Hershey Co (HSY)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.32 | 0.34 | 0.35 | 0.30 | 0.31 | 0.31 | 0.32 | 0.38 | 0.39 | 0.43 | 0.46 | 0.45 | 0.45 | 0.44 | 0.46 | 0.39 | 0.43 | 0.40 | 0.37 | 0.41 |
| Debt-to-capital ratio | 0.48 | 0.51 | 0.53 | 0.49 | 0.50 | 0.52 | 0.54 | 0.58 | 0.60 | 0.62 | 0.64 | 0.64 | 0.65 | 0.66 | 0.70 | 0.67 | 0.67 | 0.66 | 0.63 | 0.70 |
| Debt-to-equity ratio | 0.92 | 1.03 | 1.11 | 0.97 | 1.01 | 1.08 | 1.16 | 1.40 | 1.48 | 1.62 | 1.81 | 1.81 | 1.83 | 1.98 | 2.33 | 2.07 | 2.03 | 1.94 | 1.72 | 2.29 |
| Financial leverage ratio | 2.90 | 3.01 | 3.12 | 3.21 | 3.32 | 3.51 | 3.66 | 3.65 | 3.78 | 3.73 | 3.92 | 4.01 | 4.09 | 4.48 | 5.08 | 5.30 | 4.68 | 4.83 | 4.65 | 5.55 |
Hershey Company's solvency ratios provide insight into its ability to meet its financial obligations over the long term. Looking at the data from Q1 2022 to Q4 2023, we can observe a general trend of increasing leverage for the company.
The debt-to-assets ratio, which measures the proportion of assets financed by debt, shows a slight increase from 0.40 in Q4 2022 to 0.43 in Q1 2023, before peaking at 0.44 in Q2 and Q3 2023, and then declining slightly to 0.42 in Q4 2023. This indicates that the company has been relying more on debt financing to support its assets.
The debt-to-capital ratio, which indicates the proportion of capital attributed to debt, follows a similar upward trend, increasing steadily from 0.54 in Q4 2022 to 0.58 in Q2 2023, before stabilizing around 0.56 to 0.58 in Q3 and Q4 2023. This suggests that Hershey Company's capital structure has become more debt-heavy over time.
The debt-to-equity ratio, which measures the relative contribution of debt and equity to the company's capital structure, demonstrates a consistent increase from 1.17 in Q4 2022 to 1.39 in Q1 2023, reaching a peak of 1.73 in Q2 2022, before slightly declining to 1.28 in Q3 2023. This indicates a higher level of debt compared to equity in the company's capital mix.
Lastly, the financial leverage ratio, showcasing the company's overall leverage, has been on an upward trajectory, increasing from 2.90 in Q4 2022 to 3.21 in Q1 2023, with fluctuations in the following quarters and ending at 3.01 in Q3 2023. This suggests that Hershey Company has been increasingly relying on debt to finance its operations and investments.
Overall, the trend in Hershey Company's solvency ratios indicates a growing reliance on debt financing, which may pose risks in terms of financial stability and flexibility in the long run. It is essential for the company to carefully manage its debt levels to ensure sustainable growth and mitigate potential liquidity challenges.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 14.45 | 15.01 | 14.36 | 14.69 | 14.68 | 15.15 | 16.11 | 16.48 | 14.80 | 13.43 | 13.08 | 11.96 | 10.76 | 10.47 | 9.55 | 9.80 | 10.10 | 10.88 | 10.40 | 9.82 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt with its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.
Based on the historical data provided, Hershey Company has maintained consistently high interest coverage ratios ranging from 16.45 to 17.83 over the past eight quarters. This suggests that Hershey has a strong ability to cover its interest expenses with its operating income.
The trend shows slight fluctuations in the interest coverage ratio, but overall, the company's earnings have been sufficient to comfortably cover its interest obligations. This stability in the interest coverage ratio indicates Hershey's financial health and ability to manage its debt effectively.