Valero Energy Corporation (VLO)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| 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 | 2.45 | 2.39 | 2.59 | 3.14 | 2.75 |
Based on the provided data for Valero Energy Corporation, the solvency ratios paint a picture of strong financial health and stability in terms of debt management.
1. Debt-to-assets ratio: The debt-to-assets ratio measures the proportion of a company's assets that are financed by debt. With a consistent ratio of 0.00 from 2020 to 2024, Valero Energy Corporation has shown that it relies minimally on debt to fund its assets, indicating a low level of financial risk.
2. Debt-to-capital ratio: The debt-to-capital ratio assesses the level of financial risk by comparing a company's total debt to its total capital (debt + equity). Valero Energy Corporation also maintained a debt-to-capital ratio of 0.00 across the years 2020 to 2024, reinforcing the company's prudent approach to managing its capital structure.
3. Debt-to-equity ratio: The debt-to-equity ratio compares a company's total debt to its shareholder equity, indicating the extent to which a company is using debt financing. Like the previous ratios, Valero Energy Corporation consistently reported a debt-to-equity ratio of 0.00 throughout the period, suggesting a conservative capital structure and a strong equity position.
4. Financial leverage ratio: The financial leverage ratio measures the extent to which a company uses debt to finance its operations compared to equity. Valero Energy Corporation's financial leverage ratio decreased steadily from 2.75 in 2020 to 2.45 in 2024. This indicates that the company has been reducing its reliance on debt as a source of capital while preserving a healthy balance between debt and equity in its financial structure.
Overall, the data reveals that Valero Energy Corporation has maintained a solid solvency position over the years by effectively managing its debt levels and capital structure. The consistent low debt ratios and decreasing financial leverage ratio indicate a prudent and sustainable approach to financial management, which may help the company weather economic uncertainties and maintain long-term stability in its operations.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 7.65 | 20.20 | 28.24 | 3.56 | -2.57 |
Interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. Looking at the data provided for Valero Energy Corporation, the interest coverage ratio has shown fluctuation over the years.
As of December 31, 2020, the interest coverage ratio was negative at -2.57, indicating that the company's operating income was insufficient to cover its interest expenses. This could raise concerns about Valero's financial health and ability to service its debt obligations.
By December 31, 2021, the interest coverage ratio improved significantly to 3.56, indicating that the company's operating income was able to cover its interest expenses nearly four times over. This suggests a positive turnaround in Valero's financial performance, with a stronger ability to meet its interest obligations.
In the following years, Valero's interest coverage ratio continued to strengthen. By December 31, 2022, it soared to 28.24, showing a substantial improvement and a robust ability to cover interest expenses. This trend continued in December 31, 2023, where the ratio was 20.20, and by December 31, 2024, it was 7.65.
Overall, the trend in Valero Energy Corporation's interest coverage ratio indicates an improvement in its financial position and ability to meet interest obligations. The company has shown progress in generating sufficient operating income to cover its interest expenses, which is a positive signal for its financial stability and debt servicing capability.