MGP Ingredients Inc (MGPI)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.69 | 1.64 | 1.55 | 1.62 | 1.40 |
MGP Ingredients Inc has consistently maintained a strong solvency position, as evidenced by its low debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio, all of which have remained at 0.00 across the years from 2020 to 2024. This indicates that the company has minimal debt relative to its assets, capital, and equity, which is a positive signal of financial stability and financial leverage control.
However, the financial leverage ratio has shown a slight upward trend over the years, increasing from 1.40 in 2020 to 1.69 in 2024. While this suggests a slight increase in the company's reliance on debt financing to support its operations, the overall level is still relatively moderate, indicating that MGP Ingredients Inc has not overleveraged itself and continues to maintain a prudent balance between debt and equity in its capital structure.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 9.11 | 22.32 | 26.71 | 24.25 | 33.07 |
Interest coverage is a critical financial metric that reflects a company's ability to meet its interest payments based on its operating earnings. Looking at MGP Ingredients Inc's interest coverage ratios over the years, we observe a consistent ability to cover its interest expenses.
In assessing the data provided, we see a decreasing trend in the interest coverage ratio from 2020 to 2024. The interest coverage ratio was robust at 33.07 in 2020, indicating that the company earned 33 times its interest obligations that year. However, the ratio steadily declined to 9.11 in 2024, signaling a potential cause for concern regarding the company's ability to cover its interest payments comfortably.
A higher interest coverage ratio is generally preferred as it suggests that the company has sufficient earnings to cover its interest expenses. Conversely, a lower ratio may indicate that the company is less capable of meeting its interest payments from its operating profits alone, potentially raising solvency and liquidity risks.
Therefore, MGP Ingredients Inc's declining interest coverage ratio over the years may warrant a closer examination of the company's financial health and ability to service its debt obligations moving forward. It may be prudent for stakeholders to monitor this trend and assess any underlying factors contributing to the decline in the interest coverage ratio.