Lincoln Electric Holdings Inc (LECO)
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 | 2.65 | 2.58 | 3.08 | 3.00 | 2.93 |
Based on the provided data for Lincoln Electric Holdings Inc, the solvency ratios indicate a low level of debt and a strong financial position over the years:
1. Debt-to-assets ratio: The debt-to-assets ratio is consistently at 0.00 for each year from 2020 to 2024. This implies that the company has no debt relative to its total assets, indicating a conservative approach to financing and a strong ability to cover its obligations with its assets.
2. Debt-to-capital ratio: Similarly, the debt-to-capital ratio remains at 0.00 for each year from 2020 to 2024. This indicates that the company's capital structure is not reliant on debt, and its capital is primarily funded by equity. A lower debt-to-capital ratio signifies lower financial risk and greater financial stability.
3. Debt-to-equity ratio: The debt-to-equity ratio also stays at 0.00 across the years 2020 to 2024. This ratio further confirms that Lincoln Electric Holdings Inc has no debt relative to its equity, indicating strong financial health and a high level of ownership funding the company's operations.
4. Financial leverage ratio: The financial leverage ratio shows a slight fluctuation over the years, ranging from 2.58 to 3.08. This ratio measures the extent to which the company is using debt to finance its operations compared to equity. The decreasing trend from 2022 to 2024 suggests that the company may be reducing its reliance on debt financing, which can enhance its financial flexibility and reduce its financial risk.
Overall, based on the solvency ratios provided, Lincoln Electric Holdings Inc appears to maintain a solid financial position with minimal debt levels, indicating a conservative financial strategy and a strong capacity to meet its financial obligations.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 14.89 | 16.63 | 21.09 | 26.74 | 15.01 |
The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). In the case of Lincoln Electric Holdings Inc, the interest coverage ratio has shown a generally positive trend over the past five years.
As of December 31, 2020, the interest coverage ratio was 15.01, indicating that the company's earnings were able to cover its interest expenses just over 15 times. By December 31, 2021, this ratio had improved significantly to 26.74, suggesting a stronger ability to pay off interest obligations from operating profits.
In the following years, the interest coverage ratio remained relatively healthy, with ratios of 21.09 on December 31, 2022, 16.63 on December 31, 2023, and 14.89 on December 31, 2024. Although there was a slight decrease in the ratio towards the later years, Lincoln Electric Holdings Inc continued to maintain a solid ability to service its interest payments.
Overall, the trend in the interest coverage ratio for Lincoln Electric Holdings Inc demonstrates a consistent capacity to cover interest expenses with operating income, indicating a lower risk of defaulting on debt obligations.