LKQ Corporation (LKQ)

The solvency ratios of LKQ Corp indicate the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets that are financed by debt. LKQ Corp's debt-to-assets ratio has increased from 0.22 in 2019 to 0.28 in 2023, indicating a higher reliance on debt to fund its assets over the past five years.

2. Debt-to-capital ratio: The debt-to-capital ratio represents the percentage of a company's capital that is financed by debt. LKQ Corp's debt-to-capital ratio has also seen an upward trend from 0.33 in 2019 to 0.41 in 2023, suggesting a greater proportion of the company's capital structure is composed of debt.

3. Debt-to-equity ratio: This ratio compares a company's total debt to its shareholders' equity. LKQ Corp's debt-to-equity ratio has fluctuated over the years, with a notable increase from 0.49 in 2019 to 0.69 in 2023. A higher debt-to-equity ratio indicates more financial leverage and higher financial risk.

4. Financial leverage ratio: The financial leverage ratio measures the company's total assets relative to its equity. LKQ Corp's financial leverage ratio has varied but has generally been within the range of 2.18 to 2.55 over the past five years. A higher leverage ratio implies higher financial risk and a greater reliance on debt financing.

Overall, LKQ Corp's solvency ratios suggest that the company has been increasing its reliance on debt to finance its operations and investments, leading to higher financial leverage and potential risks associated with debt servicing and repayment. Investors and stakeholders should monitor these solvency ratios closely to assess the company's long-term financial health and risk profile.

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Coverage ratios

The interest coverage ratio of LKQ Corp has displayed fluctuating trends over the past five years. The ratio was at its lowest in 2023 at 6.71, indicating that the company's ability to cover its interest expenses with its operating income declined significantly in that year. However, it rebounded in 2022 and 2021 to 18.63 and 21.06, respectively, showcasing a strong ability to meet its interest obligations with higher operating income during those periods. The ratio was comparatively lower in 2020 at 10.21, but still reflected a decent coverage of interest expenses. In 2019, the interest coverage ratio stood at 6.85, which was slightly below the 2020 level. Overall, the company's interest coverage ratio has varied over the years, with some years demonstrating robust coverage and others showing weaker performance.