Mohawk Industries Inc (MHK)

The solvency ratios of Mohawk Industries Inc indicate a strong financial position with consistently low levels of debt in relation to its assets, capital, and equity. The Debt-to-assets ratio, which reflects the proportion of the company's assets financed by debt, remained at 0.00 across the years from 2020 to 2024. This suggests that Mohawk Industries has not relied heavily on debt to fund its operations or investments.

Similarly, the Debt-to-capital ratio, which compares total debt to total capital (both debt and equity), also remained at 0.00 throughout the period. This signifies that the company's capital structure is not overly leveraged and that its debt levels are negligible in relation to its total capital base.

The Debt-to-equity ratio, which measures the extent to which debt is used to finance operations relative to equity, also maintained a consistent level of 0.00 across the years. This indicates that the company has a very low debt burden compared to its equity, emphasizing its conservative approach to financing.

The Financial leverage ratio, which evaluates the company's use of debt relative to its equity, showed an anomaly with a sharp increase to 199.04 in 2024, which seems like an outlier compared to the stable ratios observed in previous years. This substantial increase may be due to a one-time event or anomaly in the financial data and would require further investigation to understand the underlying reasons.

Overall, based on the solvency ratios analyzed, Mohawk Industries Inc demonstrates a robust financial position with minimal reliance on debt for its operations and investments, thereby indicating a low-risk profile in terms of solvency.

---

Coverage ratios

Interest coverage ratio is a key financial metric used to assess a company's ability to meet its interest obligations on debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense.

Analyzing the interest coverage ratios of Mohawk Industries Inc over the past five years, we can see fluctuations in the company's ability to cover its interest payments:

1. As of December 31, 2020, the interest coverage ratio was 12.16, indicating that the company generated earnings more than 12 times its interest expense during that period, reflecting a relatively healthy financial position.

2. By December 31, 2021, the interest coverage ratio improved significantly to 23.53, signaling a stronger ability to cover its interest costs with its EBIT.

3. However, there was a notable decline in the interest coverage ratio to 4.54 by December 31, 2022, which may suggest a decrease in earnings relative to the interest charges, potentially raising concerns about the company's financial health.

4. The interest coverage ratio further deteriorated to -3.71 as of December 31, 2023, indicating that the company's EBIT was insufficient to cover its interest expenses during that period, which may pose a risk and impact the company's creditworthiness.

5. By December 31, 2024, the interest coverage ratio improved to 14.32, showing a positive trend in the company's ability to cover its interest obligations compared to the previous year.

Overall, fluctuations in Mohawk Industries Inc's interest coverage ratios over the years suggest varying levels of financial performance and potential risks related to its ability to service its debt obligations. Invested parties should continue to monitor these ratios to assess the company's financial stability and risk profile.