23.08 in 2020 to 4.86 in 2024. This indicates the company's ability to cover its interest expenses with its earnings has weakened over time. A higher interest coverage ratio is generally preferred as it suggests the company is more capable of meeting its interest obligations. The decreasing trend in Flex Ltd's interest coverage could raise concerns about its financial health and ability to service its debt in the future. It would be advisable for stakeholders to closely monitor this trend and assess the company's overall debt burden and cash flow generation capabilities.