First Solar Inc (FSLR)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.03 | 0.04 | 0.02 | 0.03 | 0.03 |
| Debt-to-capital ratio | 0.04 | 0.06 | 0.03 | 0.04 | 0.04 |
| Debt-to-equity ratio | 0.05 | 0.07 | 0.03 | 0.04 | 0.04 |
| Financial leverage ratio | 1.52 | 1.55 | 1.41 | 1.24 | 1.29 |
First Solar Inc has consistently maintained a low Debt-to-assets ratio, ranging between 0.02 to 0.04 over the five-year period from 2020 to 2024. This indicates that the company's level of debt in relation to its total assets remains relatively low and stable.
Similarly, the Debt-to-capital ratio has been relatively steady, hovering around 0.03 to 0.06 during the same period. This metric suggests that First Solar's debt as a proportion of its total capital structure has been well-managed and within reasonable limits.
The Debt-to-equity ratio of the company has shown a slight increase from 0.03 to 0.07 from 2022 to 2023, before decreasing to 0.05 in 2024. This indicates a moderate reliance on debt financing compared to equity, with a slight fluctuation in recent years.
The Financial leverage ratio has shown an increasing trend, rising from 1.29 in 2020 to 1.52 in 2024. This suggests that the company's reliance on debt to finance its operations and growth has been increasing steadily over the years.
Overall, the solvency ratios of First Solar Inc reflect a conservative approach towards debt management and capital structure, with a stable debt-to-assets and debt-to-capital ratio. However, there has been a slight increase in the Debt-to-equity ratio and a more notable rise in the Financial leverage ratio, indicating a gradual shift towards higher debt utilization for funding operations.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 35.87 | 69.75 | 1.70 | 44.65 | 13.11 |
First Solar Inc's interest coverage ratio, which measures the company's ability to meet its interest obligations using its operating income, has shown significant fluctuations over the past few years.
As of December 31, 2020, the interest coverage ratio was 13.11, indicating that the company generated operating income 13.11 times its interest expenses, suggesting a healthy cushion to cover interest payments.
By December 31, 2021, the interest coverage ratio improved drastically to 44.65, demonstrating a substantial increase in the company's ability to meet its interest obligations.
However, the interest coverage ratio dropped significantly to 1.70 by December 31, 2022, signaling a potential strain on First Solar's ability to cover its interest expenses with its operating income.
The ratio then rebounded sharply to 69.75 by December 31, 2023, indicating a robust improvement in the company's capacity to meet interest payments.
By December 31, 2024, the interest coverage ratio stood at 35.87, showcasing a strong performance in managing interest obligations compared to the previous year.
Overall, the fluctuation in First Solar Inc's interest coverage ratio over the years reflects varying levels of the company's ability to handle its interest expenses in relation to its operating income, with some years showing significant improvements while others raising potential concerns.