Textron Inc (TXT)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.41 | 2.29 | 2.32 | 2.64 | 2.72 |
Based on the solvency ratios of Textron Inc provided in the table, it is notable that the company has consistently maintained a debt-to-assets ratio of 0.00 over the past five years. This suggests that Textron Inc has not relied heavily on debt to finance its assets, indicating a low level of financial risk in terms of asset coverage by debt.
Similarly, the debt-to-capital and debt-to-equity ratios have also been consistently at 0.00 during this period. These ratios further confirm that Textron Inc has been operating with minimal financial leverage, implying a strong financial position with a low level of debt relative to its capital and equity.
However, the financial leverage ratio has shown some variability over the five-year period, decreasing from 2.72 in 2019 to 2.41 in 2023. Despite this fluctuation, the financial leverage ratio remains within a manageable range, indicating that Textron Inc has maintained a reasonable level of leverage to support its operations and growth without becoming overly reliant on debt financing.
Overall, the analysis of Textron Inc's solvency ratios suggests that the company has a strong financial foundation, characterized by conservative debt management and a healthy balance between debt and equity in its capital structure. This prudent approach to solvency ratios indicates a lower risk of financial distress and a solid capacity to meet its financial obligations in the long term.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | -26.34 | -17.02 | 7.14 | 2.70 | 6.51 |
Interest coverage is a financial ratio that measures a company's ability to pay interest expenses on its debt obligations. It is calculated by dividing earnings before interest and taxes (EBIT) by the total interest expense. A higher interest coverage ratio indicates that the company is better positioned to meet its interest obligations.
Based on the data provided for Textron Inc, the interest coverage ratio has been fluctuating over the past five years. In 2019 and 2021, the company had relatively healthy interest coverage ratios of 6.51 and 7.14, respectively, indicating that its EBIT was more than sufficient to cover its interest expenses. However, in 2020, the interest coverage ratio dropped to 2.70, suggesting a lower ability to cover interest costs.
The most recent data for 2022 and 2023 paint a concerning picture, with negative interest coverage ratios of -17.02 and -26.34, respectively. A negative interest coverage ratio implies that the company's EBIT is not enough to cover its interest expenses, indicating financial distress and a higher risk of defaulting on its debt obligations.
Overall, the trend in Textron Inc's interest coverage ratio raises concerns about its ability to meet its interest payments, especially in the more recent years. Investors and creditors should closely monitor the company's financial performance and debt management practices to assess its creditworthiness and financial stability.