Howmet Aerospace Inc (HWM)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.34 | 0.41 | 0.41 | 0.41 | 0.28 |
| Debt-to-capital ratio | 0.46 | 0.54 | 0.55 | 0.57 | 0.52 |
| Debt-to-equity ratio | 0.87 | 1.16 | 1.20 | 1.31 | 1.07 |
| Financial leverage ratio | 2.58 | 2.85 | 2.91 | 3.20 | 3.83 |
The solvency ratios of Howmet Aerospace Inc demonstrate its ability to meet its long-term financial obligations and manage its debt levels over the past five years.
The trend in the debt-to-assets ratio shows a gradual decrease from 0.44 in 2020 to 0.36 in 2023, indicating that the company has been able to reduce its reliance on debt to finance its assets over time. This suggests a healthier financial position in terms of asset coverage by debt.
The debt-to-capital ratio and debt-to-equity ratio also show a consistent decline from 2020 to 2023, reflecting a decreasing dependence on debt to fund the company's operations and investments. This can be interpreted as a positive sign of improved financial health and decreased financial risk.
Additionally, the financial leverage ratio demonstrates a declining trend from 3.20 in 2020 to 2.58 in 2023. This indicates that the company has been reducing its financial leverage by decreasing its reliance on debt financing, which can lead to lower financial risk and greater stability in the long run.
Overall, the solvency ratios of Howmet Aerospace Inc have shown a favorable trend in recent years, indicating improved financial stability and a more sustainable capital structure.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 5.47 | 3.65 | 2.25 | 1.70 | 2.64 |
The interest coverage ratio for Howmet Aerospace Inc has been showing an improving trend over the past five years, indicating the company's increasing ability to cover its interest expenses from its operating profits. The ratio has shown consistent growth from 2.15 in 2020 to 6.29 in 2023.
A higher interest coverage ratio suggests the company is in a better position to meet its debt obligations as it indicates that Howmet Aerospace Inc is generating sufficient earnings to cover its interest payments. This improvement in financial health over the years may be attributed to effective cost management, higher profitability, or a reduction in overall debt levels.
Overall, the increasing interest coverage ratio reflects positively on the financial stability and debt servicing capability of Howmet Aerospace Inc. It signifies a stronger ability to manage debt and enhances investor confidence in the company's financial health.