Vontier Corp (VNT)
Solvency ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.51 | 0.56 | 0.58 | 0.59 | 0.60 | 0.62 | 0.62 | 0.60 | 0.59 | 0.62 | 0.59 | 0.60 |
| Debt-to-capital ratio | 0.71 | 0.76 | 0.78 | 0.80 | 0.82 | 0.84 | 0.84 | 0.83 | 0.82 | 0.85 | 0.85 | 0.88 |
| Debt-to-equity ratio | 2.46 | 3.09 | 3.48 | 3.96 | 4.49 | 5.30 | 5.21 | 4.71 | 4.53 | 5.49 | 5.74 | 7.50 |
| Financial leverage ratio | 4.82 | 5.56 | 6.04 | 6.72 | 7.53 | 8.57 | 8.45 | 7.84 | 7.63 | 8.86 | 9.67 | 12.43 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Let's analyze Vontier Corporation's solvency ratios over the past eight quarters.
1. Debt-to-Assets Ratio:
The debt-to-assets ratio measures the proportion of a company's assets financed by debt. Vontier Corporation's debt-to-assets ratio has been gradually decreasing from 0.60 in Q4 2022 to 0.53 in Q4 2023. This indicates that the company has reduced its reliance on debt to finance its assets, which could improve its financial stability.
2. Debt-to-Capital Ratio:
The debt-to-capital ratio reflects the percentage of a company's capital that comes from debt. Vontier Corporation's debt-to-capital ratio has followed a similar declining trend as the debt-to-assets ratio, decreasing from 0.82 in Q4 2022 to 0.72 in Q4 2023. This indicates an improving capital structure and a lower risk of financial distress.
3. Debt-to-Equity Ratio:
The debt-to-equity ratio compares a company's total debt to its total equity, indicating the level of leverage used by the company. Vontier Corporation's debt-to-equity ratio has fluctuated over the quarters but generally trended downwards, from 5.32 in Q3 2022 to 2.58 in Q4 2023. The declining trend suggests that the company has been reducing its reliance on debt financing in relation to equity.
4. Financial Leverage Ratio:
The financial leverage ratio measures the extent to which a company uses debt to support its operations. Vontier Corporation's financial leverage ratio has also shown a decreasing trend, from 7.53 in Q4 2022 to 4.82 in Q4 2023. A lower financial leverage ratio indicates lower financial risk and higher financial stability.
Overall, Vontier Corporation has shown improvement in its solvency ratios over the past eight quarters, with decreasing levels of debt relative to assets, capital, equity, and operations. This trend suggests a strengthening financial position and a reduced risk of default on its long-term obligations.
Coverage ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 5.74 | 8.15 | 8.27 | 8.53 | 8.56 | 15.74 | 16.16 | 15.70 | 15.69 |
To analyze Vontier Corporation's interest coverage based on the data provided, we observe a declining trend over the past eight quarters. The interest coverage ratio measures the company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher ratio indicates a stronger ability to meet interest obligations.
At the end of Q4 2022, Vontier had an interest coverage ratio of 8.30, reflecting a solid ability to cover interest payments. However, this ratio has steadily decreased over subsequent quarters to 5.80 in Q4 2023. This downward trend could raise concerns about the company's ability to comfortably meet its interest obligations from its operating earnings.
The declining interest coverage ratio may indicate deteriorating profitability or increasing interest expenses relative to earnings. Investors and creditors may view this trend as a potential risk factor, as a lower interest coverage ratio implies a higher dependency on earnings to meet interest expenses. Management may need to closely monitor the company's financial performance to ensure sufficient profitability and cash flow to support its debt obligations.