Granite Construction Incorporated (GVA)

Granite Construction Inc.'s solvency ratios provide insight into the company's ability to meet its financial obligations and handle its debt levels. Looking at the trend over the past five years, we can observe some key points:

1. Debt-to-Assets Ratio: This ratio measures the proportion of the company's assets financed by debt. Granite Construction's debt-to-assets ratio has increased from 0.15 in 2019 to 0.23 in 2023. This suggests that the company has taken on more debt relative to its total assets.

2. Debt-to-Capital Ratio: The debt-to-capital ratio indicates the extent to which debt is used to finance the company's operations. The trend shows an increase in this ratio from 0.24 in 2019 to 0.40 in 2023. It indicates a higher reliance on debt in the company's capital structure.

3. Debt-to-Equity Ratio: The debt-to-equity ratio reflects the proportion of debt and equity used to finance the company's assets. Granite Construction's debt-to-equity ratio has increased from 0.32 in 2019 to 0.67 in 2023, indicating a higher level of debt financing compared to equity.

4. Financial Leverage Ratio: The financial leverage ratio measures the company's ability to meet its financial obligations through its assets. The increasing trend seen in Granite Construction's financial leverage ratio signifies that the company has been leveraging its assets more to generate returns, but it also indicates a higher level of financial risk.

Overall, based on the solvency ratios analyzed, it can be observed that Granite Construction Inc. has been gradually increasing its reliance on debt to finance its operations and assets. This trend indicates a potential increase in financial risk and highlights the importance of closely monitoring the company's debt management strategies in the future.

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Coverage ratios

Granite Construction Inc.'s interest coverage ratio has shown a significant improvement over the years. The company's interest coverage ratio has increased steadily from a negative value of -6.84 in 2019 to an impressive 83.84 in 2023. This signifies that Granite Construction Inc. has been generating substantial earnings relative to its interest expenses, indicating a strong ability to cover its interest payments. The consistent improvement in the interest coverage ratio reflects the company's enhanced financial health and reduced risk of facing financial distress due to insufficient earnings to cover its interest obligations. Overall, the trend in Granite Construction Inc.'s interest coverage ratio demonstrates a positive financial performance trajectory.