Lennox International Inc (LII)

Based on the provided data for Lennox International Inc, we can see the following trends in solvency ratios:

1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets that are financed by debt. Lennox International Inc had a debt-to-assets ratio of 0.00 in 2020, which increased to 0.12 in 2021 before returning to 0.00 in subsequent years. A lower debt-to-assets ratio generally indicates lower financial risk, as the company relies less on debt to finance its assets.

2. Debt-to-capital ratio: This ratio shows the extent of a company's capital that is funded by debt. Lennox International Inc had insufficient data (denoted by "—") for this ratio in 2020 and 2021. However, in 2023 and 2024, the debt-to-capital ratio was 0.00, indicating that no debt was used to finance the company's capital during those years.

3. Debt-to-equity ratio: The debt-to-equity ratio measures the proportion of a company's equity that is financed by debt. Similar to the debt-to-capital ratio, Lennox International Inc did not have available data for this ratio in 2020 and 2021. From 2022 onwards, the company had a debt-to-equity ratio of 0.00, suggesting that the company had no debt in its capital structure in those years.

4. Financial leverage ratio: This ratio compares the company's total assets to its equity, indicating the degree of financial leverage used by the company. Lennox International Inc did not have available data for this ratio in 2020 and 2021. However, in 2023, the financial leverage ratio was 9.81, which decreased significantly to 4.08 in 2024. A high financial leverage ratio can indicate higher financial risk and dependency on debt financing.

Overall, the solvency ratios for Lennox International Inc demonstrate a conservative approach to debt financing, with a trend towards reduced dependence on debt over the years, as shown by the decreasing financial leverage ratio and consistently low debt-to-assets, debt-to-capital, and debt-to-equity ratios in the later years.

---

Coverage ratios

Lennox International Inc's interest coverage ratio has shown a generally positive trend over the years, indicating the company's ability to meet its interest obligations comfortably. The interest coverage ratio, calculated as earnings before interest and taxes (EBIT) divided by the interest expense, was 16.70 in 2020, indicating that the company generated 16.70 times more operating income than the interest expense for that year.

In 2021, the interest coverage ratio improved significantly to 23.40, reaching a peak in the analyzed period. This increase suggests that Lennox International Inc's earnings were more than sufficient to cover its interest payments, reflecting strong financial health.

While there was a slight decline in the interest coverage ratio in 2022 to 16.91 and in 2023 to 15.26, the ratios were still at levels considered healthy and able to meet interest obligations without difficulty.

In 2024, the interest coverage ratio increased notably to 26.68, surpassing the previous peak in 2021. This improvement indicates that Lennox International Inc's ability to cover interest expenses strengthened further, showcasing the company's efficient operational performance and financial stability.

Overall, the trend of the interest coverage ratio for Lennox International Inc reflects a positive financial standing, indicating its capacity to comfortably meet interest payments and suggesting sound financial management practices.