Liberty Oilfield Services Inc (LBRT)

Looking at the solvency ratios of Liberty Energy Inc over the past five years, we can observe the following trends:

1. Debt-to-assets ratio: This ratio remained relatively stable at around 0.10 in 2023 and 2022, with a slight increase from 2020 to 2021. A lower debt-to-assets ratio indicates that a company relies less on debt financing to fund its assets, which could be a positive sign for Liberty Energy Inc's overall financial health.

2. Debt-to-capital ratio: Liberty Energy Inc's debt-to-capital ratio also showed stability over the years, hovering around 0.15 in 2023 and 0.14 in 2022. This ratio measures the proportion of a company's capital that is financed by debt, and the consistent levels suggest that the company is maintaining a balanced mix of debt and equity in its capital structure.

3. Debt-to-equity ratio: The debt-to-equity ratio for Liberty Energy Inc decreased from 0.28 in 2019 to 0.17 in 2023 and 2022. This trend indicates that the company has been reducing its reliance on debt in relation to equity, which could signify improved financial stability and lower financial risk.

4. Financial leverage ratio: Liberty Energy Inc's financial leverage ratio decreased steadily from 2.31 in 2019 to 1.65 in 2023. A lower financial leverage ratio suggests that the company has reduced its financial risk by decreasing its reliance on debt to fund its operations, which is a positive indicator of solvency.

Overall, the trends in Liberty Energy Inc's solvency ratios indicate a prudent management of debt levels and a strengthening of the company's financial position over the years. The decreasing levels of debt relative to assets, capital, and equity, as well as the declining financial leverage ratio, suggest improved solvency and potentially lower financial risk for the company.

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Coverage ratios

Interest coverage for Liberty Energy Inc has been fluctuating over the past five years. In 2023, the interest coverage ratio improved significantly to 27.40, indicating the company's ability to cover its interest expenses 27.40 times over. This improvement from the previous year's ratio of 21.63 suggests that the company's operating income is strong relative to its interest obligations.

In 2021 and 2020, Liberty Energy Inc had negative interest coverage ratios of -11.56 and -12.23, respectively, indicating that the company's operating income was insufficient to cover its interest expenses during those years. This is a concerning trend as negative interest coverage ratios can signal financial distress and potential difficulties in meeting debt obligations.

However, in 2019, the company's interest coverage ratio improved to 7.23, indicating that its operating income was 7.23 times greater than its interest expenses. This improvement suggests a better ability to meet interest payments compared to the negative ratios in the subsequent years.

Overall, Liberty Energy Inc's interest coverage has shown volatility, with significant improvements in some years and troubling negative ratios in others. It is essential for the company to maintain a consistently high interest coverage ratio to demonstrate its ability to comfortably meet its interest obligations and avoid financial difficulties.