Shake Shack Inc (SHAK)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 3.62 | 3.67 | 3.56 | 2.81 | 3.24 |
Shake Shack Inc's solvency ratios indicate that the company has consistently maintained a low level of debt relative to its assets, capital, and equity over the past five years. The debt-to-assets, debt-to-capital, and debt-to-equity ratios all stand at 0.00 for each year, suggesting that the company operates with minimal reliance on debt financing in relation to its overall financial structure.
However, the financial leverage ratio has fluctuated over the years, indicating changes in the company's use of debt to finance its operations. Despite the fluctuations, the financial leverage ratio remains relatively moderate, with the highest ratio recorded in 2022 and the lowest in 2020. This ratio of 3.62 in 2023 signifies that Shake Shack Inc's financial leverage increased slightly compared to the previous year, highlighting a higher level of debt used to support its assets.
Overall, the solvency ratios reflect a conservative approach to debt management by Shake Shack Inc, with a focus on maintaining a healthy financial position and strong solvency.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 10.47 | -13.76 | -9.07 | -50.66 | 54.49 |
Interest coverage is a significant financial ratio that reflects a company's ability to meet its interest obligations. In the case of Shake Shack Inc, the interest coverage ratio has shown a varying trend over the past five years.
In 2023, the interest coverage ratio improved significantly to 10.47, indicating that the company generated sufficient operating income to cover its interest expenses with some buffer. This is a positive sign as it suggests Shake Shack Inc has better financial health and reduced risk of defaulting on its debt obligations.
The previous years, specifically 2022, 2021, and 2020, showed negative interest coverage ratios, which indicates that Shake Shack Inc was not generating enough operating income to cover its interest expenses during those years. The negative ratios raise concerns about the company's ability to meet its interest obligations solely through operating income.
However, in 2019, Shake Shack Inc had a high interest coverage ratio of 54.49, indicating a strong ability to cover its interest expenses with a substantial margin of safety. This suggests that the company was in a much better financial position in 2019 compared to the subsequent years.
Overall, despite the recent improvement in 2023, Shake Shack Inc's interest coverage ratio has been volatile over the past five years. It is essential for investors and stakeholders to closely monitor this ratio to assess the company's ability to manage its debt and interest obligations effectively.