Viatris Inc (VTRS)

Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. The analysis of Viatris Inc's solvency ratios over the years reveals the following trends:

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. Viatris Inc's debt-to-assets ratio has been relatively stable, ranging between 0.38 and 0.42 over the past five years. This indicates that around 38% to 42% of the company's assets are funded by debt.

2. Debt-to-capital ratio: The debt-to-capital ratio shows the percentage of the company's capital that comes from debt. Viatris Inc's debt-to-capital ratio also demonstrates consistency, fluctuating between 0.47 and 0.53. This suggests that debt contributes to around 47% to 53% of the company's total capital structure.

3. Debt-to-equity ratio: The debt-to-equity ratio reflects the extent to which the company is relying on creditors versus shareholders to finance its operations. Viatris Inc's debt-to-equity ratio has shown some variability, decreasing from 1.13 in 2021 to 0.89 in 2023. This implies that the company's reliance on debt has slightly decreased, with shareholders contributing more to the capital structure in recent years.

4. Financial leverage ratio: The financial leverage ratio indicates the level of debt financing used by the company to support its assets. Viatris Inc's financial leverage ratio has been relatively consistent around 2.30 to 2.70, reflecting a moderate level of leverage in the company's capital structure.

Overall, Viatris Inc's solvency ratios suggest a stable and moderate level of debt utilization in the company's funding structure. The slight fluctuations in these ratios over the years indicate some adjustments in the company's financing strategy, with a gradual shift towards a more balanced mix of debt and equity financing.

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Coverage ratios

The interest coverage ratio of Viatris Inc has shown fluctuations over the past five years. In 2023, the interest coverage ratio improved to 1.72 from 2.79 in 2022, indicating a decrease in the company's ability to cover its interest expenses from operating profits. However, it is important to note that the ratio is still above 1, indicating that the company is generating enough operating income to cover its interest expenses, albeit at a lower level compared to the previous year.

In 2021, the interest coverage ratio drastically declined to 0.37, indicating a significant decrease in the company's ability to cover its interest expenses. This could be a concerning sign as it suggests that the company may be struggling to generate sufficient operating income to meet its interest obligations.

Furthermore, in 2020, the interest coverage ratio was negative at -0.21, indicating that the company's operating income was not sufficient to cover its interest expenses. Negative interest coverage ratios are a red flag for investors and creditors as it signifies financial distress and potential default risk.

The improvement in the interest coverage ratio in 2023 compared to the previous year is a positive sign, but it is essential for Viatris Inc to continue monitoring and managing its interest expenses and operating income to ensure sustainable financial health and stability.