The Mosaic Company (MOS)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.15 | 0.15 | 0.15 | 0.18 | 0.23 |
| Debt-to-capital ratio | 0.23 | 0.21 | 0.22 | 0.27 | 0.32 |
| Debt-to-equity ratio | 0.29 | 0.27 | 0.28 | 0.38 | 0.48 |
| Financial leverage ratio | 2.00 | 1.87 | 1.94 | 2.08 | 2.07 |
The solvency ratios of The Mosaic Company indicate the firm's ability to meet its long-term financial obligations and the extent of its leverage in financing its operations.
1. Debt-to-assets ratio:
- The debt-to-assets ratio has shown a declining trend from 0.23 in 2020 to 0.15 in 2024. This indicates that the company's reliance on debt to finance its assets has decreased over the years, which may suggest improved financial stability and lower financial risk.
2. Debt-to-capital ratio:
- The debt-to-capital ratio has also decreased over the years, from 0.32 in 2020 to 0.23 in 2024. This implies that the proportion of debt in the company's capital structure has been decreasing, which could lead to improved financial health and reduced dependence on debt financing.
3. Debt-to-equity ratio:
- The debt-to-equity ratio has exhibited a consistent decline from 0.48 in 2020 to 0.29 in 2024. This trend indicates that the company has been reducing its reliance on debt relative to equity, suggesting a stronger financial position and improved capability to withstand financial challenges.
4. Financial leverage ratio:
- The financial leverage ratio has fluctuated slightly but has generally remained within a close range, from 1.87 in 2023 to 2.08 in 2021. A financial leverage ratio above 1 indicates that the company uses more debt than equity to finance its assets. The slight variations in this ratio may reflect changes in the company's capital structure but overall seem to indicate a stable level of financial leverage.
In conclusion, based on the solvency ratios analysis, The Mosaic Company appears to have improved its financial health by decreasing its reliance on debt and demonstrating a more balanced and sustainable capital structure over the years.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.57 | 8.10 | 29.48 | 12.47 | 1.41 |
The interest coverage ratio is a key financial metric used to assess a company's ability to meet its interest obligations on outstanding debt. The Mosaic Company's interest coverage ratios for the years presented show a varied trend:
1. As of December 31, 2020, The Mosaic Company's interest coverage ratio was 1.41, indicating that the company's operating income was just sufficient to cover its interest expenses. A ratio below 1 would suggest that the company is not generating enough income to meet interest payments.
2. By December 31, 2021, there was a significant improvement in the interest coverage ratio to 12.47, signifying that the company's operating income had increased substantially, making it more capable of servicing its debt obligations.
3. The trend continued to strengthen by December 31, 2022, with an interest coverage ratio of 29.48. This high ratio indicates a robust ability to cover interest payments multiple times over, reflecting strong earnings relative to interest charges.
4. However, by December 31, 2023, the interest coverage ratio decreased to 8.10, although still at a respectable level, suggesting a slight decline in the company's ability to cover interest expenses compared to the previous year.
5. Finally, by December 31, 2024, the interest coverage ratio fell further to 2.57, indicating a significant decrease in the company's ability to cover interest payments compared to the prior year. This might be a cause for concern as it suggests a potential strain on the company's financial health.
In conclusion, The Mosaic Company's interest coverage ratios have shown fluctuations over the years, with a significant improvement in 2021 and 2022, followed by a slight decline in 2023 and a more noticeable decrease in 2024. It is essential for investors and analysts to monitor these ratios to assess the company's financial stability and ability to meet its debt obligations in the long term.