Simpson Manufacturing Company Inc (SSD)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.14 | 0.15 | 0.17 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.18 | 0.20 | 0.23 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.21 | 0.24 | 0.31 | 0.00 | 0.00 |
| Financial leverage ratio | 1.52 | 1.61 | 1.77 | 1.25 | 1.26 |
Simpson Manufacturing Company Inc's solvency ratios provide insights into the company's ability to meet its long-term financial obligations and manage its debt levels.
The Debt-to-assets ratio remained relatively low and stable over the five-year period, starting at 0.00 in 2020 and slightly increasing to 0.17 in 2022 but then decreasing to 0.14 by the end of 2024. This indicates that the company has been able to finance its assets primarily through equity rather than debt.
The Debt-to-capital ratio, which measures the proportion of debt in the capital structure, showed a similar trend to the Debt-to-assets ratio. It remained at 0.00 in 2020 and 2021, then increased to 0.23 in 2022 before decreasing to 0.18 in 2024. This suggests that the company has maintained a balanced mix of debt and equity financing.
The Debt-to-equity ratio, reflecting the level of debt relative to equity, also followed a downward trend over the period, starting at 0.00 in 2020 and decreasing to 0.21 by the end of 2024. A declining Debt-to-equity ratio is generally considered a positive sign as it indicates a lower reliance on debt financing compared to equity.
The Financial leverage ratio, which indicates the extent to which the company is using debt to finance its assets, increased from 1.26 in 2020 to 1.77 in 2022 before declining to 1.52 by the end of 2024. This suggests that while the company took on more debt in 2022, it reduced its leverage ratio in the following years, which can be seen as a positive sign for its solvency.
Overall, Simpson Manufacturing Company Inc's solvency ratios demonstrate prudent financial management with a conservative approach towards debt, gradually reducing its leverage and maintaining a healthy balance between debt and equity in its capital structure.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 192.12 | 107.23 | 56.82 | 422.82 | 110.27 |
The interest coverage ratio is a measure of a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a stronger ability to meet interest payments.
Analyzing Simpson Manufacturing Company Inc's interest coverage ratio over the past five years, we observe the following trends:
- As of December 31, 2020, the interest coverage ratio was 110.27, indicating that the company generated 110.27 times earnings before interest and taxes (EBIT) to cover its interest expense.
- By December 31, 2021, the interest coverage ratio had significantly improved to 422.82, reflecting a substantial increase in the company's ability to cover its interest payments.
- However, there was a decline in the interest coverage ratio to 56.82 by December 31, 2022, indicating a decrease in the company's ability to meet its interest obligations.
- The interest coverage ratio improved to 107.23 by December 31, 2023, suggesting a recovery in the company's ability to cover its interest expenses.
- As of December 31, 2024, the interest coverage ratio stood at 192.12, indicating a strong ability to cover interest expenses compared to the previous year.
Overall, Simpson Manufacturing Company Inc's interest coverage ratio has shown fluctuations over the years, with a notable improvement in 2021 and some volatility in the following years. It is essential for the company to maintain a healthy interest coverage ratio to demonstrate its financial stability and ability to meet debt obligations.