Generac Holdings Inc (GNRC)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.28 | 0.27 | 0.18 | 0.26 | 0.31 |
| Debt-to-capital ratio | 0.38 | 0.38 | 0.28 | 0.37 | 0.45 |
| Debt-to-equity ratio | 0.61 | 0.61 | 0.40 | 0.60 | 0.81 |
| Financial leverage ratio | 2.18 | 2.29 | 2.20 | 2.33 | 2.58 |
Generac Holdings Inc's solvency ratios indicate the company's ability to meet its long-term debt obligations and sustain its financial health.
The debt-to-assets ratio has shown fluctuation over the past five years, with a peak of 0.34 in 2019 and a low of 0.20 in 2021. This ratio suggests that, on average, around 20%-34% of Generac's total assets are financed by debt.
Similarly, the debt-to-capital ratio has also displayed variability, ranging from 0.31 to 0.47. This ratio measures the proportion of the company's capital that is funded by debt, with an average of 31%-47% over the past five years.
The debt-to-equity ratio demonstrates the relationship between debt and shareholders' equity. Generac's debt levels relative to equity have ranged from 0.44 to 0.87, indicating that the company has varied in terms of the reliance on debt versus equity financing.
Lastly, the financial leverage ratio reflects the proportion of the company's assets that are financed by debt compared to equity. Generac's financial leverage ratio has fluctuated over the years, ranging from 2.18 to 2.58, showing how debt has impacted the company's overall financial structure.
Overall, Generac Holdings Inc's solvency ratios suggest a moderate level of debt utilization over the past five years, with fluctuations indicating changing capital structures and potential risk exposures. Further analysis and comparison with industry benchmarks would provide additional insights into the company's solvency position.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 3.95 | 10.10 | 21.80 | 14.63 | 8.69 |
The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.
Generac Holdings Inc's interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio was 3.96, which indicates that the company's earnings before interest and taxes were sufficient to cover its interest expenses by approximately 3.96 times. This represents a decrease from the previous year, where the ratio was 10.36.
While a ratio of 3.96 suggests that Generac Holdings Inc still has an acceptable level of coverage, it is lower compared to previous years. The significant decrease in the interest coverage ratio from 2022 to 2023 may raise concerns about the company's ability to meet its interest obligations using its current level of earnings.
It is essential for investors and creditors to monitor the trend in interest coverage ratio over time to assess Generac Holdings Inc's ability to manage its debt and financial risks effectively. A declining trend in the interest coverage ratio could signal potential financial distress or insufficient profitability to service the company's debt obligations.