Sotera Health Co (SHC)

Sotera Health Co's solvency ratios provide insights into the company's financial leverage and ability to meet its long-term obligations.

The Debt-to-assets ratio has been increasing over the last five years, reaching 0.74 in 2023. This indicates that 74% of the company's assets are financed by debt. While this ratio has been fluctuating, the recent increase suggests a higher reliance on debt to fund its operations and investments.

The Debt-to-capital ratio has been relatively stable, hovering around 0.80 over the last three years. This ratio shows that around 80% of the company's capital structure is funded by debt and represents a measure of financial risk.

The Debt-to-equity ratio shows a fluctuating trend, with 2023 reporting a ratio of 5.19. This indicates that the company has 5.19 times more debt than equity in its capital structure. This implies a higher financial risk as the company has a significant debt burden compared to its equity.

The Financial leverage ratio has shown variability over the years, ranging from 4.76 to 8.90. In 2023, the ratio stands at 7.05, which indicates that the company has a higher level of financial leverage, suggesting increased financial risk and potential volatility in earnings due to interest payments on debt.

Overall, Sotera Health Co's solvency ratios suggest a moderate to high level of financial leverage and reliance on debt financing. It is important for investors and stakeholders to monitor these ratios to assess the company's ability to manage its debt levels and meet its long-term obligations.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt.

Sotera Health Co's interest coverage has fluctuated over the past five years. In 2023, the interest coverage ratio was 1.94, indicating a decline from the previous year but still showing the company's ability to cover its interest expenses nearly twice over. However, it's important to note that this ratio has decreased compared to the more favorable 3.46 and 3.10 ratios in 2021 and 2022, respectively.

The lowest interest coverage ratio was observed in 2020 at 0.96, which suggests that the company's operating income was just enough to cover its interest expenses. This could indicate a higher financial risk for the company during that period.

Similarly, in 2019, the interest coverage ratio was at 1.20, slightly higher than 2023 but still lower than the ratios in 2021 and 2022.

Overall, while the recent ratio is lower than in the prior years, Sotera Health Co's interest coverage ratios have generally shown some level of stability over the years, with fluctuations observed. Analysts should keep monitoring this ratio to assess the company's debt servicing ability and financial health.