O’Reilly Automotive Inc (ORLY)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.40 | 0.35 | 0.33 | 0.36 | 0.36 |
| Debt-to-capital ratio | 1.45 | 1.32 | 1.02 | 0.97 | 0.91 |
| Debt-to-equity ratio | — | — | — | 29.40 | 9.79 |
| Financial leverage ratio | — | — | — | 82.68 | 26.97 |
The solvency ratios of O`Reilly Automotive, Inc. reflect the company's ability to meet its long-term financial obligations and manage its debt levels.
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. O`Reilly Automotive's debt-to-assets ratio has gradually increased over the past five years, from 0.33 in 2021 to 0.40 in 2023. This suggests a higher reliance on debt to fund its assets.
2. Debt-to-capital ratio: This ratio indicates the percentage of the company's capital structure represented by debt. O`Reilly Automotive's debt-to-capital ratio has also shown an upward trend, increasing from 0.91 in 2019 to 1.45 in 2023. The higher ratio implies a greater reliance on debt financing relative to equity.
3. Debt-to-equity ratio: Although data is missing for the earlier years, the available information shows a significant spike in the debt-to-equity ratio from 9.79 in 2019 to 29.40 in 2020. This indicates a substantial increase in the amount of debt relative to equity financing in 2020.
4. Financial leverage ratio: This ratio compares the company's total assets to its equity, measuring the extent to which assets are financed by equity. O`Reilly Automotive's financial leverage ratio increased significantly from 26.97 in 2019 to 82.68 in 2020. This suggests a higher level of financial risk due to increased leverage.
Overall, the solvency ratios of O`Reilly Automotive, Inc. indicate a general trend of increasing leverage and reliance on debt financing in recent years. It is essential for the company to carefully manage its debt levels to maintain a healthy financial position and ensure long-term sustainability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 15.26 | 18.10 | 19.22 | 14.12 | 12.56 |
O`Reilly Automotive, Inc.'s interest coverage ratio has shown a generally positive trend over the past five years, indicating the company's ability to comfortably meet its interest obligations with its earnings before interest and taxes (EBIT). The interest coverage ratio for the latest year ending December 31, 2023, was 16.19, slightly lower than the previous year but still at a healthy level.
The company's interest coverage ratio was notably highest in December 31, 2021, at 20.43, reflecting a strong ability to cover interest payments. This indicates that O`Reilly Automotive, Inc. generated earnings more than 20 times its interest expenses during that year.
Overall, the consistently high interest coverage ratios demonstrate the company's solid financial position and its capacity to manage its debt obligations effectively. Investors and creditors are likely to view O`Reilly Automotive, Inc. as a financially stable entity with a good ability to service its debt.