Steel Dynamics Inc (STLD)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.18 | 0.21 | 0.24 | 0.33 | 0.32 |
| Debt-to-capital ratio | 0.23 | 0.27 | 0.32 | 0.41 | 0.39 |
| Debt-to-equity ratio | 0.29 | 0.37 | 0.48 | 0.69 | 0.65 |
| Financial leverage ratio | 1.68 | 1.74 | 1.99 | 2.13 | 2.03 |
The solvency ratios of Steel Dynamics Inc. provide insights into the company's ability to meet its financial obligations and the extent of its reliance on debt.
The debt-to-assets ratio has shown a declining trend from 0.33 in 2019 to 0.21 in 2023, indicating that the company has reduced its debt relative to its total assets over the years. This is a positive sign as it suggests a lower financial risk and a stronger asset base.
Similarly, the debt-to-capital ratio has decreased from 0.40 in 2019 to 0.26 in 2023, reflecting a lower dependency on debt to fund its operations compared to its total capital. This improvement indicates a more sustainable capital structure and reduced financial risk for the company.
The debt-to-equity ratio has also decreased significantly from 0.67 in 2019 to 0.35 in 2023, signaling a decreased reliance on debt financing in relation to shareholder equity. This indicates an improved financial stability and a stronger equity base for the company.
Lastly, the financial leverage ratio has shown a consistent downward trend from 2.03 in 2019 to 1.68 in 2023, indicating a decreasing level of financial leverage and a lower dependence on debt to finance its operations. This trend suggests a more conservative approach to capital structure management by the company.
Overall, the decreasing trend in all solvency ratios of Steel Dynamics Inc. reflects a strengthening financial position, lower financial risk, and improved ability to meet its financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 42.87 | 55.63 | 75.18 | 8.93 | 7.76 |
Steel Dynamics Inc.'s interest coverage ratio has exhibited significant fluctuations over the past five years. The interest coverage ratio measures the company's ability to meet its interest payments on outstanding debt, and a higher ratio indicates a stronger ability to cover interest expenses.
In 2023, the interest coverage ratio of 41.20 reflects a sufficient capacity to cover interest payments. This ratio has decreased from the previous year, which indicates a reduced ability to cover interest expenses compared to 2022.
In 2022, the interest coverage ratio was 55.63, which was a positive sign of the company's ability to meet its interest obligations. This ratio showed improvement compared to the previous year, indicating enhanced financial stability.
The interest coverage ratio of 75.18 in 2021 demonstrates a robust ability to cover interest payments, suggesting a solid financial position. This ratio increased significantly from 2020, showcasing improved profitability and cash flow generation.
In 2020, the interest coverage ratio was 9.13, indicating a lower ability to cover interest expenses compared to the previous year. While the company could still cover its interest payments, the decrease in ratio raises some concerns about its financial health.
In 2019, the interest coverage ratio was 7.76, showing a relatively weak ability to cover interest payments. This ratio was slightly lower than in 2020, indicating a slight deterioration in the company's financial position.
Overall, Steel Dynamics Inc.'s interest coverage has shown variability over the years, with fluctuations indicating changes in the company's ability to cover interest expenses. It is essential for the company to maintain a healthy interest coverage ratio to ensure financial stability and meet its debt obligations.