Trane Technologies plc (TT)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.21 | 0.21 | 0.25 | 0.25 | 0.24 |
| Debt-to-capital ratio | 0.36 | 0.38 | 0.42 | 0.41 | 0.40 |
| Debt-to-equity ratio | 0.57 | 0.62 | 0.72 | 0.70 | 0.68 |
| Financial leverage ratio | 2.77 | 2.97 | 2.89 | 2.83 | 2.82 |
Trane Technologies plc has demonstrated a consistent improvement in its solvency ratios over the past five years, indicating a strengthening financial position in terms of its debt obligations relative to its assets, capital, and equity.
The debt-to-assets ratio has decreased gradually from 0.29 in 2020 to 0.25 in 2023, reflecting a reduction in the proportion of assets financed by debt. This trend suggests that the company has been effectively managing its debt levels in relation to its total assets.
Similarly, the debt-to-capital ratio has declined from 0.45 in 2020 to 0.41 in 2023, indicating a lower reliance on debt to finance its operations compared to its total capital. This decrease implies a more balanced capital structure and a reduced financial risk for Trane Technologies plc.
The debt-to-equity ratio has also shown a favorable trend, decreasing from 0.82 in 2020 to 0.68 in 2023. This improvement suggests that the company has been successful in reducing its debt levels in comparison to its equity, enhancing its solvency and decreasing its vulnerability to financial distress.
Moreover, the financial leverage ratio, which measures the company's financial risk by assessing the proportion of assets financed by debt relative to equity, has decreased steadily from 2.83 in 2020 to 2.77 in 2023. This declining trend indicates a lower level of financial leverage and a stronger financial position for Trane Technologies plc.
Overall, the consistent improvement in Trane Technologies plc's solvency ratios over the past five years reflects effective debt management and a strengthened balance sheet, positioning the company well to meet its financial obligations and sustain its operations in the long term.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 11.76 | 10.54 | 8.52 | 5.63 | 7.79 |
Trane Technologies plc's interest coverage ratio has shown a consistent increasing trend over the past five years, reflecting the company's ability to meet its interest obligations from its operating income. The ratio stood at 13.21 for the year ended December 31, 2023, indicating that the company's earnings before interest and taxes were 13.21 times higher than its interest expenses for that period. This demonstrates a strong ability to cover interest payments and suggests a healthy financial position. The improving trend in interest coverage from 2019 to 2023 indicates that Trane Technologies plc's profitability and operational efficiency have been on a positive trajectory, providing a favorable outlook for investors and creditors.