Terex Corporation (TEX)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.25 | 0.23 | 0.38 | 0.37 |
| Debt-to-capital ratio | 0.00 | 0.40 | 0.38 | 0.56 | 0.56 |
| Debt-to-equity ratio | 0.00 | 0.65 | 0.60 | 1.27 | 1.25 |
| Financial leverage ratio | 2.16 | 2.64 | 2.58 | 3.29 | 3.43 |
Terex Corp.'s solvency ratios indicate the firm's ability to meet its long-term financial obligations and the extent to which it relies on debt financing. The trend over the five years reflects improvements in the company's leverage position.
The debt-to-assets ratio has shown a decreasing trend from 0.37 in 2019 to 0.17 in 2023, suggesting that Terex Corp. has been able to reduce its reliance on debt to finance its assets, indicating efficient asset utilization and a stronger financial position.
Similarly, the debt-to-capital and debt-to-equity ratios have declined consistently over the years, indicating a decrease in the company's reliance on debt capital relative to its equity. This trend is positive as it signifies a lower financial risk and improved overall financial health.
The financial leverage ratio, which measures the extent of the company's financial leverage, has also decreased steadily from 3.43 in 2019 to 2.16 in 2023. This indicates that Terex Corp. has been able to reduce its financial leverage, which could lead to lower financial risk and increased financial stability.
Overall, the declining trend in Terex Corp.'s solvency ratios suggests that the company has made significant progress in managing its debt levels and improving its solvency position over the years.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 10.18 | 8.46 | 6.19 | 0.87 | 2.05 |
Terex Corp.'s interest coverage ratio has shown a positive trend over the past five years, indicating the company's improving ability to meet its interest payment obligations from its operating profits. The interest coverage ratio has increased from 4.12 in 2019 to 11.43 in 2023, reflecting a significant improvement in the company's financial health.
A higher interest coverage ratio suggests that the company is in a better position to service its debt and indicates lower financial risk. Terex Corp.'s interest coverage ratio exceeding 1 indicates that the company is generating sufficient earnings to cover its interest expenses.
The consistent increase in the interest coverage ratio from 2019 to 2023 signals that Terex Corp. has been effectively managing its debt and increasing profitability over the years. This trend indicates a positive outlook for the company's ability to meet its debt obligations in the future.