Scotts Miracle-Gro Company (SMG)

The solvency ratios of Scotts Miracle-Gro Company indicate its ability to meet its long-term financial obligations and the extent to which its capital structure is reliant on debt.

The debt-to-assets ratio has shown an increasing trend over the last five years, reaching 0.76 in 2023. This suggests that a significant portion of the company's assets are financed by debt, which may raise concerns about its solvency and financial flexibility.

Additionally, the debt-to-capital ratio has also increased over the same period, indicating a higher reliance on debt in the company's capital structure. At 1.11 in 2023, this ratio suggests that over 50% of the company's capital is composed of debt financing.

The debt-to-equity ratio indicates the extent to which shareholders' equity can cover the company's debt. In 2022, this ratio was unusually high at 20.11 due to negative equity, which may raise concerns about the company's financial stability. However, in 2023, the ratio was not reported, making it difficult to assess the trend.

Moreover, the financial leverage ratio, which measures the company's total assets in relation to shareholders' equity, has significantly increased over the last five years. This suggests that the company's assets are financed primarily through debt rather than equity, potentially increasing its financial risk.

In conclusion, the solvency ratios of Scotts Miracle-Gro Company indicate an increasing reliance on debt for financing its assets and capital structure. This trend may raise concerns about the company's long-term financial stability and the ability to meet its financial obligations.

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Coverage ratios

The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. A higher ratio indicates a greater capacity to meet interest obligations. Scotts Miracle-Gro Company's interest coverage ratio has shown variability over the past five years. In 2023, the interest coverage decreased to 1.07 from 3.45 in the previous year, reflecting a decline in the company's ability to cover its interest payments. This may raise concerns about the company's financial health and its ability to service its debt. However, it is important to consider the overall financial position and cash flow of the company in conjunction with the interest coverage ratio to gain a comprehensive understanding of its financial viability.