GXO Logistics Inc (GXO)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.19 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.40 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.66 | 0.00 |
| Financial leverage ratio | 3.26 | 3.49 | 3.09 |
Based on the solvency ratios for GXO Logistics Inc over the past four years, there are several key trends to note:
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets that are financed by debt. The trend shows a decrease over the last two years from 0.20 in 2022 to 0.17 in 2023, indicating that the company has been successful in reducing its reliance on debt to fund its operations.
2. Debt-to-capital ratio: This ratio indicates the proportion of the company's capital that is financed by debt. GXO Logistics Inc has also managed to reduce this ratio over the past two years from 0.41 in 2022 to 0.36 in 2023, suggesting a more conservative approach to capital structure.
3. Debt-to-equity ratio: This ratio compares the company's total debt to its shareholders' equity. The trend shows a decline in this ratio from 0.68 in 2022 to 0.57 in 2023, indicating that GXO Logistics Inc has been decreasing its reliance on debt relative to equity, which is a positive sign for solvency.
4. Financial leverage ratio: This ratio measures the extent to which the company is using debt to finance its assets. The trend in the financial leverage ratio has been decreasing over the past two years from 3.49 in 2022 to 3.26 in 2023, indicating that the company is becoming less leveraged and potentially less risky in terms of solvency.
Overall, the solvency ratios for GXO Logistics Inc demonstrate an improving trend in terms of managing debt levels and maintaining a healthy capital structure, which is important for the company's long-term financial stability and ability to meet its financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|
| Interest coverage | 5.94 | 10.00 | 7.90 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Higher values indicate a stronger ability to cover interest expenses with operating income.
Analyzing GXO Logistics Inc's interest coverage ratio from 2020 to 2023, we observe a fluctuating trend. In 2020, the interest coverage was a relatively low 2.71, suggesting a lower ability to cover interest expenses with operating income. However, there was a significant improvement in subsequent years, with ratios of 12.10 in 2021, 11.55 in 2022, and 7.25 in 2023.
The notable increase in interest coverage from 2020 to 2021 indicates an enhanced ability to service debt obligations through operating income. Although there was a slight decrease in the ratio in 2023, from the prior year, the overall trend suggests an improved financial position in managing interest payments.
Further investigation into the reasons behind these fluctuations could provide valuable insights into the company's financial performance and the effectiveness of its debt management strategy.