Ultra Clean Holdings Inc (UCTT)

The solvency ratios of Ultra Clean Holdings Inc show a relatively stable financial position over the years based on the provided data.

1. Debt-to-Assets Ratio: This ratio indicates the proportion of a company's assets that are financed by debt. Ultra Clean Holdings Inc has maintained a low level of debt relative to its total assets, with the ratio ranging from 0.24 to 0.26 over the years, indicating that the company relies more on equity financing than debt to fund its operations.

2. Debt-to-Capital Ratio: This ratio measures the proportion of a company's capital that is financed by debt. Ultra Clean Holdings Inc's debt-to-capital ratio has also been consistent, staying in the range of 0.33 to 0.38. The higher values compared to the debt-to-assets ratio suggest that debt plays a slightly larger role in funding the company's operations compared to equity.

3. Debt-to-Equity Ratio: The debt-to-equity ratio highlights the relationship between a company's debt and equity financing. Ultra Clean Holdings Inc has shown a moderate level of leverage over the years, with the ratio hovering between 0.49 and 0.62. This indicates that the company uses a significant amount of debt alongside equity to finance its operations.

4. Financial Leverage Ratio: This ratio indicates the extent to which a company uses debt to finance its operations. Ultra Clean Holdings Inc's financial leverage ratio has remained relatively stable around 2.2, indicating that the company maintains a balanced mix of debt and equity in its capital structure.

Overall, Ultra Clean Holdings Inc's solvency ratios paint a picture of a company with a conservative approach to debt, maintaining a healthy balance between debt and equity financing to support its operations.

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Coverage ratios

Ultra Clean Holdings Inc's interest coverage ratio has shown fluctuations over the past five years.

As of December 31, 2020, the interest coverage ratio was 6.73, indicating that the company's operating income was sufficient to cover its interest expenses approximately 6.73 times. This reflects a good ability to meet its interest obligations.

The ratio improved slightly to 7.09 by December 31, 2021, suggesting a further increase in the company's ability to cover its interest payments.

However, by December 31, 2022, the interest coverage ratio declined significantly to 3.31. This could indicate a potential strain on the company's ability to meet its interest obligations from its operating income.

The ratio dropped even further to 0.59 by December 31, 2023, indicating a concerning trend where operating income may not be sufficient to cover interest payments. This could raise red flags regarding the company's financial health and ability to service its debt.

Remarkably, by December 31, 2024, the interest coverage ratio surged to 25.33, reflecting a substantial improvement and suggesting that the company's operating income significantly exceeded its interest expenses, demonstrating a strong ability to meet its interest obligations and potentially invest in growth opportunities.

In conclusion, Ultra Clean Holdings Inc's interest coverage ratio has displayed varying levels of performance over the past five years, with fluctuations that may require further investigation to understand the underlying reasons and implications for the company's financial stability and growth prospects.