R1 RCM Inc (RCM)

The solvency ratios of R1 RCM Inc. indicate the company's ability to meet its long-term financial obligations and the level of financial risk it carries.

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. R1 RCM Inc. has maintained a relatively stable debt-to-assets ratio ranging from 0.33 to 0.35 in the past few quarters, indicating that around 33% to 35% of its assets are funded by debt.

2. Debt-to-capital ratio: This ratio shows the proportion of the company's capital structure that is attributed to debt. R1 RCM Inc.'s debt-to-capital ratio has been consistently in the range of 0.37 to 0.40, suggesting that approximately 37% to 40% of its capital is derived from debt sources.

3. Debt-to-equity ratio: This ratio indicates the degree of financial leverage in the company's capital structure. The debt-to-equity ratio for R1 RCM Inc. has declined from 2.10 in Q1 2022 to 0.60 in Q4 2023, reflecting a decreasing reliance on debt financing and a stronger equity position.

4. Financial leverage ratio: This ratio compares the total assets of the company to its equity, providing insight into the level of financial risk. The financial leverage ratio for R1 RCM Inc. has shown a decreasing trend from 3.92 in Q1 2022 to 1.80 in Q4 2023, indicating a reduction in the company's financial risk over time.

Overall, R1 RCM Inc. has demonstrated consistent management of its solvency ratios, maintaining a healthy balance between debt and equity financing. The decreasing trend in its debt-related ratios reflects a strengthening financial position and reduced financial risk over the quarters analyzed.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.

Looking at the trend in R1 RCM Inc.'s interest coverage ratio over the past eight quarters, we observe a varying pattern. In Q1 2022, the interest coverage ratio was at its peak with a robust 10.27, signaling a strong ability to cover interest expenses. However, the ratio has since been on a downward trend.

In Q2 and Q3 2022, the interest coverage ratios continued to decline to 9.30 and 5.08, respectively, but remained relatively high compared to the recent quarters. The significant drop in Q3 2022 may raise concerns about the company's ability to generate sufficient earnings to cover interest expenses.

Subsequently, in Q4 2022 and Q1 2023, the interest coverage ratios further decreased to 2.91 and 2.11, respectively. These declining ratios indicate a potential strain on the company's ability to meet its interest obligations comfortably, as the earnings may not be adequate to cover the interest payments.

Moreover, in Q2 and Q3 2023, the interest coverage ratios remained relatively stable but at lower levels compared to previous quarters at 1.66 and 1.85, respectively. The ratios hovering around 2 suggest that the company's ability to cover interest expenses with its earnings has weakened, potentially indicating financial stress.

Overall, the fluctuating trend in R1 RCM Inc.'s interest coverage ratio raises concerns about the company's financial health and its ability to service its debt obligations. Further monitoring of the trend and implementing strategies to improve earnings generation may be necessary to enhance the company's financial stability in the future.