Advanced Drainage Systems Inc (WMS)
Solvency ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.39 | 0.44 | 0.34 | 0.32 | 0.46 |
| Debt-to-capital ratio | 0.52 | 0.61 | 0.50 | 0.49 | 0.67 |
| Debt-to-equity ratio | 1.09 | 1.54 | 1.02 | 0.95 | 2.07 |
| Financial leverage ratio | 2.83 | 3.52 | 2.97 | 2.94 | 4.51 |
The solvency ratios of Advanced Drainage Systems Inc have shown positive trends over the past five years, indicating improvements in the company's ability to meet its long-term financial obligations.
The debt-to-assets ratio has fluctuated somewhat but has generally decreased from 2016 to 2020, with a slight increase in 2021 before dropping again in 2022 and 2023. This implies that the company's proportion of assets financed by debt has reduced, which could indicate a stronger financial position and lower risk.
The debt-to-capital ratio has also shown a downward trend, reflecting a decrease in the company's reliance on debt to finance its operations and investments. This reduction in debt in relation to the total capital employed is a positive sign for investors and creditors.
Similarly, the debt-to-equity ratio has decreased consistently over the period, indicating that the company has been gradually reducing its dependency on debt to fund its operations in favor of using more equity. A lower debt-to-equity ratio suggests a lower risk for the company and potentially greater financial stability.
Lastly, the financial leverage ratio, which measures the company's total assets relative to equity, has decreased significantly over the years. This reduction indicates that the company has reduced its reliance on debt financing and has improved its financial structure by relying more on equity, which could enhance the company's ability to weather financial challenges.
Overall, the improving solvency ratios of Advanced Drainage Systems Inc suggest a strengthening financial position and improved capacity to meet its long-term financial obligations.
Coverage ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 358.19 | 506.91 | 1,078.32 | 901.90 | -2.77 |
Advanced Drainage Systems Inc's interest coverage ratio has shown a declining trend over the past five years, starting from a negative value in 2020 to a peak of 1,078.32 in 2022, before decreasing to 358.19 in 2024.
A high interest coverage ratio indicates that the company is generating more than enough earnings to cover its interest expenses, reflecting a strong ability to meet its debt obligations. However, the sharp decline in the interest coverage ratio from 2022 to 2024 may raise concerns about the company's ability to service its debt in the future.
It is essential for investors and creditors to closely monitor Advanced Drainage Systems Inc's interest coverage ratio to assess the company's financial health and ability to manage its debt efficiently.