NewMarket Corporation (NEU)

The solvency ratios of NewMarket Corp. provide insights into the company's financial risk and ability to meet its debt obligations. Over the past five years, there have been fluctuations in the company's solvency ratios:

1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets that are financed by debt. A lower ratio is generally favorable as it suggests lower financial risk. NewMarket Corp. has shown a decreasing trend in this ratio from 2019 to 2023, indicating a more conservative approach to debt management.

2. Debt-to-capital ratio: This ratio measures the extent to which a company is leveraged through debt. A lower ratio signifies a lower reliance on debt financing. NewMarket Corp. has steadily reduced its debt-to-capital ratio over the years, indicating a decreasing level of financial risk and improved capital structure.

3. Debt-to-equity ratio: This ratio compares the company's total debt with its shareholders' equity, reflecting the extent to which the company relies on debt to fund its operations. NewMarket Corp. has exhibited a decreasing trend in this ratio, showcasing a reduced dependence on debt and a stronger equity position.

4. Financial leverage ratio: This ratio represents the company's total assets relative to its equity, providing insights into the proportion of assets funded by equity versus debt. Lower values are preferable as they indicate lower financial risk. NewMarket Corp. has shown a declining trend in its financial leverage ratio from 2019 to 2023, suggesting improved financial stability and lower dependence on debt financing.

Overall, the trends in NewMarket Corp.'s solvency ratios indicate a positive shift towards lower debt levels, improved financial stability, and a stronger capital structure over the analyzed period.

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Coverage ratios

NewMarket Corp.'s interest coverage ratio has shown fluctuation over the past five years. The interest coverage ratio measures the company's ability to meet its interest payment obligations from its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest expenses.

In 2023, NewMarket Corp. had an interest coverage ratio of 12.93, which indicates that the company generated operating income 12.93 times greater than its interest expenses for that year. This represents an improvement compared to the previous year's ratio of 10.09 in 2022 but is notably higher than the ratio in 2021, which was 7.53.

The peak in the interest coverage ratio in the last five years was in 2020 with a ratio of 11.84, followed closely by 2019 with a ratio of 11.54. The company's ability to cover interest payments was strong in these years, indicating a consistent performance in generating operating income relative to interest expenses.

Overall, NewMarket Corp. has demonstrated a generally strong ability to cover its interest expenses over the past five years, with some fluctuations. However, the increasing trend in the interest coverage ratio in recent years, culminating in the highest ratio in 2023, suggests improved financial health and stability in meeting debt obligations from operating earnings.