Lockheed Martin Corporation (LMT)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.33 | 0.29 | 0.23 | 0.23 | 0.24 |
| Debt-to-capital ratio | 0.72 | 0.62 | 0.52 | 0.66 | 0.78 |
| Debt-to-equity ratio | 2.53 | 1.67 | 1.06 | 1.94 | 3.65 |
| Financial leverage ratio | 7.67 | 5.71 | 4.64 | 8.43 | 15.20 |
The solvency ratios of Lockheed Martin Corp. indicate the firm's ability to meet its long-term financial obligations and the extent of its leverage.
The debt-to-assets ratio has gradually increased from 0.23 in 2021 to 0.33 in 2023, which suggests that the company's reliance on debt to finance its assets has also increased over the years.
Similarly, the debt-to-capital ratio has shown an upward trend, rising from 0.52 in 2021 to 0.72 in 2023. This implies that a larger portion of the company's capital structure is being financed by debt.
The debt-to-equity ratio also indicates an increase in leverage, standing at 2.55 in 2023 compared to 1.07 in 2021. This suggests that the company is relying more on debt financing relative to equity.
The financial leverage ratio, which measures the extent of total assets to equity, has also seen an upward trend, reaching 7.67 in 2023. This indicates that the company's assets are increasingly being financed by debt rather than equity.
Overall, the increasing trend in these solvency ratios suggests that Lockheed Martin Corp. has been relying more on debt financing in recent years, which may raise concerns about its long-term solvency and financial risk.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 9.84 | 11.72 | 14.27 | 14.84 | 12.09 |
The interest coverage ratio indicates the company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio is generally favorable, as it suggests that the company is more capable of servicing its debt.
Lockheed Martin Corp.'s interest coverage has fluctuated in the past five years, with a decreasing trend in recent years. In 2023, the interest coverage ratio stands at 9.36, compared to 13.65 in 2022 and 16.16 in 2021. While the ratio remains above 1, indicating that the company's operating income is sufficient to cover its interest expenses, the decline over the years may suggest a need for monitoring, especially in relation to the company's debt levels and operating income. It would be important for the company to assess its debt management and operating performance to ensure it can comfortably meet its interest obligations in the future.