Goodyear Tire & Rubber Co (GT)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| 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 | 4.27 | 4.62 | 4.23 | 4.28 | 5.36 |
Based on the provided data for Goodyear Tire & Rubber Co, the solvency ratios paint a picture of a company with very low levels of debt compared to its assets, capital, and equity.
1. Debt-to-assets ratio:
- The debt-to-assets ratio, which indicates the proportion of a company's assets financed by debt, remained consistently at 0.00 from December 31, 2020, to December 31, 2024. This indicates that the company has no debt in relation to its total assets, which is a positive sign of financial stability.
2. Debt-to-capital ratio:
- Similar to the debt-to-assets ratio, the debt-to-capital ratio also stood at 0.00 across the same period. This ratio shows the proportion of a company's capital that is funded through debt, and the consistent 0.00 ratio indicates that the company has not used debt to fund its capital structure.
3. Debt-to-equity ratio:
- The debt-to-equity ratio, which highlights the proportion of a company's financing that comes from debt compared to equity, was also consistently at 0.00 from 2020 to 2024. This indicates that Goodyear Tire & Rubber Co has no debt in relation to its equity, implying a strong financial position in terms of solvency.
4. Financial leverage ratio:
- The financial leverage ratio, also known as the equity multiplier, shows how much of a company's assets are financed through debt. The decreasing trend of this ratio from 5.36 in 2020 to 4.27 in 2024 signifies a reduction in financial leverage over the years, indicating a move towards a lower reliance on debt financing.
In summary, the solvency ratios of Goodyear Tire & Rubber Co consistently show a company with minimal to no debt relative to its assets, capital, and equity. This indicates a strong solvency position and financial stability for the company during the period analyzed.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 1.30 | -0.27 | 1.97 | 2.43 | -2.44 |
The interest coverage ratio of Goodyear Tire & Rubber Co over the past five years has shown fluctuations. In December 2020, the interest coverage ratio was reported at -2.44, indicating that the company's operating income was insufficient to cover its interest expenses. This raised concerns about the company's ability to meet its interest obligations from its current earnings.
However, there was a significant improvement in the interest coverage ratio by December 2021, reaching 2.43. This signifies that the company's operating income had increased sufficiently to cover its interest expenses, depicting a positive trend in its financial health.
In the following years, the interest coverage ratio hovered around 1.97 in December 2022 and 1.30 in December 2024. Although these ratios indicate that the company's operating income was still able to cover its interest payments, the decreasing trend raises caution regarding the company's ability to comfortably meet its interest obligations in the future.
The most concerning point was in December 2023, where the interest coverage ratio dropped significantly to -0.27. This negative ratio implies that the company's operating income was insufficient to cover its interest expenses. This flagrant deficiency raises red flags about the company's financial stability and ability to manage its debt obligations effectively.
In conclusion, while the interest coverage ratio of Goodyear Tire & Rubber Co showed improvements over the years, the fluctuations and the negative ratio in December 2023 suggest a need for careful monitoring and management of the company's financial obligations to ensure long-term sustainability.