WESCO International Inc (WCC)

Wesco International, Inc.'s solvency ratios indicate the company's ability to meet its financial obligations and the extent of its financial leverage. The trend analysis of the solvency ratios over the past five years reveals some important insights.

1. Debt-to-assets ratio: This ratio measures the proportion of a company's assets financed by debt. Wesco International, Inc.'s debt-to-assets ratio decreased from 0.41 in 2020 to 0.35 in 2023, indicating a positive trend in the company's ability to finance its assets with less debt.

2. Debt-to-capital ratio: This ratio reflects the proportion of a company's capital structure financed by debt. Wesco International, Inc.'s debt-to-capital ratio decreased from 0.59 in 2020 to 0.51 in 2023, suggesting a decreasing reliance on debt financing and an improvement in financial stability.

3. Debt-to-equity ratio: The debt-to-equity ratio indicates the extent to which a company is leveraged through debt. Wesco's debt-to-equity ratio increased from 0.57 in 2019 to 1.06 in 2023, which may suggest a higher proportion of debt in the capital structure compared to equity.

4. Financial leverage ratio: This ratio measures the company's financial leverage and its ability to cover interest payments. Wesco's financial leverage ratio increased from 2.21 in 2019 to 2.99 in 2023, indicating that the company's debt levels have increased over the years.

In summary, Wesco International, Inc. has shown improvements in its debt-to-assets and debt-to-capital ratios over the years, reflecting a more conservative approach to debt financing. However, the increasing debt-to-equity ratio and financial leverage ratio suggest a higher reliance on debt, which may pose risks in terms of financial stability and interest payment coverage.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations on its debt. A higher ratio indicates that the company is more capable of covering its interest expenses.

Based on the data provided for Wesco International, Inc., we observe the following trend in the interest coverage ratio over the years:

1. Dec 31, 2023: Interest coverage ratio of 3.61
2. Dec 31, 2022: Interest coverage ratio of 4.88
3. Dec 31, 2021: Interest coverage ratio of 2.99
4. Dec 31, 2020: Interest coverage ratio of 1.53
5. Dec 31, 2019: Data not available

The trend indicates fluctuations in Wesco International, Inc.'s ability to cover its interest expenses. The ratios improved from 2019 to 2022, showing a strengthening ability to meet interest payments. However, there was a slight drop in the interest coverage ratio in 2023 compared to 2022, though it remained at a moderate level.

Overall, a ratio above 1 suggests that Wesco International, Inc. has sufficient earnings to cover its interest payments. However, investors and creditors typically prefer a higher interest coverage ratio for greater financial stability and lower default risk. The company should continue to monitor and manage its interest coverage ratio to ensure it remains at a healthy level.