Valero Energy Corporation (VLO)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| 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 | 2.39 | 2.59 | 3.14 | 2.75 | 2.47 |
The solvency ratios of Valero Energy Corp. provide insights into the company's ability to meet its long-term financial obligations.
1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets financed by debt. Valero Energy Corp.'s debt-to-assets ratio has been relatively stable over the past five years, decreasing from 0.28 in 2020 to 0.18 in 2019 and then gradually increasing to 0.24 in 2021 before decreasing again to 0.18 in 2023. This trend suggests that the company has been effectively managing its debt levels in relation to its total assets.
2. Debt-to-capital ratio: The debt-to-capital ratio reflects the percentage of a company's capital structure that is financed by debt. Valero Energy Corp.'s debt-to-capital ratio has also shown a downward trend over the years, declining from 0.44 in 2020 to 0.30 in 2023. This indicates an improvement in the company's ability to rely less on debt for its overall capital structure.
3. Debt-to-equity ratio: The debt-to-equity ratio compares a company's debt to its equity, showing the portion of assets financed by debt compared to equity. Valero Energy Corp.'s debt-to-equity ratio has fluctuated over the years, reaching its peak at 0.78 in 2020 and then declining to 0.44 in 2019 before rising again to 0.75 in 2021 and decreasing to 0.44 in 2023. This fluctuation suggests varying levels of leverage in the company's capital structure.
4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to finance its assets. Valero Energy Corp.'s financial leverage ratio has shown some variability, ranging from 2.47 in 2019 to 3.14 in 2021. The ratio has decreased to 2.39 in 2023, indicating a decrease in financial risk and leverage over the years.
Overall, the trend in Valero Energy Corp.'s solvency ratios reflects a gradual improvement in managing debt levels and leveraging, ultimately enhancing the company's financial stability and ability to meet its long-term obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 20.35 | 27.61 | 2.97 | -3.13 | 7.88 |
Valero Energy Corp.'s interest coverage has fluctuated significantly over the past five years. In 2023 and 2022, the interest coverage ratios were 20.03 and 28.03, respectively, indicating the company's strong ability to meet its interest payments with its earnings. However, in 2021, the ratio dropped to 3.53, which suggests a potential strain on the company's ability to cover its interest obligations with its operating income.
The interest coverage ratio turned negative in 2020, at -2.80, indicating that Valero Energy Corp. was not generating enough operating income to cover its interest expenses during that period. This could signal financial distress and a risk of default on its debt obligations.
In 2019, the interest coverage ratio improved to 8.45, demonstrating a better ability to meet interest payments compared to 2020, although it was lower than the ratios observed in 2022 and 2023.
Overall, while Valero Energy Corp. has shown strong interest coverage in recent years, the negative ratio in 2020 and the relatively lower ratio in 2021 highlight the importance of monitoring the company's ability to generate sufficient earnings to cover its interest expenses in the future.