Quanex Building Products (NX)

Quanex Building Products Corp's solvency ratios paint a picture of the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing. Let's analyze the solvency ratios for the last five years:

Debt-to-assets ratio:
- The debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. Quanex Building Products Corp's debt-to-assets ratio has been relatively low and stable over the past five years, ranging from 0.04 to 0.08. This indicates that a small portion of the company's total assets is funded by debt, reflecting a conservative approach to leverage.

Debt-to-capital ratio:
- The debt-to-capital ratio assesses the proportion of a company's capital that is financed by debt. Quanex Building Products Corp's debt-to-capital ratio has also been low and consistent, ranging from 0.06 to 0.11 over the last five years. This suggests that a minimal portion of the company's capital structure is comprised of debt, indicating a prudent approach to capital structure management.

Debt-to-equity ratio:
- The debt-to-equity ratio measures the extent to which a company's operations are financed by debt relative to shareholders' equity. Quanex Building Products Corp's debt-to-equity ratio has remained low and stable, fluctuating between 0.07 and 0.13. This indicates that the company relies more on equity financing than debt, demonstrating a lower risk of financial distress.

Financial leverage ratio:
- The financial leverage ratio compares a company's total assets to its equity. Quanex Building Products Corp's financial leverage ratio has exhibited a declining trend over the past five years, indicating an improvement in the company's ability to generate profit from its equity. The ratio decreased from 1.95 in 2019 to 1.52 in 2023.

Overall, Quanex Building Products Corp's solvency ratios reflect a conservative and stable financial structure with a relatively low reliance on debt financing. The company has demonstrated a prudent approach to managing its long-term financial obligations and maintaining a healthy balance between debt and equity in its capital structure.

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Coverage ratios

Quanex Building Products Corp's interest coverage ratio measures its ability to meet interest obligations with its earnings. The trend of the interest coverage ratio over the past five years indicates the company's ability to pay interest expenses from its operating income.

In 2019, the interest coverage ratio was 5.07, indicating that the company's operating income was able to cover its interest expenses 5.07 times over. Over the next four years, the interest coverage ratio improved significantly. It reached 10.71 in 2020, showing a substantial increase in the company's ability to cover interest payments.

The trend continued with a substantial increase to 32.44 in 2021, indicating a substantial improvement in the company's ability to cover interest costs from its operating income. In 2022, the interest coverage ratio experienced a notable surge to 43.81, reflecting a further improvement in the company's ability to service its interest payments.

In the most recent period, the interest coverage ratio continued to strengthen, reaching 14.03. Although lower than the previous year, the ratio remains at a level that indicates the company has ample earnings to cover its interest expenses.

Overall, Quanex Building Products Corp's interest coverage ratio has shown a positive trend over the five-year period, reflecting an improving ability to meet its interest obligations through its operating income. This trend suggests that the company has become more financially stable and has a better ability to service its debt.