WD-40 Company (WDFC)

The solvency ratios of WD-40 Company indicate its ability to meet its long-term financial obligations and the extent to which it relies on debt financing.

The debt-to-assets ratio has shown a decreasing trend from 0.31 in 2020 to 0.19 in 2024. This suggests a lower reliance on debt to finance assets, indicating better financial health and reduced risk for creditors.

The debt-to-capital ratio has also decreased over the years, from 0.41 in 2020 to 0.27 in 2024. This signifies a decreasing proportion of debt in the company's capital structure, indicating improved financial stability and increased equity financing.

The debt-to-equity ratio has shown a consistent decline from 0.71 in 2020 to 0.37 in 2024. This trend indicates a decreasing reliance on debt relative to equity, demonstrating a stronger financial position and reduced financial risk for shareholders.

The financial leverage ratio, which measures the extent to which the company uses debt in its capital structure, has fluctuated but generally improved from 2.26 in 2020 to 1.95 in 2024. A lower financial leverage ratio suggests lower financial risk and higher financial stability.

Overall, the decreasing trends in these solvency ratios indicate that WD-40 Company has been progressively strengthening its financial position, reducing its reliance on debt, and improving its ability to meet its long-term financial obligations.

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Coverage ratios

The interest coverage ratio for WD-40 Company has shown a fluctuating trend over the past five years. In 2024, the interest coverage ratio was 22.48, indicating that the company generated operating income 22.48 times higher than its interest expenses. This represents a significant improvement compared to the prior year, where the ratio was 16.17.

The peak in interest coverage was observed in 2022 at 31.67, reflecting strong earnings relative to interest payments. The ratio declined slightly in 2023 but remained healthy at 16.17. Prior to that, in 2021 and 2020, the interest coverage ratios were 37.12 and 31.96, respectively, demonstrating a consistent ability to cover interest expenses with operating income.

Overall, the trend in WD-40 Company's interest coverage ratio indicates a generally strong financial position in terms of its ability to meet interest obligations through operating earnings, with occasional fluctuations likely influenced by changes in operating income and interest expenses.