Telephone and Data Systems Inc (TDS)

Telephone And Data Systems, Inc. has shown stability and improvement in its solvency ratios over the past five years. The debt-to-assets ratio has gradually increased from 0.22 in 2019 to 0.29 in 2023, indicating that the company's proportion of debt to total assets has also increased during this period. However, the company has maintained a relatively conservative debt structure, with this ratio remaining below 0.30.

The debt-to-capital ratio has followed a similar trend, increasing from 0.33 in 2019 to 0.44 in 2023. This ratio shows the proportion of debt in the company's capital structure and suggests that debt financing has become more significant compared to equity financing over the years. Despite this increase, the company has managed to keep this ratio at a moderate level.

The debt-to-equity ratio has also shown an upward trend, rising from 0.50 in 2019 to 0.79 in 2023. This ratio indicates the amount of debt relative to shareholders' equity and highlights the increasing reliance on debt financing. While this ratio has reached a higher level, it is still below 1, indicating that the company's equity continues to cover a significant portion of its debt.

The financial leverage ratio, which reflects the company's total assets relative to shareholders' equity, has been relatively stable between 2.28 and 2.68 over the past five years. This suggests that the company has maintained a conservative level of leverage, balancing its use of debt and equity to support its operations and investments.

Overall, the solvency ratios of Telephone And Data Systems, Inc. indicate a prudent approach to managing its debt levels, maintaining a healthy balance between debt and equity in its capital structure.

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Coverage ratios

Telephone And Data Systems, Inc.'s interest coverage ratio has been declining over the past five years, indicating a decrease in the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A lower interest coverage ratio may suggest that the company is becoming less capable of servicing its debt obligations, which could raise concerns about its financial health and stability.

The interest coverage ratio of Telephone And Data Systems, Inc. was 1.30 in 2023, down from 1.78 in 2022 and 2.01 in 2021. This declining trend indicates that the company's earnings are becoming less sufficient to cover its interest expenses.

Although the ratio was higher in 2020 and 2019 at 2.75 and 2.17 respectively, the recent decrease raises red flags regarding the company's financial leverage and ability to meet its interest payments. Investors and creditors may view a declining interest coverage ratio as a warning sign and may require additional reassurances or demand higher interest rates to compensate for the increased risk associated with lending to the company.