Westlake Chemical Corporation (WLK)

Solvency ratios provide insight into a company's ability to meet its long-term debt obligations. Looking at the solvency ratios of Westlake Corporation over the past five years, we can observe certain trends:

1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. Westlake Corporation's debt-to-assets ratio has fluctuated between 0.23 and 0.28 over the past five years, suggesting that a moderate portion of its assets is funded through debt financing. The decreasing trend in recent years indicates a slightly lower reliance on debt to finance assets.

2. Debt-to-capital ratio: The debt-to-capital ratio reflects the proportion of a company's capital that is derived from debt. Westlake Corporation's debt-to-capital ratio has ranged from 0.32 to 0.39 during the period under review. This ratio indicates that debt comprises around one-third of the company's capital structure, with a slight downward trend seen in recent years.

3. Debt-to-equity ratio: The debt-to-equity ratio shows the extent to which a company is leveraged through debt relative to its equity. Westlake Corporation's debt-to-equity ratio has varied from 0.48 to 0.65 over the past five years. The decreasing trend in this ratio suggests a lower level of financial risk as the company relies less on debt financing relative to equity.

4. Financial leverage ratio: The financial leverage ratio measures the proportion of a company's assets that are financed through debt. Westlake Corporation's financial leverage ratio has fluctuated between 2.05 and 2.32, indicating that the company has used debt financing to magnify its returns. However, the ratio has shown some stability over the years.

In conclusion, Westlake Corporation's solvency ratios suggest a reasonable level of financial stability and a prudent approach to debt management. The decreasing trends in certain ratios indicate a potential shift towards a more conservative debt structure.

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Coverage ratios

Westlake Corporation's interest coverage ratio has fluctuated over the past five years. The interest coverage ratio measures the company's ability to meet its interest obligations from its operating income. A higher ratio indicates that the company is more capable of servicing its debt payments.

In 2023, Westlake Corporation's interest coverage ratio was 7.47, representing a decrease from the previous year's ratio of 17.42 in 2022. Despite this drop, the company's interest coverage ratio remains at a level that suggests it is able to comfortably meet its interest payments.

Comparing the latest ratio to previous years, Westlake's interest coverage was relatively lower in 2020 and 2019, at 3.27 and 5.59, respectively. This indicates a potential increase in the company's ability to cover interest expenses in recent years.

Overall, while there has been some fluctuation in Westlake Corporation's interest coverage ratio, the company appears to have maintained a solid ability to cover its interest obligations with its operating income, based on the ratios provided.