Parsons Corp (PSN)

To analyze Parsons Corp's solvency ratios based on the provided data, we will look at the trends and relationships between different solvency ratios over the past five years.

1. Debt-to-assets ratio:
The debt-to-assets ratio measures the proportion of a company's assets financed by debt. Parsons Corp's debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.07 to 0.18. A lower debt-to-assets ratio indicates a lower financial risk as it shows a smaller portion of assets are funded by debt.

2. Debt-to-capital ratio:
The debt-to-capital ratio reflects the proportion of a company's capital structure that is funded by debt. Parsons Corp's debt-to-capital ratio has also shown a consistent trend over the past five years, varying between 0.13 and 0.27. A lower debt-to-capital ratio suggests a lower reliance on debt financing.

3. Debt-to-equity ratio:
The debt-to-equity ratio compares a company's total debt to its equity, indicating the extent to which equity can cover company obligations. Parsons Corp's debt-to-equity ratio has fluctuated between 0.15 and 0.36 during the five-year period, reflecting changes in the company's capital structure. A decreasing trend in this ratio may suggest a decreasing reliance on debt for financing.

4. Financial leverage ratio:
The financial leverage ratio measures the relationship between a company's equity and its total assets. Parsons Corp's financial leverage ratio has fluctuated within a narrow range over the past five years, indicating relatively stable leverage levels. A higher financial leverage ratio implies a higher degree of financial risk, as it signifies more debt financing relative to equity.

Overall, Parsons Corp has maintained a conservative approach to debt financing as evidenced by the consistently low to moderate solvency ratios. The stability in these solvency ratios suggests that the company has managed its capital structure effectively to maintain a balanced mix of debt and equity financing.

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Coverage ratios

The interest coverage ratio for Parsons Corp has shown a consistent positive trend over the past five years, indicating the company's ability to meet its interest obligations from its operating income. In 2023, the interest coverage ratio improved to 7.90, reaching its highest level in the period under review. This suggests that Parsons Corp generated almost 8 times the amount of operating income needed to cover its interest expenses in 2023. The company's interest coverage ratio has been steadily increasing since 2019, reflecting improving financial health and a stronger ability to handle debt obligations. Overall, Parsons Corp's interest coverage ratio demonstrates a healthy financial position and a reduced risk of default on its debt obligations.