KBR Inc (KBR)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.38 | 0.32 | 0.25 | 0.30 | 0.28 |
| Debt-to-capital ratio | 0.64 | 0.57 | 0.46 | 0.53 | 0.50 |
| Debt-to-equity ratio | 1.74 | 1.30 | 0.85 | 1.12 | 1.00 |
| Financial leverage ratio | 4.59 | 4.02 | 3.44 | 3.72 | 3.61 |
Solvency ratios provide insights into a company's ability to meet its long-term debt obligations.
1. Debt-to-assets ratio: KBR Inc's debt-to-assets ratio has increased from 0.28 in December 2020 to 0.38 in December 2024. This indicates the proportion of the company's assets financed by debt has been on an upward trend. A higher ratio suggests a higher level of financial risk as a larger portion of assets is funded by debt.
2. Debt-to-capital ratio: The debt-to-capital ratio of KBR Inc has also shown an increasing trend from 0.50 in December 2020 to 0.64 in December 2024. This ratio represents the proportion of a company's capital structure that is debt. An increasing ratio indicates a higher reliance on debt financing, which may lead to increased financial risk.
3. Debt-to-equity ratio: KBR Inc's debt-to-equity ratio has fluctuated over the years, ranging from 1.00 in December 2020 to 1.74 in December 2024. A higher debt-to-equity ratio implies that the company is more leveraged, with a greater portion of its funding coming from debt rather than equity.
4. Financial leverage ratio: The financial leverage ratio, which measures the extent to which a company uses debt to finance its assets, has also shown an increasing trend for KBR Inc, rising from 3.61 in December 2020 to 4.59 in December 2024. This indicates a higher level of financial risk as the company's debt levels relative to its equity have been increasing.
Overall, the increasing trends in these solvency ratios suggest that KBR Inc's reliance on debt financing has been growing over the years, potentially increasing its financial risk and highlighting the importance of closely monitoring its debt levels and ability to service its debt obligations.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 4.60 | -0.48 | 4.24 | 2.72 | 0.51 |
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. Looking at the data provided for KBR Inc, we can see fluctuations in the interest coverage ratio over the years:
- As of December 31, 2020, the interest coverage ratio was quite low at 0.51, indicating that KBR Inc was barely able to cover its interest payments with its operating income.
- By December 31, 2021, there was a significant improvement in the interest coverage ratio to 2.72, suggesting that the company's operating income could cover the interest expenses more comfortably.
- The ratio further improved to 4.24 by December 31, 2022, showing a positive trend in KBR Inc's ability to meet its interest obligations.
- However, there was a significant drop in the interest coverage ratio to -0.48 by December 31, 2023. A negative interest coverage ratio is concerning as it indicates that the company's operating income was insufficient to cover its interest expenses during that period.
- Fortunately, KBR Inc managed to bounce back by December 31, 2024, with an interest coverage ratio of 4.60, indicating a strong ability to cover its interest payments with operating income.
Overall, fluctuating interest coverage ratios suggest varying levels of financial health and risk for KBR Inc over the analyzed period. It is essential for investors and stakeholders to monitor these ratios to assess the company's ability to meet its debt obligations in the long term.