Lincoln Electric Holdings Inc (LECO)

The solvency ratios of Lincoln Electric Holdings, Inc. provide insights into the company's ability to meet its financial obligations and manage its debt levels effectively.

1. Debt-to-assets ratio:
The debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. A lower ratio indicates a lower reliance on debt financing. Lincoln Electric's debt-to-assets ratio has fluctuated over the past five years, ranging from 0.30 to 0.38, with a decrease to 0.33 in 2023 compared to the previous year. This suggests that the company has been managing its debt levels relative to its total assets.

2. Debt-to-capital ratio:
The debt-to-capital ratio reflects the percentage of a company's capital structure that is financed by debt. Lincoln Electric's debt-to-capital ratio has shown some variability, ranging from 0.47 to 0.54 over the past five years. The decrease to 0.46 in 2023 suggests a slightly lower reliance on debt compared to the previous year.

3. Debt-to-equity ratio:
The debt-to-equity ratio indicates the extent to which a company's operations are financed by debt relative to equity. Lincoln Electric's debt-to-equity ratio has also fluctuated, with values ranging from 0.84 to 1.16 over the past five years. The decrease to 0.84 in 2023 indicates a lower level of debt financing relative to equity compared to the previous year.

4. Financial leverage ratio:
The financial leverage ratio highlights the proportion of a company's total assets that are financed by debt. Lincoln Electric's financial leverage ratio has shown a downward trend from 2.90 in 2019 to 2.58 in 2023. A lower financial leverage ratio indicates a lower level of financial risk associated with debt financing.

In summary, Lincoln Electric has demonstrated a trend of improving solvency ratios over the past year, indicating effective management of debt levels and a balanced capital structure. These ratios suggest that the company has maintained a prudent approach to debt management and financial leverage.

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Coverage ratios

The interest coverage ratio for Lincoln Electric Holdings, Inc. has shown fluctuations over the past five years. The company's ability to cover its interest expenses improved from 2019 to 2022, with the ratio ranging from 16.49 to 21.23, indicating a strong ability to meet interest obligations with operating income. However, there was a slight decrease in 2023 to 15.94, which may suggest a relatively lower ability to cover interest expenses compared to the previous year. Overall, the company has consistently maintained a healthy interest coverage ratio above 1, signaling that it has sufficient earnings to pay off its interest costs comfortably.