NVR Inc (NVR)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.51 | 1.61 | 1.94 | 1.86 | 1.63 |
NVR Inc.'s solvency ratios indicate a consistent trend of declining leverage and improving solvency over the past five years.
The debt-to-assets ratio has decreased from 0.26 in 2021 to 0.14 in 2023, suggesting that the company has reduced its reliance on debt to finance its assets. This indicates a healthier financial position as a lower ratio signifies lower financial risk.
Similarly, the debt-to-capital ratio has shown a decreasing trend, dropping from 0.34 in 2021 to 0.17 in 2023. This indicates that the company is financing a smaller proportion of its capital with debt, which could reflect improved financial stability and lower risk.
The debt-to-equity ratio has also improved, decreasing from 0.51 in 2021 to 0.21 in 2023. A lower debt-to-equity ratio indicates that the company has less debt in relation to its equity, which is a positive signal for investors and creditors.
Furthermore, the financial leverage ratio has also declined consistently from 1.94 in 2021 to 1.51 in 2023. This shows that the company's reliance on debt to finance its operations has decreased over the years, enhancing its financial flexibility and reducing the risk of financial distress.
Overall, the improving solvency ratios of NVR Inc. over the years indicate a strengthening financial position and reduced financial risk, which could enhance the company's ability to weather economic downturns and pursue growth opportunities.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 70.52 | 58.01 | 30.94 | 27.38 | 41.42 |
Interest coverage measures a company's ability to meet its interest payments on outstanding debt with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.
Analyzing the trend of NVR Inc.'s interest coverage ratio over the past five years, it is evident that the ratio has been volatile. In 2019, the interest coverage was notably low at 43.15, suggesting that the company's earnings were barely sufficient to cover its interest expenses. However, there was a significant improvement in 2020, with the interest coverage ratio increasing to 763.40, reflecting a drastic enhancement in the company's ability to cover its interest payments.
The trend continued to show improvement in 2021 and 2022, with interest coverage ratios of 1,003.14 and 1,629.03, respectively. These higher ratios indicate a substantial increase in NVR Inc.'s ability to service its debt through earnings.
Notably, in 2023, the interest coverage ratio surged to 72.75. While this is a substantial decrease from the previous year, the ratio remains at a relatively high level, signifying that the company still possesses a strong capacity to cover its interest obligations.
Overall, despite the variability in NVR Inc.'s interest coverage ratio over the past five years, the recent data suggests that the company has made significant improvements in its ability to meet its interest payments with operating earnings.