Murphy USA Inc (MUSA)

Solvency ratios provide insight into a company's ability to meet its long-term financial obligations. Looking at the solvency ratios of Murphy USA Inc over the past five years, we can observe the following trends:

1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets financed by debt. Murphy USA's debt-to-assets ratio has fluctuated between 0.37 and 0.45 over the past five years, with a decreasing trend in recent years. A lower debt-to-assets ratio suggests a lower dependency on debt financing for its assets.

2. Debt-to-capital ratio: This ratio measures the extent to which a company is leveraged. Murphy USA's debt-to-capital ratio has ranged from 0.56 to 0.74 during the period under review. There has been some volatility in this ratio, but it appears to have decreased slightly in the most recent year. A lower debt-to-capital ratio indicates a lower level of financial risk.

3. Debt-to-equity ratio: This ratio shows the proportion of a company's financing that comes from debt and equity. Murphy USA's debt-to-equity ratio has varied from 1.28 to 2.82 over the past five years, with a noticeable decline in the most recent year. A lower debt-to-equity ratio indicates a lower reliance on debt financing compared to equity, which may lower the company's financial risk.

4. Financial leverage ratio: This ratio indicates the extent to which a company is using debt to fund its operations. Murphy USA's financial leverage ratio has ranged from 3.35 to 6.44 over the past five years, with a decreasing trend in recent years. A lower financial leverage ratio suggests a lower level of financial risk and greater financial stability.

Overall, the solvency ratios of Murphy USA Inc show a general trend of decreasing reliance on debt financing and improving financial stability over the past five years, which may indicate a stronger ability to meet its long-term financial obligations.

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Coverage ratios

Based on the data provided for Murphy USA Inc's interest coverage ratio over the past five years, we observe fluctuations in the company's ability to cover its interest expenses from its earnings before interest and taxes (EBIT). The interest coverage ratio indicates the firm's capacity to meet its interest obligations, with a higher ratio suggesting stronger financial health and lower default risk.

In 2023, the interest coverage ratio stands at 8.39, reflecting a decline from the previous year's level of 11.76. This decrease may signal a slight weakening in Murphy USA Inc's ability to cover interest expenses with its operating profits. However, the ratio remains at a relatively healthy level above 1, indicating that the company's EBIT is still sufficient to cover its interest charges by a considerable margin.

Comparing the 2023 ratio to that of 2021 and 2019, we see that the current interest coverage is higher than the ratio in those years, suggesting an improvement in the company's ability to service its debt obligations. Despite the fluctuations observed over the years, the overall trend indicates a fluctuating but generally adequate coverage of interest payments by the firm's operating income.

Further analysis and monitoring of Murphy USA Inc's interest coverage ratio in conjunction with other financial metrics are recommended to gain a comprehensive understanding of the company's financial performance and debt servicing capabilities.