Trade Desk Inc (TTD)

The analysis of Trade Desk Inc.'s solvency ratios from December 31, 2020, to December 31, 2024, reveals a consistent profile characterized by negligible or nonexistent debt levels and moderate financial leverage.

The debt-to-assets ratio remains at zero throughout the entire period, indicating that the company does not utilize debt financing relative to its total assets. Similarly, the debt-to-capital ratio also remains at zero, further emphasizing an absence of leverage derived from debt relative to the company's total capital structure. Additionally, the debt-to-equity ratio is consistently zero, suggesting that shareholders' equity is entirely funded without reliance on debt liabilities.

Despite the lack of debt, the financial leverage ratio—defined here as a measure of the company's total assets relative to shareholders' equity—steadily declines from 2.72 in 2020 to 2.07 in 2024. This indicates that the company's assets are approximately 2 to 2.7 times its equity throughout the period, reflecting a stable but moderate level of leverage that is entirely internally financed.

Overall, the data indicates that Trade Desk Inc. maintains a debt-free capital structure with no apparent dependency on borrowed funds. Its solvency position is robust, characterized by zero debt obligations and moderate leverage derived solely from its equity base, which may contribute to resilience against financial distress or insolvency risks.

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Coverage ratios

The interest coverage ratio of Trade Desk Inc. demonstrates a clear declining trend over the observed period from December 31, 2020, through December 31, 2024. At the close of 2020, the company exhibited an exceptionally strong interest coverage ratio of 269.86, indicating that its earnings before interest and taxes (EBIT) were significantly more than sufficient to cover interest expenses, reflecting a robust financial position and low risk of default on interest obligations at that time.

By December 31, 2021, the ratio declined markedly to 41.05, representing a substantial reduction in the company's ability to cover interest expenses from its operating earnings. Although still well above unity, this sharp decrease suggests increased financial leverage or a decline in earnings that warrants closer examination.

The trend continued into December 31, 2022, where the interest coverage further diminished to 8.91. This decline indicates that while the company remains capable of meeting its interest obligations, its cushion has considerably narrowed, raising awareness of potential vulnerabilities if earnings were to deteriorate further.

As of December 31, 2023, the ratio further contracted to 2.93, approaching levels that suggest a more strained capacity to cover interest costs solely from operating earnings. Although still above the generally cautious threshold of 2.0, this indicates a narrowing margin of safety and potentially increased financial stress or high debt levels relative to earnings.

There is no data available for December 31, 2024, implying that the ratio is either indeterminate or that the relevant financial figures are not yet disclosed. The ongoing downward trajectory signifies that the company's relative ability to comfortably service its interest obligations has markedly diminished over the analyzed period, highlighting a trend of increasing leverage or declining profitability that warrants ongoing monitoring.