Goodyear Tire & Rubber Co (GT)
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 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 4.62 | 4.23 | 4.28 | 5.36 | 3.95 |
Goodyear Tire & Rubber Co.'s solvency ratios indicate the company's ability to meet its long-term financial obligations. The debt-to-assets ratio has been relatively stable over the past five years, ranging between 0.33 and 0.36, signifying that around 33% to 36% of the company's assets are financed by debt.
The debt-to-capital ratio has also remained fairly consistent, fluctuating between 0.57 and 0.66. This ratio reflects the proportion of the company's capital structure that is funded by debt, which has been around 60% to 62% in the recent years.
On the other hand, the debt-to-equity ratio shows that Goodyear has been increasing its reliance on debt financing compared to equity. The ratio has risen from 1.30 in 2019 to 1.63 in 2023, indicating that for every dollar of equity, the company has $1.63 in debt.
The financial leverage ratio, which measures the company's total assets relative to its equity, has also shown an increasing trend over the past five years. This suggests that Goodyear's debt levels have been rising in proportion to its equity, with the ratio increasing from 3.95 in 2019 to 4.62 in 2023.
Overall, while the company's solvency ratios indicate a stable debt-to-assets and debt-to-capital structure, the increasing debt-to-equity and financial leverage ratios suggest a growing reliance on debt financing, which could potentially increase the company's financial risk in the long term.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -0.28 | 1.87 | 2.28 | -2.53 | 1.48 |
The interest coverage ratio measures a company's ability to meet its interest payment obligations with its operating income. In the case of Goodyear Tire & Rubber Co., the interest coverage ratio has fluctuated over the past five years.
In 2023, the interest coverage ratio stands at 1.55, which indicates that the company's operating income is sufficient to cover its interest payments, although the margin of safety is relatively low. This ratio has decreased significantly from the previous year's ratio of 2.53.
In 2022, the interest coverage ratio was at a healthier level of 2.53, suggesting a stronger ability to cover interest expenses with operating income.
In 2021, the interest coverage ratio improved further to 3.45, indicating a more comfortable position in meeting interest obligations.
However, in 2020, the interest coverage ratio was negative at -0.67, signaling that the company's operating income was insufficient to cover its interest payments. This is a concerning sign as it implies financial distress.
In 2019, the interest coverage ratio was at 2.61, showing a good ability to cover interest expenses with operating income.
Overall, Goodyear Tire & Rubber Co. has experienced fluctuations in its interest coverage ratio over the years, with 2020 standing out as a particularly challenging year in terms of meeting interest obligations. Investors and creditors may need to closely monitor this ratio to assess the company's financial health and ability to manage its debt obligations.