Matthews International Corporation (MATW)

The solvency ratios of Matthews International Corporation provide insights into the company's ability to meet its financial obligations and manage its debt levels.

1. Debt-to-assets ratio: This ratio remained relatively stable over the past five years, ranging from 0.37 to 0.42. A lower ratio indicates a lower reliance on debt to finance assets, which is generally considered favorable.

2. Debt-to-capital ratio: This ratio increased gradually from 0.54 in 2021 to 0.64 in 2024. A higher ratio reflects a larger proportion of debt in the company's capital structure, which can increase financial risk.

3. Debt-to-equity ratio: The debt-to-equity ratio also showed an upward trend, rising from 1.19 in 2021 to 1.76 in 2024. This indicates that the company has been using more debt relative to shareholders' equity to finance its operations and investments.

4. Financial leverage ratio: The financial leverage ratio, which measures the company's debt relative to its equity, increased over the five-year period. A higher ratio suggests higher financial risk due to a larger proportion of debt in the company's capital structure.

Overall, the increasing trend in the debt-to-capital, debt-to-equity, and financial leverage ratios indicates that Matthews International Corporation has been taking on more debt compared to equity over the past five years. This may raise concerns about the company's ability to manage its debt levels and meet its financial obligations in the future. It is important for the company to closely monitor and manage its debt levels to ensure long-term financial stability and solvency.

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Coverage ratios

Interest coverage ratio indicates the company's ability to cover its interest expenses with its operating income. An interest coverage ratio above 1 implies the company is generating enough operating income to cover its interest payments.

Looking at Matthews International Corporation's interest coverage over the past five years, we observe fluctuations in the ratio. In 2023, the interest coverage ratio improved significantly to 1.92 from a negative ratio in the previous year, indicating that the company was better positioned to cover its interest expenses. However, in 2022 and 2020, the interest coverage ratios were negative, suggesting that the company's operating income was insufficient to cover its interest payments during those periods.

It is essential for investors and creditors to monitor Matthews International Corporation's interest coverage ratio closely as it provides valuable insights into the company's financial health and ability to meet its debt obligations.