Somnigroup International Inc. (SGI)

The solvency ratios of Somnigroup International Inc. provide insight into the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio:
- In 2019, the company had a debt-to-assets ratio of 0.49, indicating that 49% of its assets were financed by debt.
- Subsequently, from 2020 onwards, the company managed to reduce its debt levels to zero, showing a significant improvement in its solvency position.

2. Debt-to-capital ratio:
- In 2019, the debt-to-capital ratio stood at 0.81, meaning 81% of the company's capital was funded by debt.
- Similar to the debt-to-assets ratio, the company was able to eliminate its debt relative to capital by 2020.

3. Debt-to-equity ratio:
- The debt-to-equity ratio in 2019 was 4.18, reflecting a higher level of financial leverage with debt accounting for 4.18 times the equity.
- By 2020 and subsequent years, the company effectively eradicated its debt relative to equity.

4. Financial leverage ratio:
- The financial leverage ratio was 8.52 in 2019, indicating a higher level of financial risk due to higher debt levels compared to equity.
- Although there is no data available for 2022, the trend shows a substantial reduction in financial leverage by 2020 and 2023, signifying an enhanced ability to withstand financial challenges.

Overall, the solvency ratios demonstrate a positive trajectory for Somnigroup International Inc., showcasing prudent financial management by reducing debt levels and enhancing its solvency position over the years.

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Coverage ratios

Interest coverage is a financial ratio that assesses a company's ability to meet its interest obligations based on its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates a stronger ability to cover interest expenses.

For Somnigroup International Inc., the interest coverage ratio has fluctuated over the past five years. In December 2019, the interest coverage ratio was 4.08, indicating that the company generated earnings 4.08 times greater than its interest expense.

By December 2021, the interest coverage ratio improved significantly to 13.41, demonstrating a notable enhancement in the company's ability to cover its interest payments comfortably. However, in December 2022, the ratio decreased to 6.58, suggesting a slight decline in the company's ability to cover interest expenses.

The most recent data for December 2023 shows an interest coverage ratio of 4.63, which is lower compared to the previous year but still above the benchmark value of 1. This indicates that Somnigroup International Inc. is still capable of meeting its interest obligations, although not as comfortably as in 2021.

Overall, the trend in Somnigroup International Inc.'s interest coverage ratio indicates a mix of fluctuations with periods of strength and slight weakness. It is essential for the company to closely monitor its interest coverage ratio to ensure it maintains a healthy financial position and can comfortably fulfill its debt obligations.