United Parcel Service Inc (UPS)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.24 | 0.29 | 0.35 | 0.38 |
| Debt-to-capital ratio | 0.00 | 0.47 | 0.58 | 0.97 | 0.87 |
| Debt-to-equity ratio | 0.00 | 0.88 | 1.39 | 33.53 | 6.68 |
| Financial leverage ratio | 4.09 | 3.59 | 4.87 | 94.99 | 17.71 |
The solvency ratios for United Parcel Service, Inc. show the company's ability to meet its long-term financial obligations and the extent to which it relies on debt to finance its operations.
1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets that are financed by debt. UPS's debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.28 to 0.44. A lower ratio is generally considered more favorable as it suggests lower financial risk.
2. Debt-to-capital ratio: This ratio shows the percentage of the company's capital structure that is funded by debt. UPS's debt-to-capital ratio has also been consistent, with a slight increase in 2021 followed by a decrease in 2022. A decreasing trend indicates a reduced reliance on debt for financing.
3. Debt-to-equity ratio: This ratio compares the company's total debt to its shareholders' equity and reflects the extent to which the company is leveraged. UPS's debt-to-equity ratio has fluctuated significantly over the past five years, with 2020 and prior years showing extraordinarily high ratios, possibly due to specific financial events. This suggests that UPS has relied heavily on debt in the past but has made efforts to reduce this reliance in recent years.
4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to support its operations. UPS's financial leverage ratio has also shown variability over the years, with significant increases in 2020 and prior years. A high financial leverage ratio indicates a high level of financial risk due to excessive debt usage.
Overall, while UPS has shown some fluctuations in its solvency ratios over the years, there are indications of efforts to manage debt levels and improve the overall financial stability of the company. Investors and stakeholders should continue to monitor these ratios to assess UPS's long-term financial health and risk profile.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 11.92 | 22.06 | 24.91 | 3.63 | 9.66 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher interest coverage ratio indicates a greater ability to make interest payments from operating income.
Based on the data provided, United Parcel Service, Inc.'s interest coverage ratio has varied over the past five years. In 2023, the interest coverage ratio was 11.64, which indicates that the company generated operating income 11.64 times larger than its interest expense. This represents a decrease compared to the previous year where the ratio was 18.60.
Looking back further, the interest coverage ratio was relatively stable in 2021 and 2020 at 18.46 and 10.96, respectively. The ratio in 2019 was 11.94, which was similar to the current year's ratio.
Overall, United Parcel Service, Inc.'s interest coverage has fluctuated over the years, with 2023 showing a decline from the previous year. This trend warrants further analysis to understand the underlying factors affecting the company's ability to cover its interest expenses effectively.