Sherwin-Williams Co (SHW)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.36 | 0.42 | 0.42 | 0.41 | 0.39 |
| Debt-to-capital ratio | 0.69 | 0.76 | 0.78 | 0.70 | 0.66 |
| Debt-to-equity ratio | 2.25 | 3.09 | 3.52 | 2.29 | 1.95 |
| Financial leverage ratio | 6.18 | 7.28 | 8.48 | 5.65 | 4.97 |
From the solvency ratios provided for Sherwin-Williams Co., we can observe the following trends:
1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets financed by debt. Sherwin-Williams' debt-to-assets ratio has fluctuated between 0.41 and 0.47 over the past five years, implying that roughly 41% to 47% of its assets have been funded by debt.
2. Debt-to-capital ratio: The debt-to-capital ratio measures the percentage of a company's capital that is financed through debt. Sherwin-Williams' debt-to-capital ratio has varied between 0.68 and 0.80 during the same period, showing that around 68% to 80% of its capital has been derived from debt.
3. Debt-to-equity ratio: This ratio compares a company's total debt to its shareholders' equity. Sherwin-Williams' debt-to-equity ratio has shown a broader range, from 2.11 to 3.95, indicating that the company has utilized debt to a higher extent in financing its operations compared to equity.
4. Financial leverage ratio: The financial leverage ratio measures how much a company's assets are funded by debt. Sherwin-Williams' financial leverage ratio has been between 4.97 and 8.48, suggesting that the company has significantly utilized debt to amplify its return on equity.
Overall, the trends in these solvency ratios highlight Sherwin-Williams' consistent reliance on debt as a financing source. Investors and stakeholders may monitor these ratios to assess the company's risk exposure and financial stability, particularly concerning its ability to meet debt obligations and withstand economic downturns.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 8.45 | 7.58 | 7.72 | 8.40 | 6.67 |
The interest coverage ratio for Sherwin-Williams Co. has been relatively stable over the past five years, ranging from 6.94 to 9.21. This ratio indicates the company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio suggests that the company is generating more than enough operating income to cover its interest expenses, which is a positive sign of financial health and stability. The consistent values above 1 indicate that Sherwin-Williams Co. has ample earnings to cover its interest payments comfortably, reducing its risk of financial distress. Overall, the trend in the interest coverage ratio reflects the company's strong ability to service its debt obligations over the years.