International Paper (IP)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.79 | 2.78 | 2.82 | 2.78 | 4.04 |
Based on the provided data, International Paper has consistently maintained a strong solvency position with debt ratios of 0.00 across all years for debt-to-assets, debt-to-capital, and debt-to-equity ratios. This indicates that the company has either no debt or very minimal debt relative to its total assets, capital, and equity.
Additionally, the financial leverage ratio, which measures the extent to which the company is using debt to finance its operations, shows a declining trend over the analyzed period. Starting at 4.04 in 2020, the financial leverage ratio decreased gradually to 2.79 by the end of 2024. This decrease suggests that International Paper has been reducing its reliance on debt financing, which can be indicative of a more conservative financial strategy and lower financial risk.
Overall, the data indicates that International Paper has a stable and healthy solvency position with minimal debt levels and a decreasing reliance on leverage, which bodes well for the company's financial stability and ability to weather economic downturns.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.77 | 1.82 | 5.79 | 4.24 | 2.08 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. For International Paper, the interest coverage has shown fluctuations over the years:
- As of December 31, 2020, International Paper's interest coverage ratio was 2.08, indicating that the company's operating income could cover its interest expenses 2.08 times over.
- By December 31, 2021, the interest coverage improved significantly to 4.24, suggesting a stronger ability to meet interest obligations from operating income.
- As of December 31, 2022, the interest coverage ratio further increased to 5.79, indicating a more comfortable position in servicing debt obligations.
- However, by December 31, 2023, the interest coverage ratio dropped to 1.82, signaling a decrease in the company's ability to cover interest expenses with operating income.
- The ratio slightly recovered by December 31, 2024, with an interest coverage of 2.77, although it remained below the levels seen in 2022 and 2021.
In summary, International Paper's interest coverage ratio has shown variability over the years, with improvements in some periods and declines in others. Investors and creditors may scrutinize these fluctuations to gauge the company's financial health and ability to meet its interest obligations.