Solventum Corp. (SOLV)
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 | — |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | — |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | — |
| Financial leverage ratio | 4.89 | 4.22 | 1.16 | 1.17 | — |
The solvency ratios of Solventum Corp. indicate a strong financial position in terms of debt management and leverage.
1. Debt-to-assets ratio: This ratio remained at 0.00 from December 31, 2021, to December 31, 2024, signifying that the company does not have any debt relative to its total assets. This suggests that Solventum Corp. has a low financial risk associated with debt obligations.
2. Debt-to-capital ratio: Similar to the debt-to-assets ratio, the debt-to-capital ratio also stood at 0.00 across the same period. This indicates that the company's capital structure is not reliant on debt financing, highlighting a conservative approach to managing financial leverage.
3. Debt-to-equity ratio: The debt-to-equity ratio remained at 0.00 from December 31, 2021, to December 31, 2024, showing that Solventum Corp. has no debt relative to its equity. This implies that the company is not highly leveraged and is less vulnerable to financial distress caused by debt repayment obligations.
4. Financial leverage ratio: The financial leverage ratio increased from 1.17 on December 31, 2021, to 4.89 on December 31, 2024. This substantial increase indicates a significant rise in the company's reliance on debt to finance its operations and investments. While a higher leverage ratio can magnify returns, it also amplifies risks associated with debt repayment and financial stability.
In conclusion, Solventum Corp. maintains a strong solvency position as reflected in its low debt ratios and relatively stable financial leverage. However, the notable increase in the financial leverage ratio over the years indicates a shift towards greater debt utilization, necessitating careful monitoring of the company's debt management strategies to sustain its solvency in the long term.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 0.00 | — | — | — | — |
The interest coverage ratio for Solventum Corp. indicates a significant concern as it has been consistently reported as "—", which implies that the company did not generate any operating income to cover its interest expenses in the years leading up to December 31, 2024. This situation raises red flags regarding the company's ability to meet its interest obligations and suggests a potential risk of default. It is crucial for Solventum Corp. to improve its profitability and operational performance to ensure a sustainable financial position and avoid financial distress in the future.