Waste Management Inc (WM)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 4.75 | 4.58 | 4.08 | 3.94 | 3.93 |
Waste Management, Inc.'s solvency ratios provide insights into the company's ability to meet its long-term obligations. The trends in the ratios over the five-year period indicate the company's evolving financial leverage and capital structure.
1. Debt-to-assets ratio:
- The debt-to-assets ratio has ranged between 0.46 to 0.49 over the past five years, indicating that, on average, around 46% to 49% of Waste Management's assets are financed by debt. The slight increase in 2023 compared to 2022 suggests a slightly higher reliance on debt to finance assets.
2. Debt-to-capital ratio:
- Waste Management's debt-to-capital ratio has fluctuated between 0.65 to 0.70 during the period. This ratio measures the proportion of debt in the company's capital structure. The increase in 2023 compared to the previous years suggests a higher proportion of debt financing relative to the total capital employed.
3. Debt-to-equity ratio:
- The debt-to-equity ratio has shown an increasing trend from 1.85 in 2020 to 2.35 in 2023. This indicates that the company has been using more debt relative to equity to finance its operations. A higher ratio signifies higher financial risk and leverage.
4. Financial leverage ratio:
- Waste Management's financial leverage ratio has been increasing steadily over the five-year period, reaching 4.75 in 2023. This indicates that the company's assets are financed predominantly through debt, with a significantly higher proportion relative to equity. A higher financial leverage ratio implies higher financial risk and interest rate sensitivity.
Overall, Waste Management's solvency ratios suggest a trend towards increased reliance on debt financing over the years, which may signal higher financial risk but also potential opportunities for growth and investment. Investors and stakeholders should monitor these ratios to assess the company's ability to manage its debt levels and financial obligations effectively.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 6.06 | 7.92 | 7.64 | 5.15 | 5.58 |
The interest coverage ratio for Waste Management, Inc. has shown a generally positive trend over the past five years, indicating the company's ability to meet its interest payment obligations comfortably. The ratio has consistently been above 1, which is a positive sign that the company's operating income is sufficient to cover its interest expenses.
In particular, the interest coverage ratio increased from 6.57 in 2019 to 7.53 in 2023, reaching its peak at 8.89 in 2022. This improvement suggests that Waste Management, Inc. has been generating more income relative to its interest expenses in recent years, enhancing its financial stability and creditworthiness.
Overall, the upward trajectory of the interest coverage ratio for Waste Management, Inc. reflects a healthy financial position and indicates that the company has been effectively managing its debt obligations while sustaining profitability.