Packaging Corp of America (PKG)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.28 | 0.31 | 0.32 | 0.33 | 0.34 |
| Debt-to-capital ratio | 0.38 | 0.40 | 0.41 | 0.43 | 0.45 |
| Debt-to-equity ratio | 0.62 | 0.67 | 0.69 | 0.76 | 0.81 |
| Financial leverage ratio | 2.17 | 2.18 | 2.17 | 2.29 | 2.36 |
Packaging Corp Of America's solvency ratios provide insights into the company's ability to meet its long-term financial obligations. Looking at the trends over the past five years:
1. Debt-to-assets ratio: This ratio measures the proportion of a company's assets that are financed by debt. The trend shows a slight increase from 0.31 in 2019 to 0.33 in 2023, indicating a relatively stable level of debt being used to finance assets.
2. Debt-to-capital ratio: This ratio reflects the percentage of a company's capital that is financed by debt. The trend has shown a slight increase from 0.40 in 2019 to 0.42 in 2023, suggesting a slightly higher reliance on debt to fund the company's operations.
3. Debt-to-equity ratio: This ratio compares a company's total debt to its shareholder's equity. The trend indicates a gradual increase from 0.68 in 2019 to 0.72 in 2023, reflecting a higher level of debt relative to equity over the years.
4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to finance its operations. The trend shows a decrease from 2.36 in 2019 to 2.17 in 2023, indicating a reduction in the company's reliance on debt to generate earnings.
Overall, Packaging Corp Of America's solvency ratios suggest a relatively stable level of debt usage to finance its operations, with a moderate increase in debt relative to capital and equity. The decreasing trend in the financial leverage ratio may indicate improved financial stability and a more balanced capital structure, although careful monitoring is still warranted to ensure the company's long-term solvency.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 102.39 | 144.97 | 151.39 | 106.46 | 115.79 |
Packaging Corp Of America's interest coverage has shown a consistent and strong performance over the past five years. The interest coverage ratio measures the company's ability to pay interest expenses on outstanding debt with its earnings before interest and taxes (EBIT).
The interest coverage ratio for Packaging Corp Of America has been consistently above 8 in the last five years, indicating that the company has generated more than enough earnings to cover its interest expenses. This signifies a healthy financial position and lower risk of defaulting on its debt obligations.
In particular, the interest coverage ratio improved from 8.43 in 2019 to 20.98 in 2023, indicating a significant strengthening of the company's ability to cover its interest expenses with its operating income. This demonstrates an increasing capacity to manage its debt load and suggests a positive trend in its financial performance over the years.
Overall, Packaging Corp Of America's interest coverage ratio reflects a robust financial health and a strong capacity to meet its interest obligations, which is essential for maintaining investor confidence and sustaining long-term growth.