SolarWinds Corp (SWI)

The solvency ratios of SolarWinds Corp indicate the company's ability to meet its long-term financial obligations and the level of financial risk it carries.

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. SolarWinds Corp has maintained a relatively stable debt-to-assets ratio over the past five years, ranging from 0.33 to 0.39. This suggests that between 33% and 39% of the company's assets are funded by debt.

2. Debt-to-capital ratio: The debt-to-capital ratio reflects the percentage of the company's capital that is financed by debt. SolarWinds Corp's debt-to-capital ratio has fluctuated between 0.38 and 0.47 over the same period. This indicates that debt accounts for 38% to 47% of the company's total capital.

3. Debt-to-equity ratio: The debt-to-equity ratio shows the proportion of the company's financing that comes from debt relative to equity. SolarWinds Corp's debt-to-equity ratio has varied between 0.63 and 0.87 in the past five years. This implies that between 63% and 87% of the company's financing is in the form of debt.

4. Financial leverage ratio: The financial leverage ratio indicates the company's level of debt relative to its equity. SolarWinds Corp's financial leverage ratio has shown a consistent trend, ranging from 1.90 to 2.34 over the past five years. This suggests that the company's financial leverage has increased slightly in recent years.

In summary, SolarWinds Corp has maintained a moderate level of debt in its capital structure, as evidenced by the stability in its debt-to-assets and debt-to-capital ratios. However, the increasing trend in the debt-to-equity ratio and the financial leverage ratio indicate a higher reliance on debt financing, which may increase financial risk and interest expense for the company.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a stronger ability to cover interest payments.

SolarWinds Corp's interest coverage ratio has fluctuated significantly over the past five years. In 2023, the interest coverage ratio improved to 14.03 compared to the previous year, suggesting an increase in the company's ability to cover its interest expenses.

However, in 2022, the interest coverage ratio was negative at -90.50, indicating that the company's operating income was insufficient to cover its interest payments during that period, raising concerns about financial stability.

In 2021, the interest coverage ratio was also negative at -3.61, signifying a continuation of financial challenges in meeting interest obligations.

The interest coverage ratios for 2020 and 2019 were 5.68 and 8.65 respectively, indicating that the company had a reasonable ability to cover interest expenses in those years, although the ratio in 2020 was lower compared to the two previous years.

Overall, SolarWinds Corp's interest coverage ratio has shown volatility, with significant fluctuations over the past five years. Investors and creditors should closely monitor this ratio to assess the company's ability to service its debt obligations in the future.