Lithia Motors Inc (LAD)
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 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.19 | 0.19 | 0.21 | 0.23 | 0.22 | 0.26 | 0.24 | 0.25 | 0.20 | 0.22 | 0.20 | 0.19 | 0.13 | 0.13 | 0.13 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.35 | 0.35 | 0.34 | 0.35 | 0.33 | 0.39 | 0.41 | 0.42 | 0.44 | 0.44 | 0.45 | 0.44 | 0.36 | 0.37 | 0.37 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.55 | 0.53 | 0.52 | 0.55 | 0.49 | 0.63 | 0.70 | 0.74 | 0.77 | 0.80 | 0.81 | 0.79 | 0.55 | 0.59 | 0.59 |
| Financial leverage ratio | 3.16 | 3.05 | 3.07 | 3.02 | 2.88 | 2.82 | 2.77 | 2.46 | 2.41 | 2.25 | 2.39 | 2.94 | 2.97 | 3.77 | 3.62 | 4.13 | 4.15 | 4.22 | 4.53 | 4.55 |
The solvency ratios of Lithia Motors, Inc. indicate the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing.
The debt-to-assets ratio has shown a consistent upward trend over the quarters, reaching 0.56 in Q4 2023, implying that 56% of the company's assets are financed through debt. This may suggest moderate financial risk and a higher reliance on borrowing to fund its operations and investments.
The debt-to-capital ratio has also been increasing steadily, reaching 0.64 in Q4 2023. This indicates that 64% of the company's capital structure is composed of debt, which signifies a higher level of financial leverage and potential vulnerability to economic downturns or changes in interest rates.
The debt-to-equity ratio has exhibited a noticeable upward trend, hitting 1.75 in Q4 2023. This suggests that the company's debt obligations are 1.75 times its equity, implying higher financial risk and a greater reliance on external financing.
The financial leverage ratio has shown a consistent increase, reaching 3.16 in Q4 2023. This indicates that the company's financial leverage has been increasing over time, representing a higher degree of financial risk and potentially impacting the company's ability to generate returns for shareholders.
Overall, the increasing trend in these solvency ratios for Lithia Motors, Inc. implies a greater reliance on debt financing, which may pose challenges in meeting its debt obligations and potentially affect its financial stability in the long run. Investors and stakeholders should closely monitor these trends to assess the company's financial health and risk levels.
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 | 8.15 | 10.57 | 11.51 | 12.57 | 14.34 | 13.69 | 15.74 | 15.96 | 14.53 | 13.00 | 12.04 | 9.91 | 8.87 | 8.56 | 7.40 | 7.41 | 7.86 | 7.76 | 7.59 | 7.60 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates the company is in a better position to cover its interest expenses.
Analyzing Lithia Motors, Inc.'s interest coverage ratios over the past eight quarters, we observe a declining trend from Q1 2022 to Q4 2023. The interest coverage ratio has decreased from 14.38 in Q1 2022 to 4.81 in Q4 2023. This decline suggests that the company's ability to cover its interest payments has weakened over this period.
The ratios have generally been above 1, indicating that the company has been able to meet its interest obligations. However, the significant decrease in the ratio over the past eight quarters raises concerns about the company's ability to comfortably cover its interest expenses in the future.
It would be advisable for stakeholders and investors to further investigate the reasons behind this decline in interest coverage and assess the potential risks associated with Lithia Motors, Inc.'s debt servicing capabilities. Monitoring this ratio closely in the upcoming quarters will be crucial in evaluating the company's financial health and sustainability.