Hillenbrand Inc (HI)

The solvency ratios of Hillenbrand Inc provide insight into the company's ability to meet its long-term financial obligations and the extent to which it relies on debt to finance its operations. Let's analyze each ratio in detail:

1. Debt-to-Assets Ratio:
The debt-to-assets ratio measures the proportion of a company's assets financed by debt. Hillenbrand's ratio has increased from 0.28 in 2019 to 0.36 in 2023, indicating a higher reliance on debt to finance its assets over the years.

2. Debt-to-Capital Ratio:
This ratio indicates the proportion of a company's capital structure that is financed by debt. Hillenbrand's debt-to-capital ratio has fluctuated between 0.45 and 0.59 over the past five years, suggesting a moderate level of reliance on debt financing for its capital needs.

3. Debt-to-Equity Ratio:
The debt-to-equity ratio measures the extent to which a company's operations are funded by debt relative to equity. Hillenbrand's ratio has fluctuated notably, reaching a peak of 1.47 in 2020 and a low of 0.82 in 2019. The current ratio of 1.23 indicates a higher proportion of debt in the capital structure compared to equity.

4. Financial Leverage Ratio:
This ratio reflects the extent to which a company's operations are funded by equity compared to debt. Hillenbrand's financial leverage ratio has also fluctuated, reaching a high of 3.77 in 2020 and a low of 2.96 in 2019, signifying changes in the company's capital structure over time.

In summary, Hillenbrand Inc has shown a trend of increasing reliance on debt financing, as evidenced by the rising debt-to-assets and debt-to-equity ratios. The company's capital structure has exhibited fluctuations, with varying levels of debt and equity financing. It is essential for the company to carefully manage its debt levels to maintain a healthy balance between debt and equity financing and ensure long-term solvency.

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Coverage ratios

Interest coverage ratio is an important financial metric that measures a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations from its operating income.

Looking at the interest coverage ratio of Hillenbrand Inc over the past five years, we can see fluctuations in their ability to cover their interest payments. In 2019, the interest coverage ratio was 7.69, indicating a strong ability to meet interest obligations. However, in 2020, the ratio dropped to 2.74, signaling a potential strain on the company's ability to cover interest expenses.

The interest coverage ratio improved in 2021 to 5.06 and further to 5.89 in 2022, suggesting a better ability to meet interest payments. However, the ratio decreased to 3.79 in 2023, which may raise concerns about the company's ability to cover interest expenses from its operating income.

The fluctuation in the interest coverage ratio over the years indicates that Hillenbrand Inc's ability to meet interest payments has varied. This could be influenced by changes in the company's profitability, operating income, and the cost of debt. Investors and creditors should monitor the company's interest coverage ratio closely to assess its financial health and ability to service its debts.