Toro Co (TTC)

The solvency ratios of Toro Co indicate the company's ability to meet its long-term financial obligations and manage its debt levels effectively.

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. Toro Co has consistently maintained a relatively low debt-to-assets ratio over the past five years, ranging from 0.24 to 0.28. This implies that the company relies more on equity financing to support its operations and investments.

2. Debt-to-capital ratio: The debt-to-capital ratio reflects the percentage of the company's capital structure that is attributed to debt. Toro Co's debt-to-capital ratio has remained relatively stable around 0.38 to 0.42 during the same period, indicating a moderate level of debt in its capital structure.

3. Debt-to-equity ratio: The debt-to-equity ratio measures the proportion of the company's financing that comes from debt compared to equity. Toro Co's debt-to-equity ratio ranges from 0.59 to 0.73 over the past five years, showing that the company has been gradually reducing its reliance on debt financing in favor of equity.

4. Financial leverage ratio: The financial leverage ratio indicates the extent to which the company utilizes debt to finance its assets. Toro Co's financial leverage ratio has shown some fluctuations but has generally remained within the range of 2.31 to 2.63. This suggests that the company's assets are primarily financed through a combination of debt and equity, with a heavier reliance on equity.

Overall, Toro Co's solvency ratios demonstrate a prudent approach to managing its debt levels and maintaining a healthy balance between debt and equity in its capital structure. The company's consistent control over its debt levels reflects a sound financial position and ability to meet its long-term obligations.

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Coverage ratios

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt using its earnings before interest and taxes (EBIT). A higher ratio indicates that the company has more earnings available to cover its interest obligations.

Looking at Toro Co's interest coverage ratio over the past five years, there is a significant fluctuation in the company's ability to cover its interest expenses. In particular, the ratio has varied from a low of 7.82 in 2023 to a high of 172.03 in 2024.

The sudden spike in the interest coverage ratio to 172.03 in 2024 suggests that the company experienced a substantial increase in its EBIT relative to its interest expenses, indicating a strong capacity to meet its interest obligations. However, the significant drop in the ratio to 7.82 in 2023 raises concerns about the company's ability to cover its interest expenses comfortably.

Overall, while Toro Co's interest coverage ratio has experienced fluctuations over the years, it is crucial for investors and stakeholders to monitor the trend closely to assess the company's financial health and ability to manage its debt obligations effectively.