Altria Group (MO)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.65 | 0.68 | 0.68 | 0.59 | 0.55 |
| Debt-to-capital ratio | 1.16 | 1.19 | 1.06 | 0.91 | 0.81 |
| Debt-to-equity ratio | — | — | — | 9.85 | 4.35 |
| Financial leverage ratio | — | — | — | 16.70 | 7.92 |
Altria Group Inc.'s solvency ratios have fluctuated over the years, as indicated by the debt-to-assets, debt-to-capital, debt-to-equity, and financial leverage ratios.
The debt-to-assets ratio, which measures the proportion of assets financed by debt, increased from 0.57 in 2019 to 0.68 in 2023. This suggests that Altria Group Inc. has been relying more on debt to finance its assets in recent years.
The debt-to-capital ratio, which reflects the percentage of capital structure funded by debt, also showed an upward trend, rising from 0.82 in 2019 to 1.16 in 2023. This indicates an increasing reliance on debt within the capital structure.
The debt-to-equity ratio was not available for 2021 and prior years but showed a significant jump from 4.51 in 2019 to 10.38 in 2020. This surge suggests a considerable increase in the company's financial leverage, indicating higher financial risk.
The financial leverage ratio, which quantifies the level of debt in the capital structure relative to equity, was not reported in earlier years but stood at 7.92 in 2019 and surged to 16.70 in 2020. This significant increase further highlights the higher financial risk associated with increased leverage.
In conclusion, the solvency ratios of Altria Group Inc. indicate a trend of escalating reliance on debt financing and a notable increase in financial leverage over the years, signaling heightened financial risk and a potentially more leveraged capital structure.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 10.51 | 7.55 | 4.22 | 6.64 | 1.58 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expenses.
Analyzing Altria Group Inc.'s interest coverage ratio over the past five years shows an improving trend from 2019 to 2023, indicating the company's strengthening ability to cover its interest obligations.
In 2019, the interest coverage ratio was 9.54, which means Altria's EBIT was 9.54 times higher than its interest expenses. This indicated a strong ability to cover interest payments.
However, there was a slight dip in 2020 when the interest coverage ratio decreased to 8.90. This could be a signal for potential investors to monitor the company's ability to cover interest payments carefully.
Subsequently, the interest coverage ratio improved significantly in 2021 to 4.80, indicating a stronger financial position compared to the previous year. This improvement continued in 2022, with a ratio of 7.82, further solidifying the company's ability to service its debt obligations.
The most recent data for 2023 shows a significant improvement in the interest coverage ratio to 11.92, reflecting Altria's robust earnings relative to its interest expenses. This positive trend implies a healthy financial position, indicating that the company has ample earnings to cover its interest payments comfortably.
Overall, the increasing trend in Altria Group Inc.'s interest coverage ratio over the past five years is a positive sign of the company's financial stability and ability to manage its debt obligations effectively. Investors and stakeholders can view this trend favorably as it suggests a lower risk of default due to insufficient earnings to cover interest expenses.