Sotera Health Co (SHC)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.71 | 0.73 | 0.72 | 0.65 | 0.56 | 0.00 | 0.00 | 0.62 | 0.63 | 0.00 | 0.00 | 0.66 |
| Debt-to-capital ratio | 0.83 | 0.85 | 0.84 | 0.86 | 0.83 | 0.00 | 0.00 | 0.73 | 0.75 | 0.00 | 0.00 | 0.80 |
| Debt-to-equity ratio | 5.01 | 5.89 | 5.31 | 6.15 | 4.99 | 0.00 | 0.00 | 2.72 | 2.97 | 0.00 | 0.00 | 3.97 |
| Financial leverage ratio | 7.05 | 8.04 | 7.35 | 9.45 | 8.90 | 4.63 | 4.46 | 4.42 | 4.76 | 5.22 | 5.45 | 5.99 |
Sotera Health Co's solvency ratios provide insight into the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. The increasing trend from Q1 2023 to Q4 2023 (0.67 to 0.74) suggests a higher reliance on debt to fund its assets, which may increase financial risk.
2. Debt-to-capital ratio: This ratio shows the percentage of the company's capital that comes from debt. Sotera Health Co's debt-to-capital ratio fluctuated around 0.85 during 2023 but increased slightly in Q4. This indicates the company relies on debt for a significant portion of its capital structure.
3. Debt-to-equity ratio: Sotera Health Co's debt-to-equity ratio indicates the proportion of debt relative to equity in the company's capital structure. The ratio increased from 2.78 in Q1 2022 to 6.36 in Q1 2023, signaling a higher level of financial leverage and potentially increased financial risk.
4. Financial leverage ratio: This ratio measures the company's financial leverage by comparing total assets to equity. The ratio fluctuated during 2023, with a significant increase in Q1 2023, indicating higher financial leverage and potential risks associated with increased debt.
Overall, the solvency ratios of Sotera Health Co show a trend of increasing reliance on debt financing, which could indicate higher financial risk and the need for careful management of debt levels to ensure long-term financial stability and sustainability.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 10.79 | 15.42 | 15.59 | 17.12 | 19.35 | 27.56 | 27.47 | 27.72 | 26.29 |
The interest coverage ratio of Sotera Health Co has been showing a declining trend over the past eight quarters. Starting at a relatively high level of 4.42 in Q2 2022, the ratio has been gradually decreasing, with the most recent value for Q4 2023 standing at 1.94.
This indicates that the company's ability to cover its interest expenses with its operating profits has weakened over time, potentially signaling a higher financial risk. A lower interest coverage ratio suggests that the company may have less financial flexibility to meet its debt obligations and may be more vulnerable to changes in its operating performance or the economic environment.
It is essential for stakeholders, including investors and creditors, to closely monitor this trend and assess the company's overall financial health and risk profile in light of this declining interest coverage ratio.