Trane Technologies plc (TT)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.21 | 0.21 | 0.21 | 0.25 | 0.25 |
| Debt-to-capital ratio | 0.37 | 0.36 | 0.38 | 0.42 | 0.41 |
| Debt-to-equity ratio | 0.58 | 0.57 | 0.62 | 0.72 | 0.70 |
| Financial leverage ratio | 2.70 | 2.77 | 2.97 | 2.89 | 2.83 |
Trane Technologies plc's solvency ratios indicate a stable and strong financial position over the years. The Debt-to-assets ratio has remained around 0.21 to 0.25 from 2022 to 2024, suggesting that the company's assets are mostly financed by equity rather than debt.
Similarly, the Debt-to-capital ratio has shown a slight decline from 0.42 in 2021 to 0.37 in 2024, indicating a decreasing reliance on debt for capital structure. Moreover, the Debt-to-equity ratio has exhibited a decreasing trend from 0.72 in 2021 to 0.58 in 2024, demonstrating an improvement in the proportion of equity financing.
The Financial leverage ratio has fluctuated between 2.70 to 2.97, indicating a moderate level of leveraging in the company's capital structure. Overall, these solvency ratios suggest that Trane Technologies plc maintains a conservative approach towards debt, with a healthy balance between debt and equity financing, ensuring financial stability and sustainability.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 14.40 | 11.76 | 10.54 | 8.52 | 5.63 |
The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. Looking at Trane Technologies plc data, we observe a positive trend in interest coverage over the years. In December 31, 2020, the interest coverage ratio was 5.63, indicating that the company's operating income was able to cover its interest expenses approximately 5.63 times. The ratio improved significantly over the following years, reaching 8.52 in December 31, 2021, 10.54 in December 31, 2022, 11.76 in December 31, 2023, and finally 14.40 in December 31, 2024.
This trend suggests that Trane Technologies plc has been effectively managing its interest obligations and strengthening its financial position over time. The consistent increase in the interest coverage ratio indicates improved profitability or lower interest expenses, or both, which bodes well for the company's financial health and ability to service its debt obligations. A higher interest coverage ratio typically signifies a lower risk of default on debt payments, reflecting positively on the company's creditworthiness and overall financial stability.