Transdigm Group Incorporated (TDG)

Based on the provided data for Transdigm Group Incorporated, the solvency ratios show a consistent trend of a decreasing debt burden over the years.

1. Debt-to-assets ratio: The company has successfully maintained a debt-to-assets ratio of 0.00% for the past five years, indicating that the company has not relied on debt to finance its assets during this period. This signals a strong financial position and lower financial risk.

2. Debt-to-capital ratio: The data does not provide specific figures for the debt-to-capital ratio. However, given the decreasing trend in the debt-to-assets ratio and assuming a stable capital structure, it can be inferred that the debt-to-capital ratio has also been decreasing over the years. A declining debt-to-capital ratio suggests that the company is becoming less reliant on debt financing in relation to its overall capital structure.

3. Debt-to-equity ratio: The data does not provide values for the debt-to-equity ratio. However, considering the consistently low debt levels indicated by the debt-to-assets ratio, it is likely that the debt-to-equity ratio remains low or even non-existent. A low or zero debt-to-equity ratio implies that the company is primarily financed by equity, which can enhance financial stability and reduce the risk of financial distress.

4. Financial leverage ratio: Unfortunately, specific figures for the financial leverage ratio are not available in the data provided. However, based on the decreasing trend in the debt-to-assets ratio and the likely decrease in the debt-to-capital ratio, it can be assumed that the financial leverage ratio has been decreasing as well. A declining financial leverage ratio indicates that the company is becoming less leveraged and relies less on debt to finance its operations.

In summary, the solvency ratios suggest that Transdigm Group Incorporated has been effectively managing its debt levels and maintaining a strong financial position with minimal reliance on debt financing in recent years. This conservative approach to leveraging indicates a lower risk profile and stronger financial stability for the company.

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Coverage ratios

Interest coverage ratio is a financial metric used to assess a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing the operating income by the interest expense. A higher ratio indicates a stronger ability to cover interest payments.

In the case of Transdigm Group Incorporated, the interest coverage ratio has shown an upward trend over the past five years, ranging from 1.60 in 2021 to 2.75 in 2024. This indicates an improved ability to meet interest expenses using operating income.

The significant increase from 437.75 in 2020 to 1.60 in 2021 raises a red flag and could be attributed to a specific event or anomaly in the financial statements. However, the subsequent increase in the ratio in the following years suggests a recovery and more stable interest coverage.

Overall, Transdigm Group Incorporated's interest coverage has shown a positive trend, demonstrating a satisfactory ability to cover interest payments with operating income over the years. Investors and stakeholders may find this improvement in interest coverage ratio favorable as it suggests lower financial risk associated with meeting interest obligations.