Ultra Clean Holdings Inc (UCTT)

The solvency ratios of Ultra Clean Holdings Inc indicate the company's ability to meet its financial obligations and the level of financial risk it carries.

The debt-to-assets ratio has remained relatively stable over the past five years, ranging between 0.24 to 0.28. This ratio suggests that, on average, 25% of the company's total assets are financed by debt.

The debt-to-capital ratio has fluctuated slightly, showing a slight increase from 0.33 in 2020 to 0.38 in 2021 before decreasing to 0.35 in 2023. This ratio indicates that, on average, 35% of the company's capital is sourced from debt.

The debt-to-equity ratio has shown some variability, with a peak of 0.65 in 2019 and the lowest value of 0.49 in 2020. This ratio reflects the proportion of the company's assets that are financed through debt relative to shareholders' equity, with an average of 55% over the five-year period.

The financial leverage ratio, which measures the company's debt level relative to its equity, has fluctuated between 2.07 to 2.39, with higher values indicating higher financial risk.

Overall, Ultra Clean Holdings Inc has managed to maintain a relatively stable solvency position over the past five years, with a moderate level of debt relative to assets, capital, and equity. This suggests that the company has been able to effectively manage its debt levels and maintain a balanced capital structure, although fluctuations in some ratios indicate the need for continued monitoring of its financial health.

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Coverage ratios

Ultra Clean Holdings Inc's interest coverage has exhibited fluctuations over the past five years. In 2023, the interest coverage ratio dropped significantly to 0.59 from 3.31 in 2022, indicating a significant decrease in the company's ability to cover its interest expenses with its operating income. The substantial decline from the prior year suggests that the company may be facing challenges in generating sufficient earnings to meet its interest obligations.

Comparing the current interest coverage ratio with the ratios from 2021 and 2020, which were 7.09 and 6.73 respectively, it is evident that there has been a sharp decline in the company's ability to service its interest payments in 2023. The 2023 ratio is also notably lower than the 2019 ratio of 1.02, indicating a significant deterioration in the company's financial health in terms of covering its interest expenses.

The decline in interest coverage could raise concerns about the company's financial stability and its ability to meet its debt obligations in a sustainable manner. It is crucial for Ultra Clean Holdings Inc to closely monitor its interest coverage ratio and take necessary measures to improve its profitability and operating efficiency to ensure it can comfortably meet its interest payments in the future.