Gentherm Inc (THRM)

Gentherm Inc's solvency ratios provide insights into the company's ability to meet its long-term financial obligations.

The debt-to-assets ratio has varied over the years, ranging from 0.04 to 0.19, with the latest figure at 0.18 as of Dec 31, 2023. This ratio indicates the proportion of the company's assets financed by debt, with lower values generally considered favorable as they suggest lower financial risk.

The debt-to-capital ratio has remained relatively stable between 0.06 and 0.26, with the most recent figure at 0.26. This ratio shows the extent to which debt contributes to the company's capital structure, with a higher ratio indicating a higher level of leverage.

The debt-to-equity ratio has shown more variability, ranging from 0.06 to 0.35. The latest figure of 0.35 on Dec 31, 2023, suggests that Gentherm Inc relies more on debt financing compared to equity. A higher debt-to-equity ratio can signal higher financial risk and potential difficulties in meeting debt obligations.

The financial leverage ratio has also fluctuated over the years, from 1.43 to 1.91, with a value of 1.91 as of Dec 31, 2023. This ratio reflects the company's reliance on debt to finance its assets and operations, with higher values indicating higher financial leverage.

Overall, Gentherm Inc's solvency ratios indicate a mix of debt and equity financing in its capital structure, with a trend towards higher leverage in recent years. Investors and lenders may closely monitor these ratios to assess the company's ability to manage its debt levels and withstand economic downturns.

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Coverage ratios

Interest coverage measures a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.

Analyzing Gentherm Inc's interest coverage over the past five years reveals a general declining trend in the ratio. In 2023, the interest coverage ratio stood at 6.95, a decrease from 12.86 in 2022 and a significant drop from 43.10 in 2021. This decrease signals a potential weakening in Gentherm's ability to cover its interest payments from its earnings.

Comparing the current interest coverage ratio to historical levels, it is substantially lower than the ratios in both 2021 and 2020, indicating a possible decrease in the company's profitability or an increase in its interest expenses relative to its operating income.

Further investigation into the underlying reasons for the declining interest coverage ratio, such as changes in revenue, costs, or debt levels, would provide valuable insights into Gentherm's financial performance and sustainability.