Sonic Automotive Inc (SAH)

Solvency ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Debt-to-assets ratio	0.30	0.32	0.32	0.32	0.34	0.30	0.29	0.30	0.30	0.18	0.17	0.17	0.17	0.19	0.19	0.21	0.16	0.21	0.21	0.21
Debt-to-capital ratio	0.64	0.65	0.65	0.66	0.65	0.57	0.56	0.57	0.58	0.39	0.40	0.44	0.44	0.46	0.48	0.54	0.40	0.48	0.49	0.51
Debt-to-equity ratio	1.81	1.89	1.86	1.93	1.87	1.30	1.25	1.32	1.40	0.63	0.67	0.77	0.80	0.87	0.91	1.15	0.67	0.94	0.97	1.03
Financial leverage ratio	6.01	5.89	5.80	6.02	5.56	4.36	4.29	4.41	4.62	3.49	3.86	4.47	4.60	4.53	4.83	5.51	4.31	4.56	4.70	4.86

Sonic Automotive, Inc.'s solvency ratios indicate the company's ability to meet its long-term financial obligations and the extent to which it relies on debt to finance its operations. The debt-to-assets ratio has remained relatively stable around 0.67 over the past four quarters, suggesting that approximately 67% of the company's assets are financed through debt. This ratio indicates moderate leverage and suggests that Sonic Automotive's creditors have a significant stake in the company's assets.

The debt-to-capital ratio, which measures the proportion of the company's capital that is funded by debt, has also shown consistency around 0.80 in the same period. This ratio implies that about 80% of Sonic Automotive's capital structure is debt-financed, indicating a relatively high level of leverage.

When looking at the debt-to-equity ratio, which indicates the amount of debt relative to shareholders' equity, it has fluctuated between 3.60 and 4.05 over the past year. This shows that Sonic Automotive has a higher reliance on debt compared to equity in its capital structure. The increasing trend in this ratio suggests a growing proportion of debt in the company's financial structure over time.

Lastly, the financial leverage ratio, which measures the company's total assets in relation to its equity, has been on an upward trajectory from 4.29 in Q1 2022 to 6.01 in Q4 2023. This indicates that Sonic Automotive has increased its reliance on debt to finance its operations and investments, which can potentially amplify returns but also increase financial risk.

Overall, the solvency ratios of Sonic Automotive, Inc. reflect a significant presence of debt in its capital structure, highlighting the importance of closely monitoring the company's ability to service its debt obligations and maintain financial stability in the long term.

Coverage ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Interest coverage	3.06	1.38	1.54	2.31	2.93	6.57	7.34	8.67	9.13	10.97	9.81	7.24	0.69	0.38	-0.20	-0.03	5.15	218.12	1,020.30	—

The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates a stronger ability to cover interest expenses with operating income.

Based on the data provided for Sonic Automotive, Inc., we observe a consistent decline in interest coverage over the past eight quarters. The ratio has decreased from 8.06 in Q1 2022 to 2.77 in Q4 2023. This downward trend may signal potential concerns regarding the company's ability to service its debt obligations using its current level of operating income.

The decreasing trend in the interest coverage ratio could indicate that Sonic Automotive may be facing challenges in generating sufficient earnings to cover its interest expenses. It is essential for investors and stakeholders to closely monitor this trend and assess the company's overall financial health and ability to manage its debt levels effectively.