Frontdoor Inc (FTDR)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | — | — |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | — | — |
| Financial leverage ratio | 8.01 | 17.74 | 534.50 | — | — |
Frontdoor Inc.'s solvency ratios provide insight into the company's ability to meet its long-term financial obligations. The debt-to-assets ratio has shown a decreasing trend over the past five years, dropping from 0.78 in 2019 to 0.55 in 2023. This indicates that the company has been successful in managing its debt levels in relation to its total assets.
Similarly, the debt-to-capital ratio has also exhibited a downward trend, declining from 1.22 in 2019 to 0.81 in 2023. This indicates that the company has reduced its reliance on debt to finance its operations and investments, opting for a more balanced capital structure.
The debt-to-equity ratio has shown significant fluctuations over the years, with a sharp increase in 2021 to 208.33, followed by a substantial decrease to 4.34 in 2023. This erratic behavior could signal changes in the company's capital structure and financial management practices.
The financial leverage ratio has also seen a significant decrease from 356.33 in 2021 to 7.95 in 2023. This suggests that Frontdoor Inc. has been able to significantly reduce its leverage and dependence on debt financing to support its operations.
Overall, the improving trends in the debt-to-assets, debt-to-capital, and financial leverage ratios indicate that Frontdoor Inc. has made positive strides in managing its solvency and financial risk. However, the fluctuations in the debt-to-equity ratio warrant further investigation to understand the underlying factors influencing the company's capital structure and financial stability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 6.70 | 4.00 | 5.28 | 3.61 | 4.29 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Frontdoor Inc.'s interest coverage has shown a generally positive trend over the past five years, increasing from 4.23 in 2019 to 6.68 in 2023. This indicates that the company's earnings before interest and taxes (EBIT) are sufficient to cover its interest expenses multiple times over, reflecting a strong financial position and ability to manage debt obligations.
The consistent improvement in the interest coverage ratio suggests that Frontdoor Inc. has been effectively managing its debt levels and generating more earnings relative to its interest obligations. This enhanced ability to service debt may be viewed favorably by creditors and investors, as it reduces the company's risk of default and potential financial distress.
Overall, the trend in Frontdoor Inc.'s interest coverage ratio implies a favorable financial performance and debt servicing capability, signaling a healthy balance between earnings and interest expenses over the years.