Lowe's Companies Inc (LOW)
Solvency ratios
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | — | — | — | 0.00 | 0.00 |
| Debt-to-equity ratio | — | — | — | 0.00 | 0.00 |
| Financial leverage ratio | — | — | — | 32.52 | 20.02 |
The solvency ratios for Lowe's Companies Inc indicate a consistently low level of debt relative to its assets, capital, and equity over the past five fiscal years. The Debt-to-assets ratio, Debt-to-capital ratio, and Debt-to-equity ratio were all at zero for all years, suggesting that the company has not relied heavily on debt financing to support its operations or growth.
The Financial leverage ratio, which measures the degree to which a company is utilizing debt to fund its operations, was significantly higher in 2021 and 2020 at 32.52 and 20.02, respectively. This indicates that Lowe's had a higher level of financial leverage in those years compared to the more recent years, potentially exposing the company to higher financial risk.
Overall, the stable and low debt levels in relation to the company's assets and capital indicate that Lowe's has maintained a conservative approach to its capital structure, which can be viewed positively from a solvency perspective. However, management should continue to monitor and manage its leverage levels effectively to ensure long-term financial stability.
Coverage ratios
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 7.80 | 8.78 | 13.66 | 11.06 | 8.79 |
The interest coverage ratio for Lowe's Companies Inc has exhibited fluctuations over the past five years. The ratio indicates the company's ability to cover interest payments on its debt obligations using its operating income.
In the most recent fiscal year ending February 2, 2024, the interest coverage ratio stood at 7.80, representing a decrease from the prior year's ratio of 8.78 as of February 3, 2023. This decline may suggest that Lowe's ability to cover its interest expenses with its operating income weakened during the most recent period.
Comparing the latest ratio to historical data, it is lower than the ratios reported in the preceding years, such as 13.66 in January 28, 2022, 11.06 in January 29, 2021, and 8.79 in January 31, 2020. This declining trend raises concerns about Lowe's sustainable ability to handle its interest obligations as its ratio has been on a downward trajectory over the past few years.
A lower interest coverage ratio may indicate that Lowe's is becoming less capable of servicing its interest payments from its operating profits, potentially signaling increased financial risk and a reduced financial buffer to cover debt obligations. This analysis suggests that monitoring Lowe's interest coverage closely is crucial to assess the company's overall financial health and debt repayment capacity in the future.