Tetra Tech Inc (TTEK)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.24 | 0.23 | 0.23 | 0.27 | 0.09 | 0.09 | 0.09 | 0.09 | 0.09 | 0.08 | 0.09 | 0.10 | 0.11 | 0.10 | 0.00 | 0.00 | 0.00 | 0.12 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.38 | 0.39 | 0.38 | 0.44 | 0.15 | 0.17 | 0.16 | 0.16 | 0.17 | 0.14 | 0.16 | 0.17 | 0.20 | 0.19 | 0.00 | 0.00 | 0.00 | 0.21 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.61 | 0.63 | 0.62 | 0.79 | 0.18 | 0.21 | 0.19 | 0.19 | 0.20 | 0.16 | 0.20 | 0.21 | 0.25 | 0.23 | 0.00 | 0.00 | 0.00 | 0.27 | 0.00 | 0.00 |
| Financial leverage ratio | 2.57 | 2.72 | 2.74 | 2.94 | 2.06 | 2.22 | 2.22 | 2.13 | 2.13 | 2.09 | 2.11 | 2.14 | 2.19 | 2.29 | 2.31 | 2.47 | 2.29 | 2.17 | 2.06 | 1.97 |
Tetra Tech, Inc.'s solvency ratios provide valuable insights into the company's ability to meet its long-term financial obligations.
Starting with the debt-to-assets ratio, which measures the proportion of total assets financed by debt, we observe a relatively stable trend between Q4 2022 and Q1 2024, ranging from 0.09 to 0.27. A lower debt-to-assets ratio indicates lower financial risk and greater financial stability, which is the case for Tetra Tech in Q4 2022 and Q1 2023, but there is a notable increase in Q2 2023.
Moving on to the debt-to-capital ratio, we see a similar pattern of stability, albeit at a higher level compared to the debt-to-assets ratio. The company's debt-to-capital ratio remains between 0.16 and 0.44, indicating that a significant portion of Tetra Tech's capital structure is debt-financed. This ratio helps evaluate financial risk and leverage levels.
The debt-to-equity ratio shows a more fluctuating trend, ranging from 0.19 to 0.79. This ratio indicates the extent to which the company is using debt to finance its operations versus equity. The lower the ratio, the lower the financial risk, and the company's debt-to-equity ratio is relatively low in Q4 2022 and Q1 2023 but increases notably in Q2 2023 and further.
Lastly, the financial leverage ratio, which provides a broader view of the company's overall financial leverage, also shows variability over the quarters. Tetra Tech's financial leverage ratio ranges from 2.06 to 2.94, reflecting the company's use of debt to support its operations and growth initiatives.
Overall, the analysis of Tetra Tech, Inc.'s solvency ratios suggests that the company has been managing its debt levels relatively well. However, the increasing trend in some ratios, notably the debt-to-assets and debt-to-equity ratios in recent quarters, warrants close monitoring to ensure that the company maintains a healthy balance between debt and equity in its capital structure.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 7.43 | 7.70 | 9.55 | 13.69 | 24.57 | 29.39 | 26.27 | 25.51 | 25.05 | 23.06 | 22.79 | 20.76 | 18.67 | 18.00 | 13.51 | 13.62 | 13.95 | 13.85 | 15.62 | 14.10 |
To analyze Tetra Tech, Inc.'s interest coverage, we observe a consistent trend of strong interest coverage ratios over the past eight quarters. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income.
In Q1 2024, the interest coverage ratio was 8.56, followed by ratios of 9.02 in Q4 2023, 10.51 in Q3 2023, and 15.03 in Q2 2023. These figures indicate that the company's earnings before interest and taxes (EBIT) were sufficient to cover its interest expenses comfortably during these periods.
Moreover, the interest coverage ratios notably increased to 24.93 in Q1 2023, 29.42 in Q4 2022, 26.56 in Q3 2022, and 25.80 in Q2 2022. These higher ratios suggest a more robust financial position, with ample earnings to service its interest payments.
Overall, Tetra Tech, Inc.'s interest coverage ratios demonstrate consistent and strong financial health, with the company having a comfortable cushion to meet its interest obligations. This stability reflects the company's ability to generate earnings to cover its interest expenses, indicating a lower risk of default on its debt obligations.