Heartland Express Inc (HTLD)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.19 | 0.24 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.25 | 0.32 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.34 | 0.47 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.74 | 1.95 | 1.28 | 1.31 | 1.31 |
Heartland Express, Inc. has shown a consistent and positive trend in its solvency ratios over the years analyzed. The debt-to-assets ratio, which measures the proportion of assets financed by debt, decreased from 0.25 in 2022 to 0.20 in 2023, indicating a stronger position in terms of asset coverage by debt.
Similarly, the debt-to-capital ratio, which reflects the portion of the company's capital that is financed by debt, improved from 0.33 in 2022 to 0.26 in 2023. This suggests that the company has been able to reduce its reliance on debt financing in relation to its total capital.
The debt-to-equity ratio, comparing debt to shareholders' equity, also decreased from 0.48 in 2022 to 0.35 in 2023, demonstrating a lower level of financial risk associated with debt funding relative to equity.
Furthermore, the financial leverage ratio, which indicates the extent to which a company is utilizing debt to finance its assets, decreased from 1.95 in 2022 to 1.74 in 2023. This reduction implies an improvement in financial stability and a lower risk of default due to excessive leverage.
Overall, the solvency ratios of Heartland Express, Inc. for the year 2023 show a positive trend, suggesting a strengthening financial position and prudent debt management practices.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 1.68 | 20.19 | — | — | 89.62 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.
In the case of Heartland Express, Inc., we observe a significant decline in the interest coverage ratio over the years, as evidenced by the values provided in the table. In 2023, the interest coverage ratio is extremely low at 0.06, indicating that the company's EBIT is only able to cover 6% of its interest expense. This sharp drop from 2022's ratio of 12.58 raises concerns about the company's ability to generate enough earnings to cover its interest payments.
The absence of data for 2021, 2020, and 2019 limits the trend analysis, but the substantial decrease from 12.58 to 0.06 in just one year is noteworthy. A low interest coverage ratio suggests a higher risk of default on existing debt obligations. It may indicate that the company is struggling to generate sufficient operating income to meet its interest expenses, potentially leading to financial distress if not addressed.
In conclusion, the sharp decline in Heartland Express, Inc.'s interest coverage ratio raises concerns about its financial health and ability to manage its debt obligations effectively. Further analysis and monitoring of the company's financial performance and debt management strategies are advisable to assess and address the risks associated with the declining interest coverage ratio.