Shake Shack Inc (SHAK)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| 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 | 3.61 | 3.62 | 3.78 | 3.35 | 2.81 |
Shake Shack Inc has demonstrated a strong solvency position as indicated by its consistently low debt-to-assets, debt-to-capital, and debt-to-equity ratios, all of which were recorded as 0.00 across the financial years from 2020 to 2024. This reflects that the company does not rely heavily on debt to fund its operations or growth.
However, the financial leverage ratio, which provides insight into the company's use of debt in its capital structure, shows an increasing trend from 2.81 in 2020 to 3.61 by the end of 2024. While this ratio is still relatively moderate, the upward trend suggests that Shake Shack Inc has slightly increased its reliance on debt financing over the years.
Overall, the company's solvency ratios indicate a healthy financial position with low debt levels compared to its assets, capital, and equity. However, the increasing financial leverage ratio highlights a potential shift towards utilizing more debt in its financial structure, which may warrant monitoring in the future.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 7.97 | 10.89 | -15.00 | -9.99 | -54.80 |
Shake Shack Inc's interest coverage has shown a significant improvement over the period analyzed. The interest coverage ratio was negative in the years 2020, 2021, and 2022, indicating that the company was not generating enough earnings to cover its interest expenses during those years. However, starting from 2023, the interest coverage ratio turned positive, reaching 10.89 in 2023 and 7.97 in 2024. This positive trend suggests that Shake Shack Inc's earnings have strengthened, enabling the company to cover its interest payments more comfortably in recent years. Despite the improvement, it's important to monitor the interest coverage ratio going forward to ensure the company's ability to meet its debt obligations remains sustainable.