Timken Company (TKR)

Solvency ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Debt-to-assets ratio 0.27 0.26 0.33 0.34 0.33 0.27 0.32 0.32 0.27 0.28 0.28 0.28 0.28 0.31 0.35 0.36 0.34 0.34 0.35 0.37
Debt-to-capital ratio 0.41 0.39 0.45 0.46 0.46 0.40 0.44 0.43 0.38 0.38 0.38 0.40 0.40 0.43 0.48 0.50 0.47 0.47 0.49 0.52
Debt-to-equity ratio 0.69 0.65 0.81 0.84 0.84 0.67 0.79 0.77 0.61 0.62 0.62 0.65 0.67 0.76 0.92 0.98 0.88 0.89 0.96 1.07
Financial leverage ratio 2.53 2.52 2.47 2.49 2.54 2.52 2.47 2.40 2.25 2.24 2.26 2.35 2.34 2.42 2.60 2.74 2.60 2.62 2.73 2.86

The solvency ratios of Timken Co., as depicted by the debt-to-assets, debt-to-capital, debt-to-equity, and financial leverage ratios, provide insight into the company's ability to meet its financial obligations and leverage levels.

The debt-to-assets ratio measures the proportion of the company's assets financed by debt, with Timken Co. showing a relatively stable trend around 0.34 to 0.37 over the past eight quarters. This indicates that roughly 34% to 37% of the company's assets are funded by debt.

The debt-to-capital ratio signifies the percentage of the company's capital that comes from debt, revealing a consistent range between 0.44 to 0.48 in the same period. This implies that debt constitutes around 44% to 48% of Timken Co.'s capital structure.

The debt-to-equity ratio highlights the proportion of debt relative to equity in the company's capital structure. Timken Co. has exhibited a trend of decreasing leverage over the quarters, with the ratio declining from 0.93 to 0.79. This suggests that the company has been reducing its reliance on debt financing in comparison to equity.

The financial leverage ratio reflects the company's total assets relative to equity, with Timken Co. demonstrating fluctuations around 2.40 to 2.54 over the analyzed quarters. A higher financial leverage ratio indicates higher financial risk due to increased debt financing.

Overall, Timken Co. has shown consistency in its debt-to-assets and debt-to-capital ratios, while actively reducing its debt-to-equity ratio over the quarters. However, the financial leverage ratio has experienced some variability, requiring close monitoring to ensure sustainable financial health and effective management of debt levels.

Coverage ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Interest coverage 5.67 6.66 7.07 7.51 8.26 8.64 9.12 9.28 8.89 8.53 8.46 7.37 6.75 7.04 6.66 7.14 7.38 6.92 7.37 8.20

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt with its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Analyzing Timken Co.'s interest coverage ratio over the past eight quarters, we observe a general trend of decreasing values. The ratio started at 9.19 in Q4 2022 and decreased to 6.93 by Q4 2023. This decline may indicate that Timken Co.'s operating income may have decreased relative to its interest expenses over this period.

Despite the decreasing trend, it is important to note that Timken Co. has maintained a healthy interest coverage ratio above 1 throughout all the quarters, indicating that the company generates enough operating income to comfortably cover its interest expenses. However, the decreasing trend suggests that investors and creditors should continue monitoring the company's ability to service its debt in the future. Further analysis of the company's income statement and overall financial health may provide more insights into the factors driving this trend in the interest coverage ratio.