Ingevity Corp (NGVT)

Based on the data provided for Ingevity Corp, the solvency ratios paint a picture of a company with a very strong financial position in terms of leverage and debt.

1. Debt-to-assets ratio: Ingevity Corp has consistently maintained a debt-to-assets ratio of 0.00 over the years from 2020 to 2024. This indicates that the company has not utilized debt extensively to finance its assets, which is a positive sign of financial stability and solvency.

2. Debt-to-capital ratio: Similar to the debt-to-assets ratio, the debt-to-capital ratio for Ingevity Corp has also been at 0.00 across the years. This shows that the company has not relied heavily on debt to fund its operations relative to its total capital structure.

3. Debt-to-equity ratio: The debt-to-equity ratio, which compares a company's debt to its equity, has also been consistently reported as 0.00 for Ingevity Corp. This indicates that the company has no debt in its capital structure, making it less risky from a solvency perspective.

4. Financial leverage ratio: The financial leverage ratio has shown an interesting trend for Ingevity Corp, increasing from 3.64 in 2020 to 10.36 in 2024. This significant increase in the financial leverage ratio suggests a substantial change in the capital structure of the company, potentially due to a large increase in debt or a decrease in equity. This change could indicate a shift in the financial risk profile of the company.

Overall, the data indicates that Ingevity Corp has maintained a very conservative approach towards debt financing, with a strong emphasis on equity. The substantial increase in the financial leverage ratio in 2024 warrants further investigation to understand the underlying reasons for the change and its implications for the company's solvency and financial stability.

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Coverage ratios

Interest coverage ratio is an important financial metric that indicates a company's ability to meet its interest obligations on outstanding debt. Ingevity Corp's interest coverage has shown some fluctuations over the past few years.

As of December 31, 2020, the interest coverage ratio was 5.99, suggesting that the company generated nearly 6 times the earnings needed to cover its interest expenses. This indicates a comfortable level of financial health and ability to meet interest payments.

By December 31, 2021, the interest coverage ratio had decreased to 4.15, indicating a slight decline in the company's ability to cover interest expenses with operating income. While the ratio is still above 1, which is considered the minimum threshold for a healthy interest coverage, a further decrease would warrant close monitoring.

In 2022, the interest coverage ratio improved to 5.36, showing a better ability to cover interest payments compared to the previous year. This increase is a positive sign, indicating improved financial performance and stability in meeting debt obligations.

However, by December 31, 2023, the interest coverage ratio dropped significantly to 0.89. This sharp decline raises concerns about the company's ability to generate sufficient earnings to cover interest expenses comfortably. A ratio below 1 indicates that the company may be struggling to meet its interest obligations from operating income alone.

Furthermore, by December 31, 2024, the interest coverage ratio turned negative at -4.48. A negative interest coverage ratio indicates that the company's earnings are insufficient to cover its interest expenses, putting the company at a higher risk of defaulting on its debt obligations.

In summary, Ingevity Corp's interest coverage has shown volatility and a declining trend over the analyzed years, with the ratio reaching alarming levels in 2023 and 2024. It is essential for the company to closely monitor its financial performance and take necessary measures to improve its ability to cover interest payments to avoid financial distress.