Gentherm Inc (THRM)

Gentherm Inc's solvency ratios show a generally healthy financial position over the analyzed period from 2020 to 2024.

The Debt-to-assets ratio decreased from 0.19 in 2020 to 0.04 in 2021, indicating the company's improved ability to cover its total debt with its assets. However, there was a slight increase to 0.18 by 2024, suggesting a slight increase in the company's debt relative to its assets compared to the previous year.

The Debt-to-capital ratio also exhibited a decreasing trend from 0.24 in 2020 to 0.05 in 2021, highlighting the reduction in the amount of debt relative to the company's capital structure. However, the ratio remained stable at 0.26 from 2022 to 2024, suggesting a consistent level of debt in the company's capital mix.

The Debt-to-equity ratio decreased significantly from 0.32 in 2020 to 0.06 in 2021, showing a substantial decrease in the company's reliance on debt financing compared to equity. However, there was a moderate uptick in the ratio to 0.36 by 2024, indicating a slightly higher proportion of debt in relation to equity.

The Financial leverage ratio increased from 1.74 in 2020 to 2.02 in 2024, reflecting a higher level of financial risk taken on by the company. This increase suggests that the company is taking on more debt relative to its equity over the years, potentially indicating higher financial leverage and risk.

In summary, Gentherm Inc's solvency ratios demonstrate an initial improvement in solvency and debt management, followed by stabilization in debt levels relative to assets, capital, and equity. However, the increasing financial leverage ratio signals a rising level of financial risk towards the later years of the analysis period.

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Coverage ratios

Based on the provided data, Gentherm Inc's interest coverage ratio has shown significant fluctuations over the past five years.

In December 2020, the interest coverage ratio was 19.57, indicating that the company generated operating income nearly 20 times the amount needed to cover its interest expenses. This suggests a strong ability to meet interest obligations using its operating earnings.

By the end of December 2021, Gentherm Inc's interest coverage ratio improved to 41.70, reflecting a further strengthening of its ability to cover interest payments comfortably.

However, there was a substantial spike in the interest coverage ratio by the end of December 2022 to 3,019.19, and an even higher figure of 2,765.68 by December 2023. Such exceptionally high values may be due to significant changes in the company's financial structure, profits, or interest expenses during those periods.

By December 2024, the interest coverage ratio dropped to 6.99. While still indicating that Gentherm Inc is generating sufficient operating income to cover its interest payments, this decline could suggest a possible increase in interest expenses relative to operating income compared to the previous years.

Overall, Gentherm Inc's interest coverage ratio demonstrates the company's historical ability to comfortably meet its interest obligations, with some fluctuations that warrant further investigation into the underlying factors impacting the financial performance.