Simpson Manufacturing Company Inc (SSD)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.15 | 0.17 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.20 | 0.23 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.24 | 0.31 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.61 | 1.77 | 1.25 | 1.26 | 1.23 |
Simpson Manufacturing Co., Inc.'s solvency ratios exhibit a consistent and positive trend over the past five years. The debt-to-assets ratio has decreased from 0.23 in 2022 to 0.18 in 2023, indicating that the company's reliance on debt to finance its assets has been reduced. Similarly, the debt-to-capital and debt-to-equity ratios have also shown a decline, reflecting a lower level of debt relative to the company’s capital and equity, respectively.
The financial leverage ratio, which measures the extent to which the company uses debt to finance its operations, decreased from 1.77 in 2022 to 1.61 in 2023. This suggests that Simpson Manufacturing Co., Inc. has become less leveraged and more solvent over the years.
Overall, the company’s solvency ratios demonstrate a favorable trend, indicating that Simpson Manufacturing Co., Inc. has been successful in managing its debt levels and improving its financial stability. This trend may be viewed positively by creditors and investors, as it suggests a healthier financial position and reduced financial risk for the company.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 107.23 | 56.82 | 422.82 | 110.27 | 88.95 |
The interest coverage ratio for Simpson Manufacturing Co., Inc. has shown a declining trend over the past five years, from 125.26 in 2020 to 62.56 in 2022. This indicates that the company's ability to cover its interest expenses with its operating income has weakened. The substantial decrease in the interest coverage ratio in 2022 compared to the previous years raises concerns about the company's financial health and ability to meet its debt obligations comfortably.
A high interest coverage ratio is generally considered favorable as it indicates that the company is generating ample operating income to easily cover its interest expenses. On the other hand, a declining interest coverage ratio may suggest that the company's profitability is decreasing relative to its debt obligations.
Simpson Manufacturing Co., Inc. should carefully monitor this trend and take proactive measures to improve its interest coverage ratio to ensure its financial stability and ability to meet its debt payments in the future.