Generac Holdings Inc (GNRC)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.24 | 0.28 | 0.27 | 0.18 | 0.26 |
| Debt-to-capital ratio | 0.33 | 0.38 | 0.38 | 0.28 | 0.37 |
| Debt-to-equity ratio | 0.49 | 0.61 | 0.61 | 0.40 | 0.60 |
| Financial leverage ratio | 2.05 | 2.18 | 2.29 | 2.20 | 2.33 |
Generac Holdings Inc's solvency ratios reflect its ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: The company's debt-to-assets ratio has shown slight fluctuations over the years, ranging from 0.18 to 0.28. This ratio indicates that between 18% and 28% of the company's assets are financed by debt.
2. Debt-to-capital ratio: Generac Holdings Inc's debt-to-capital ratio has ranged from 0.28 to 0.38, showing a decreasing trend. This ratio signifies the proportion of a company's capital that is funded by debt, ranging from 28% to 38% over the years.
3. Debt-to-equity ratio: The debt-to-equity ratio, reflecting the company's leverage through equity and debt, has fluctuated between 0.40 and 0.61. This suggests that the company has been relying more on equity financing compared to debt, with debt representing between 40% and 61% of the total equity.
4. Financial leverage ratio: Generac Holdings Inc's financial leverage ratio has shown a declining trend from 2.33 to 2.05, indicating a reduction in the company's reliance on debt to finance its operations.
Overall, the company's solvency ratios show a mixed picture with varying levels of debt utilization over the years. It is essential for investors and stakeholders to monitor these ratios to assess the company's ability to manage its debt levels effectively and sustain its financial health in the long run.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 5.56 | 3.95 | 10.10 | 21.80 | 14.63 |
Generac Holdings Inc's interest coverage ratio has demonstrated fluctuations over the past five years. Starting at 14.63 on December 31, 2020, the ratio improved significantly to 21.80 by December 31, 2021, indicating the company's ability to comfortably cover its interest expenses. However, the ratio declined to 10.10 by December 31, 2022, suggesting a slight decrease in the company's ability to cover interest costs.
The trend became more concerning as the interest coverage ratio fell to 3.95 by December 31, 2023, indicating a potential strain on Generac's ability to meet interest obligations from its operating income. While the ratio increased to 5.56 by December 31, 2024, it remains considerably lower compared to the ratios observed in the earlier years.
Overall, Generac Holdings Inc's interest coverage has shown volatility and a downward trend in recent years, signaling a potential risk in its ability to service debt obligations solely from operational earnings. Further monitoring of the company's financial performance and debt management strategies may be warranted to assess and address this ongoing concern.