MP Materials Corp (MP)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Debt-to-assets ratio | 0.29 | 0.30 | 0.36 | 0.00 |
| Debt-to-capital ratio | 0.33 | 0.34 | 0.40 | 0.00 |
| Debt-to-equity ratio | 0.50 | 0.52 | 0.67 | 0.00 |
| Financial leverage ratio | 1.71 | 1.70 | 1.87 | 1.26 |
MP Materials Corporation has demonstrated a consistent downward trend in its solvency ratios over the past four years. The company's debt-to-assets ratio decreased from 0.37 in 2021 to 0.29 in 2023, indicating a lower reliance on debt to finance its assets. Similarly, the debt-to-capital ratio also decreased from 0.41 in 2021 to 0.33 in 2023, suggesting a reduced proportion of debt in the company's capital structure.
Moreover, the debt-to-equity ratio declined from 0.69 in 2021 to 0.50 in 2023, indicating a lower level of financial leverage and a stronger equity position. The financial leverage ratio also decreased from 1.87 in 2021 to 1.71 in 2023, reflecting a decrease in the proportion of debt used to support the company's operations.
Overall, the improving solvency ratios of MP Materials Corporation suggest a healthier financial position with reduced reliance on debt financing and a stronger equity base to support its operations and future growth.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|
| Interest coverage | 7.30 | 59.96 | 18.99 | -6.88 |
Interest coverage ratio measures the company's ability to cover its interest obligations with its operating income. A higher ratio indicates a stronger ability to meet interest payments. Looking at MP Materials Corporation's interest coverage over the past four years, there has been significant variability.
In 2023, the interest coverage ratio was negative at -3.37, signaling that the company's operating income was insufficient to cover its interest expenses. This could raise concerns about the company's financial health and ability to service its debt obligations.
In 2022, the interest coverage ratio was notably high at 56.65, indicating a strong ability to cover interest payments. This could suggest that the company had healthy profitability and cash flow to easily meet its interest obligations.
In 2021 and 2020, the interest coverage ratios were 18.77 and 7.08, respectively. While these ratios are lower than 2022's, they still indicate that the company had the operating income to cover its interest expenses during those years.
Overall, the fluctuation in MP Materials Corporation's interest coverage ratios over the past four years may indicate varying levels of financial stability and performance. It is essential for stakeholders to closely monitor these ratios to assess the company's ability to meet its debt obligations in the future.