LCI Industries (LCII)
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 | 2.09 | 2.18 | 2.35 | 3.01 | 2.53 |
LCI Industries has consistently maintained a strong solvency position as indicated by its debt-to-assets, debt-to-capital, and debt-to-equity ratios, all of which have remained at 0.00 from 2020 to 2024. These ratios suggest that the company has either no debt or very minimal debt relative to its assets, capital, and equity, signifying a healthy financial structure with low financial risk.
Additionally, the financial leverage ratio, which measures the extent to which a company is using debt to finance its operations, shows a decreasing trend over the years. The ratio has decreased from 2.53 in 2020 to 2.09 in 2024. This indicates that LCI Industries has been decreasing its reliance on debt financing while maintaining an appropriate balance between debt and equity in its capital structure.
Overall, based on the solvency ratios, LCI Industries appears to have a solid financial foundation with low debt levels and efficient capital structure management, which bodes well for its long-term financial stability and risk management.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 0.00 | 3.05 | 20.06 | 24.34 | 16.57 |
Interest coverage is a crucial financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. Looking at the trend for LCI Industries over the past several years, we observe a generally positive trajectory in the interest coverage ratio.
As of December 31, 2020, the interest coverage ratio stood at 16.57, suggesting that LCI Industries earned 16.57 times the amount needed to cover its interest expenses for that period. This indicates a strong ability to comfortably meet its interest payments.
Moving forward to December 31, 2021, the interest coverage ratio improved further to 24.34. This continued increase signifies the company's enhanced financial health and capacity to service its debt obligations efficiently.
By December 31, 2022, the interest coverage remained healthy at 20.06, indicating a robust ability to generate earnings that cover its interest expenses adequately.
However, there was a significant drop in the interest coverage ratio by December 31, 2023, falling to 3.05. This considerable decline may raise concerns about the company's ability to generate sufficient earnings to cover its interest payments comfortably during this period.
Moreover, the interest coverage ratio dropped to 0.00 by December 31, 2024. This indicates that the company's earnings were not sufficient to cover its interest expenses, signaling potential financial strain or liquidity concerns.
Overall, while LCI Industries demonstrated a strong capacity to cover its interest obligations in the earlier years, the recent decline in the interest coverage ratio raises flags about its ability to sustainably meet its interest payments in the near term. Further examination of the company's financial health and operational performance is warranted to understand the underlying reasons for this significant decrease in interest coverage.