RXO Inc. (RXO)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | ||||
|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 3.07 | 3.30 | 3.25 | 3.45 | 3.46 | 1.96 |
From the provided solvency ratios for RXO Inc., we can see that the debt-related ratios, including the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio, are consistently shown as 0.00 in the periods mentioned (December 31, 2023, September 30, 2023, and June 30, 2023). This indicates that the company has no debt in relation to its assets, capital, or equity during these periods.
However, when considering the financial leverage ratio, we observe fluctuations over the same periods. The financial leverage ratio measures the extent to which a company relies on debt to finance its operations. RXO Inc.'s financial leverage ratio started at 1.96 on June 30, 2023, then increased to 3.25 on September 30, 2023, and further to 3.46 by December 31, 2023.
The rising trend in the financial leverage ratio suggests an increase in the company's reliance on debt financing, which can sometimes indicate a higher level of risk due to the obligations associated with debt repayments. It is essential for stakeholders to monitor this trend closely to ensure that the company's financial health remains stable and sustainable in the long term.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | |
|---|---|---|---|
| Interest coverage | 1.62 | 1.14 | 1.00 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates that the company is more capable of meeting its interest obligations.
In the case of RXO Inc., the interest coverage ratio has improved over the last three quarters, increasing from 1.00 in June 2023 to 1.14 in September 2023, and further to 1.62 by the end of December 2023. This trend suggests that RXO Inc. has been more effective in generating operating income relative to its interest expenses, demonstrating a positive sign of financial health.
While the current interest coverage ratio of 1.62 is an improvement, it may still be considered relatively low, indicating that RXO Inc. might be cutting it close in meeting its interest obligations. It would be prudent for the company to continue monitoring and improving this ratio to ensure its long-term financial stability and ability to handle debt obligations.