Reliance Steel & Aluminum Co (RS)

Reliance Steel & Aluminum Co.'s solvency ratios indicate the firm's ability to meet its long-term obligations. The data shows a favorable trend over the past five years, demonstrating an improvement in the company's solvency position.

The debt-to-assets ratio has been decreasing steadily from 0.20 in 2019 to 0.11 in 2023. This trend indicates that the company has been reducing its reliance on debt financing in relation to its total assets.

Similarly, the debt-to-capital and debt-to-equity ratios have shown a declining pattern over the years, indicating a strengthening financial structure. The debt-to-capital ratio decreased from 0.23 in 2019 to 0.13 in 2023, while the debt-to-equity ratio declined from 0.31 in 2019 to 0.15 in 2023.

Moreover, the financial leverage ratio, which measures the proportion of debt in the company's capital structure, has also decreased from 1.56 in 2019 to 1.36 in 2023. This indicates that the company is using less debt to finance its operations, which reduces the risk associated with high leverage.

Overall, the downward trend in these solvency ratios reflects a positive picture of Reliance Steel & Aluminum Co.'s financial health, showing that the company has been managing its debt levels effectively and improving its ability to cover its long-term obligations.

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Coverage ratios

Interest coverage measures the company's ability to pay interest expenses on its debt obligations. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payments from its operating income.

Reliance Steel & Aluminum Co.'s interest coverage has shown a positive trend over the past five years, significantly improving from 6.39 in 2019 to 355.00 in 2023. This considerable increase demonstrates a strong ability to cover interest expenses in 2023.

The significant improvement in the interest coverage ratio can be attributed to various factors such as increased operating income, better cost management, and potentially lower debt levels or interest expenses. This positive trend indicates that the company's financial health has strengthened over the years and it is in a better position to meet its interest obligations.

It is important to note that an interest coverage ratio of 355.00 in 2023 is exceptionally high, showcasing a robust financial position and a low risk of default on interest payments. Investors and creditors may view this as a positive signal of the company's creditworthiness and financial stability.

Overall, the upward trend in Reliance Steel & Aluminum Co.'s interest coverage ratio reflects an improved ability to service its debt obligations through operating income, highlighting a positive financial performance and enhanced solvency.