Stepan Company (SCL)

Solvency ratios provide insights into a company's ability to meet its long-term obligations. Looking at the solvency ratios of Stepan Co. over the past five years, we observe the following trends:

1. Debt-to-assets ratio: This ratio has shown an increasing trend from 2019 to 2023, indicating that Stepan Co. has been using more debt to finance its assets over the years. In 2023, the ratio stands at 0.28, suggesting that 28% of the company's assets are funded by debt.

2. Debt-to-capital ratio: Similar to the debt-to-assets ratio, the debt-to-capital ratio has been increasing steadily from 2019 to 2023. In 2023, the ratio is at 0.35, meaning that 35% of Stepan Co.'s capital structure is composed of debt.

3. Debt-to-equity ratio: The debt-to-equity ratio has also been on the rise over the past five years, reaching 0.54 in 2023. This indicates that the company's reliance on debt funding in relation to equity has been increasing, with 54% of the company's equity being financed by debt.

4. Financial leverage ratio: The financial leverage ratio measures the extent to which the company is using debt to finance its assets. The ratio has fluctuated slightly over the years but remains above 1, indicating that Stepan Co. is employing financial leverage to support its operations.

Overall, the increasing trend in Stepan Co.'s solvency ratios suggests a growing reliance on debt financing to support the company's operations and investment activities. It is important for stakeholders to monitor these ratios closely to assess the company's ability to manage its debt levels and meet its financial obligations in the long run.

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Coverage ratios

The interest coverage ratio for Stepan Co. has shown a decreasing trend over the past five years. In 2023, the interest coverage ratio was 6.36, which indicates a moderate ability to cover interest expenses with operating income. This was a significant decrease from the previous year, where the ratio was substantially higher at 20.31.

The declining trend in the interest coverage ratio suggests that Stepan Co. may be facing challenges in generating sufficient operating income to cover its interest expenses. It is important for the company to closely monitor its interest coverage ratio and take necessary measures to improve its financial performance and ensure its ability to meet interest obligations in the future.