Steel Dynamics Inc (STLD)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.18 | 0.20 | 0.21 | 0.21 | 0.21 | 0.21 | 0.22 | 0.23 | 0.24 | 0.26 | 0.28 | 0.30 | 0.33 | 0.31 | 0.31 | 0.32 | 0.32 | 0.30 | 0.30 | 0.30 |
| Debt-to-capital ratio | 0.23 | 0.25 | 0.26 | 0.27 | 0.27 | 0.27 | 0.28 | 0.30 | 0.32 | 0.35 | 0.38 | 0.39 | 0.41 | 0.39 | 0.39 | 0.39 | 0.39 | 0.37 | 0.37 | 0.37 |
| Debt-to-equity ratio | 0.29 | 0.34 | 0.35 | 0.36 | 0.37 | 0.38 | 0.40 | 0.43 | 0.48 | 0.54 | 0.60 | 0.64 | 0.69 | 0.63 | 0.64 | 0.64 | 0.65 | 0.58 | 0.58 | 0.59 |
| Financial leverage ratio | 1.68 | 1.68 | 1.67 | 1.71 | 1.74 | 1.76 | 1.81 | 1.87 | 1.99 | 2.06 | 2.13 | 2.14 | 2.13 | 2.05 | 2.04 | 2.03 | 2.03 | 1.96 | 1.93 | 1.96 |
Steel Dynamics Inc.'s solvency ratios indicate the company's ability to meet its long-term financial obligations using various metrics. The debt-to-assets ratio has remained relatively stable around 0.21 to 0.22 over the past four quarters, indicating that approximately 21% to 22% of the company's assets are financed by debt.
Similarly, the debt-to-capital ratio has also shown stability between 0.26 and 0.27 over the same period, suggesting that around 26% to 27% of the company's capital structure consists of debt. The debt-to-equity ratio has followed a similar trend, staying within the range of 0.35 to 0.38, meaning that debt accounts for around 35% to 38% of the company's equity.
The financial leverage ratio, which reflects the amount of debt compared to equity, has shown a slight increase from 1.68 to 1.71 over the past year. This indicates that the company has been using more debt relative to equity to finance its operations, potentially increasing its financial risk.
Overall, Steel Dynamics Inc. appears to have a conservative approach to leveraging, as evidenced by the consistent and relatively low solvency ratios. However, the increasing financial leverage ratio suggests a gradual shift towards more debt financing, which could impact the company's financial stability in the long run.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 42.87 | 40.72 | 42.64 | 45.89 | 55.46 | 71.82 | 86.66 | 91.47 | 75.18 | 48.11 | 27.54 | 13.88 | 8.93 | 7.20 | 7.06 | 7.81 | 7.76 | 9.26 | 11.64 | 13.44 |
Interest coverage is a key financial ratio that indicates a company's ability to pay its interest expenses on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the total interest payable. In the case of Steel Dynamics Inc., the interest coverage ratios for the last eight quarters have been consistently above 1, which is a positive sign indicating that the company has been generating more than enough operating income to cover its interest expenses.
The trend in Steel Dynamics Inc.'s interest coverage ratio shows a gradual decline from Q1 2022 to Q4 2023, dropping from a high of 91.89 to 41.20. Despite this decline, the company's interest coverage ratio remains comfortably above 1 in each quarter, indicating a healthy financial position. This implies that Steel Dynamics Inc. has the capacity to meet its interest obligations without relying heavily on borrowed funds and has sufficient earnings to cover its interest expenses.
The consistently strong interest coverage ratios demonstrate that Steel Dynamics Inc. has a strong operating performance and sufficient profitability to service its debt. However, it is important for investors and stakeholders to monitor the trend and ensure that the company continues to generate enough income to cover its interest payments in the future. Overall, based on the historical data, Steel Dynamics Inc. appears to have a solid financial position in terms of its ability to meet its interest obligations.