Trade Desk Inc (TTD)

The analysis of Trade Desk Inc.'s solvency ratios, based on the provided data, indicates a consistent pattern of financial stability in terms of leverage and capital structure. Notably, the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio remain at zero across all fiscal periods from September 2020 through June 2025. This persistent absence of debt suggests that the company has financed its operations predominantly through equity rather than debt, maintaining a debt-free capital structure over the observed period.

The financial leverage ratio, however, demonstrates that the company employs some degree of leverage, with values fluctuating between approximately 2.05 and 2.72. This ratio signifies that for each dollar of equity, Trade Desk Inc. utilizes roughly two times that amount in total assets, implying a moderate reliance on financial leverage. The ratios have shown slight variations over time, with a downward trend observed from 2.72 in December 2020 to around 2.05 in September 2022, followed by a gradual increase toward 2.21 in June 2025.

Overall, the data points toward a company with a conservative approach to leverage, avoiding debt financing, which enhances its long-term solvency position. The zero debt ratios reflect an absence of liabilities, reducing insolvency risk and indicating strong solvency health. The moderate and relatively stable leverage ratios suggest that while the company is capable of employing leverage, it prefers a low-debt structure, further contributing to its financial resilience.

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Coverage ratios

The interest coverage ratio for Trade Desk Inc. exhibits significant fluctuations over the analyzed period. Initially, as of September 30, 2020, the ratio was approximately 13.81, indicating that the company’s earnings before interest and taxes (EBIT) were more than sufficient to cover its interest expenses. Through the end of 2020 and into the first quarter of 2021, the ratio surged markedly, reaching peaks of 61.05 in December 2020 and 89.16 in March 2021, which reflect an improved ability to service interest obligations—likely driven by improved profitability or reduced interest expense.

Subsequently, the ratio hit an even higher point at 125.34 in September 2021, further emphasizing strong coverage during this period. However, the trend shifted in the latter part of 2021, with a notable decline to 34.38 in December 2021 and further reduction to 14.77 in the first quarter of 2022, suggesting a diminishing capacity to cover interest expenses. The decline intensified in the subsequent quarters; by June 2022, the ratio plunged into negative territory at -7.65, and continued to deteriorate, reaching -17.78 in September 2022. These negative values imply that the company’s EBIT was insufficient to cover interest expenses, potentially indicating operational challenges or increased interest obligations.

From December 2022 onward, the interest coverage ratio improved, recording values of 3.75 in the last quarter of 2022, then decreasing slightly to 2.13 in Q1 2023, before stabilizing around 2.46 and 2.56 in subsequent quarters. This recovery indicates that the company regained some capacity to meet its interest payments, though not at the elevated levels observed in 2020 and early 2021.

Projections for 2024 show an upward trend in the interest coverage ratio, with estimates reaching 3.83 in March, 7.45 in June, and further increasing to 9.72 by September 2024. This suggests an expected strengthening of profitability or reduction in interest expenses, improving the company's ability to service its debt. No data is available beyond this point, with projections indicating that the ratios for 2025 are not yet available.

Overall, the data depict a period of strong interest coverage in late 2020 and mid-2021, followed by a substantial decline into negative territory in 2022, and subsequent recovery beginning in late 2022 and into 2024. The fluctuations reflect changes in operational performance, profitability, or interest-related obligations over time.