Liberty Oilfield Services Inc (LBRT)

Liberty Oilfield Services Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio remained relatively stable over the past five years, fluctuating between 0.05 and 0.08. This ratio suggests that the company's assets are financed primarily through equity rather than debt.

2. Debt-to-capital ratio increased from 0.08 in 2020 to 0.13 in 2022 before declining to 0.09 in 2024. This indicates that the proportion of debt in the company's capital structure increased significantly in 2022 but then decreased.

3. Debt-to-equity ratio fluctuated between 0.08 and 0.15 over the period, indicating the company's reliance on debt financing relative to shareholders' equity. The ratio was highest in 2022, suggesting a higher level of debt relative to equity that year.

4. The financial leverage ratio remained fairly stable around 1.65 to 1.72, indicating that the company is utilizing debt to support its operations while maintaining a moderate level of financial leverage.

Overall, Liberty Oilfield Services Inc's solvency ratios demonstrate a conservative approach to debt management, with a relatively low level of indebtedness compared to its assets, capital, and equity.

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Coverage ratios

Based on the data provided, Liberty Oilfield Services Inc's interest coverage ratio has displayed significant fluctuations over the past five years.

As of December 31, 2020, the interest coverage ratio was at a concerning level of -9.10, indicating that the company's operating income was insufficient to cover its interest expenses. This suggests a significant financial risk and potential challenges in meeting debt obligations.

By December 31, 2021, the interest coverage ratio deteriorated even further to -49.86, signaling a worsening financial situation where the company's operating income was not adequate to cover its interest payments. This suggests a high dependency on external financing to meet debt obligations.

However, there was a remarkable turnaround by December 31, 2022, with a substantial improvement in the interest coverage ratio to 290.50. This implies that Liberty Oilfield Services Inc's operating income was significantly higher compared to its interest expenses, reflecting a strengthened financial position and reduced risk of default on debt payments.

The positive trend continued into December 31, 2023, with an interest coverage ratio of 125.51, indicating a healthy financial position where the company's operating income comfortably covered its interest obligations. This suggests improved profitability and a reduced reliance on external financing.

By December 31, 2024, the interest coverage ratio decreased to 12.09, which, although lower than the previous year, still indicates that Liberty Oilfield Services Inc's operating income was sufficiently covering its interest expenses, although to a lesser extent than in the prior year.

In conclusion, the analysis of Liberty Oilfield Services Inc's interest coverage demonstrates significant fluctuations over the years, with the company experiencing both financial challenges and improvements. It is essential for stakeholders to monitor these ratios closely to assess the company's ability to meet its debt obligations and manage financial risk effectively.