LivaNova PLC (LIVN)

Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Looking at LivaNova PLC's solvency ratios over the past five years, we observe the following trends:

1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets financed by debt. LivaNova's debt-to-assets ratio has been relatively stable, hovering around 0.24 to 0.27 over the period. This suggests that approximately 24% to 27% of the company's assets have been funded by debt.

2. Debt-to-capital ratio: The debt-to-capital ratio reflects the percentage of a company's capital structure that is financed by debt. LivaNova's debt-to-capital ratio has also remained steady, ranging from 0.31 to 0.37. This indicates that around 31% to 37% of the company's capital has been derived from debt sources.

3. Debt-to-equity ratio: The debt-to-equity ratio compares a company's total debt to its shareholders' equity. LivaNova's debt-to-equity ratio shows a slight upward trend, increasing from 0.19 in 2021 to 0.46 in 2023. This implies that the company has been relying more on debt to finance its operations compared to equity.

4. Financial leverage ratio: The financial leverage ratio measures a company's use of debt to support its operations. LivaNova's financial leverage ratio has fluctuated but generally maintained between 1.70 and 2.16. This suggests that the company's financial leverage has varied but remains within a reasonable range.

Overall, LivaNova's solvency ratios indicate that the company has been managing its debt levels effectively to support its operations and growth. However, the increasing trend in the debt-to-equity ratio warrants attention as it suggests a higher reliance on debt financing, which could potentially increase financial risk in the future. Analyzing these ratios in conjunction with other financial metrics can provide a more comprehensive understanding of LivaNova PLC's financial health and long-term sustainability.

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Coverage ratios

LivaNova PLC's interest coverage ratio has displayed significant fluctuations over the past five years. In 2023, the interest coverage ratio stands at 0.58, indicating that the company generated $0.58 in operating income for every $1 of interest expense. This represents a decline from the previous year when the ratio was 1.21. The negative ratios in 2021 and 2020 (-0.02) suggest that the company's operating income was insufficient to cover its interest payments during those years. However, in 2019, the interest coverage ratio was 3.36, showing a healthy ability to cover interest expenses with operating income. Overall, the downward trend in recent years raises concerns about LivaNova's ability to meet its interest obligations from operating earnings.