TransMedics Group Inc (TMDX)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.72 | 0.21 | 0.26 | 0.23 | 0.32 |
| Debt-to-capital ratio | 0.79 | 0.24 | 0.34 | 0.25 | 0.38 |
| Debt-to-equity ratio | 3.69 | 0.31 | 0.52 | 0.33 | 0.62 |
| Financial leverage ratio | 5.15 | 1.48 | 1.99 | 1.46 | 1.93 |
The solvency ratios of TransMedics Group Inc indicate the company's ability to meet its long-term financial obligations and the level of risk associated with its debt financing.
Firstly, the debt-to-assets ratio has been increasing over the past five years, standing at 0.72 in 2023. This suggests that 72% of the company's assets are financed by debt. The rising trend indicates a higher reliance on debt to fund its operations and investments.
Secondly, the debt-to-capital ratio has also shown an upward trend, reaching 0.79 in 2023. This ratio reflects the proportion of capital employed that is financed by debt. The increase may signal an increase in financial risk as debt represents a higher percentage of the company's capital structure.
Thirdly, the debt-to-equity ratio has significantly increased to 3.69 in 2023, indicating a substantial portion of the company's operations are funded through debt in relation to equity. This high ratio implies a higher financial risk and potential vulnerability to economic downturns or interest rate fluctuations.
Lastly, the financial leverage ratio, which measures the extent to which the company relies on debt to finance its assets, has also increased substantially to 5.15 in 2023. This indicates that for every dollar of equity, the company has $5.15 in total assets. This high leverage signifies a significant reliance on debt financing, which may expose the company to heightened financial risk.
In conclusion, the solvency ratios of TransMedics Group Inc have shown a consistent trend of increasing reliance on debt financing over the past five years, indicating a higher level of financial risk and potential vulnerability to adverse economic conditions. It is essential for investors and stakeholders to closely monitor these ratios to assess the company's ability to manage its debt levels and maintain long-term financial stability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -1.48 | -8.44 | -10.18 | -6.21 | -6.71 |
TransMedics Group Inc's interest coverage ratio has been consistently negative over the past five years, indicating that the company's earnings before interest and taxes (EBIT) have not been sufficient to cover its interest expenses. The trend of the interest coverage ratio decreasing from -6.71 in 2019 to -1.48 in 2023 signifies a worsening ability to meet interest obligations.
A negative interest coverage ratio suggests financial distress and implies that the company may have difficulty servicing its debt obligations. Investors and creditors often view a negative interest coverage ratio as a red flag, signaling potential financial instability and heightened default risk.
In the case of TransMedics Group Inc, the consistently negative interest coverage ratio indicates a concerning financial position with inadequate earnings to cover interest expenses. It is crucial for the company to address its financial performance and improve its ability to generate sufficient earnings to meet its interest obligations in the future.