UFP Technologies Inc (UFPT)

The solvency ratios of UFP Technologies Inc indicate the company's ability to meet its long-term financial obligations and its overall financial stability.

The trend analysis of the ratios from 2019 to 2023 reveals an improvement in solvency:

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. The decreasing trend from 0.00 in 2020 to 0.07 in 2023 indicates that UFP Technologies has been relying less on debt to fund its assets, which is a positive sign for solvency.

2. Debt-to-capital ratio: This ratio represents the proportion of capitalization that comes from debt. Similar to the debt-to-assets ratio, the decreasing trend from 0.00 in 2020 to 0.09 in 2023 suggests that the company is becoming less reliant on debt for its capital structure.

3. Debt-to-equity ratio: This ratio compares the total debt of the company to its shareholders' equity, showing the leverage of the business. The declining trend from 0.00 in 2020 to 0.10 in 2023 indicates that UFP Technologies is relying less on debt financing and more on equity, improving its financial stability.

4. Financial leverage ratio: This ratio calculates the company's total assets divided by equity, representing the proportion of assets financed by equity. The decreasing trend from 1.17 in 2019 to 1.41 in 2023 also suggests that the company is relying less on borrowed funds and more on shareholders' equity to fund its operations, which is positive for long-term solvency.

Overall, the improving trend in UFP Technologies' solvency ratios indicates a strengthened financial position and reduced reliance on debt financing, which bodes well for the company's ability to meet its financial obligations in the long term.

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Coverage ratios

Interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). In this case, the interest coverage ratio for UFP Technologies Inc has fluctuated over the past five years.

In 2023, the interest coverage ratio stood at 15.79, indicating that the company generated earnings approximately 15.79 times its interest expense for the year. This represents a slight decrease from the prior year's ratio of 20.08.

The significant spike in the interest coverage ratio to 544.72 in 2021 may be attributed to a sharp increase in earnings relative to the interest expense for that particular year. This could signify a very strong ability to cover interest obligations with operating profits.

The ratio decreased in 2022 to 20.08 and in 2023 to 15.79, which may indicate a relative decline in earnings compared to interest expenses. Although the ratio remains healthy, the downward trend should be monitored to ensure the company's ability to cover its interest payments remains strong in the long term.

Overall, UFP Technologies Inc has generally maintained a strong ability to cover its interest expenses with operating earnings over the years, although there have been fluctuations. It is essential for investors and analysts to continue monitoring this ratio to assess the company's financial health and debt servicing capabilities.