Vulcan Materials Company (VMC)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.27 | 0.27 | 0.28 | 0.24 | 0.26 |
| Debt-to-capital ratio | 0.34 | 0.36 | 0.37 | 0.32 | 0.33 |
| Debt-to-equity ratio | 0.52 | 0.56 | 0.59 | 0.46 | 0.50 |
| Financial leverage ratio | 1.94 | 2.05 | 2.09 | 1.94 | 1.89 |
The solvency ratios of Vulcan Materials Co provide insights into the company's ability to meet its long-term financial obligations. Over the past five years, the trends in these ratios indicate the following:
1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. Vulcan Materials Co's debt-to-assets ratio has remained relatively stable, ranging between 0.26 and 0.28. This indicates that the company relies moderately on debt to finance its assets.
2. Debt-to-capital ratio: The debt-to-capital ratio reflects the percentage of the company's capital structure that is financed by debt. Vulcan Materials Co's debt-to-capital ratio has fluctuated slightly over the years, with a range of 0.33 to 0.37. This suggests a moderate level of leverage in the company's capital structure.
3. Debt-to-equity ratio: The debt-to-equity ratio shows the proportion of the company's equity that is financed by debt. Vulcan Materials Co's debt-to-equity ratio has also shown fluctuations, ranging from 0.50 to 0.59. This indicates that the company has been increasing its reliance on debt to finance its operations.
4. Financial leverage ratio: The financial leverage ratio provides an indication of how much debt the company has in relation to its equity. Vulcan Materials Co's financial leverage ratio has ranged from 1.89 to 2.09. This ratio suggests that the company has been using debt to support its operations while maintaining a level of financial leverage within a reasonable range.
Overall, the analysis of Vulcan Materials Co's solvency ratios shows that the company has maintained a relatively stable and moderate level of debt utilization over the past five years. However, the increasing trend in some ratios, such as the debt-to-equity ratio, indicates a higher reliance on debt financing, which may pose risks in the future if not managed effectively. It is important for investors and stakeholders to closely monitor these solvency ratios to assess the company's ability to meet its long-term financial obligations.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 7.29 | 5.54 | 6.83 | 6.44 | 6.78 |
The interest coverage ratio for Vulcan Materials Co has shown a fluctuating trend over the past five years. The company's interest coverage ratio was 7.68 for the year ending December 31, 2023, which indicates that Vulcan Materials Co generated operating income 7.68 times higher than its interest expenses for that period. This is an improvement compared to the previous year, where the interest coverage ratio was 5.99.
In general, higher interest coverage ratios are considered favorable as they indicate the company's ability to meet its interest payment obligations comfortably. However, it is important to note that the ideal level of interest coverage may vary depending on the industry and macroeconomic conditions.
Vulcan Materials Co's interest coverage ratios for the past five years have generally been above 5, suggesting that the company has been able to consistently generate sufficient operating income to cover its interest expenses. The slight fluctuations in the interest coverage ratio over the years may reflect changes in the company's financial structure, profitability, or interest rate environment.
Overall, the trend in Vulcan Materials Co's interest coverage ratio indicates a reasonable ability to manage its interest payment obligations, although investors and creditors may want to monitor the trend over time to ensure continued financial health.