Stanley Black & Decker Inc (SWK)

The solvency ratios of Stanley Black & Decker Inc indicate the firm's ability to meet its long-term financial obligations and manage its debt levels effectively.

The Debt-to-assets ratio has shown an increasing trend over the past five years, reaching 0.26 in 2023. This suggests that 26% of the company's total assets are financed by debt. The increasing trend may indicate a higher reliance on debt to fund its operations and growth.

The Debt-to-capital ratio has also been on the rise, reaching 0.40 in 2023. This ratio indicates that 40% of the company's capital structure is composed of debt. A higher debt-to-capital ratio signifies a greater financial risk due to increased debt obligations.

The Debt-to-equity ratio has increased steadily over the years, reaching 0.67 in 2023. This ratio indicates that 67% of the company's equity is financed by debt. A higher debt-to-equity ratio may suggest that the company is highly leveraged and reliant on debt financing.

The Financial leverage ratio reflects the company's total assets in relation to its equity, showing an increasing trend from 2.13 in 2020 to 2.61 in 2023. This suggests that the company is increasingly relying on debt to finance its assets, which could potentially increase the financial risk associated with its operations.

Overall, the increasing trends in these solvency ratios for Stanley Black & Decker Inc indicate a higher level of leverage and potential risk in its capital structure. It is important for the company to carefully manage its debt levels to ensure long-term financial stability and sustainability.

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Coverage ratios

The interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. A higher ratio indicates a better ability to meet interest obligations.

Stanley Black & Decker Inc's interest coverage has fluctuated over the past five years. In 2023, the interest coverage ratio was notably low at 0.28, indicating a significant decline in the company's ability to cover its interest expenses with its operating income. This could be a cause for concern as it suggests a potential strain on the company's financial health and ability to service its debt.

In contrast, the interest coverage was much healthier in 2021 and 2022, with ratios of 10.41 and 3.75 respectively, demonstrating a strong ability to meet interest payments during those years. The ratio in 2020 was also respectable at 6.71, indicating a solid ability to cover interest expenses.

However, the interest coverage ratio in 2019 was slightly lower at 4.84 compared to 2021 and 2022, but still indicated a reasonable ability to pay interest obligations.

Overall, the declining trend in interest coverage from 2022 to 2023 raises a red flag and requires further investigation into the company's financial stability and debt servicing capabilities.