Woodward Inc (WWD)

Woodward Inc's solvency ratios provide insights into the company's ability to meet its long-term financial obligations. Let's analyze the solvency ratios based on the given data.

1. Debt-to-assets ratio:
The debt-to-assets ratio measures the proportion of total assets financed by debt. Woodward Inc's debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.18 to 0.27. The decreasing trend from 2019 to 2023 indicates that the company has reduced its reliance on debt to finance its assets, which is a positive sign for solvency.

2. Debt-to-capital ratio:
The debt-to-capital ratio reflects the percentage of the company's capital that is financed by debt. Woodward Inc's debt-to-capital ratio has also shown a decreasing trend, declining from 0.39 in 2019 to 0.26 in 2023. This indicates that the company has been using a lower proportion of debt in its capital structure, which reduces solvency risk.

3. Debt-to-equity ratio:
The debt-to-equity ratio measures the degree of leverage in the company's capital structure. Woodward Inc's decreasing debt-to-equity ratio from 0.63 in 2019 to 0.35 in 2023 indicates a decreasing reliance on debt financing in relation to equity. This implies improved solvency and financial stability.

4. Financial leverage ratio:
The financial leverage ratio compares the company's total assets to its equity. Woodward Inc's financial leverage ratio has decreased steadily from 2.29 in 2019 to 1.94 in 2023. This suggests that the company's reliance on debt to generate earnings has decreased, which is a positive sign for solvency.

Overall, Woodward Inc's solvency ratios show a consistent improvement in its ability to meet long-term financial obligations. The decreasing trends in debt-related ratios indicate a prudent approach to managing its capital structure and reducing solvency risk over the years.

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Coverage ratios

Woodward Inc's interest coverage ratio, calculated as EBIT (earnings before interest and taxes) divided by interest expense, provides insight into the company's ability to meet its interest obligations. A higher interest coverage ratio indicates a better ability to meet interest payments.

Looking at the trend over the past five years:
- In 2023, the interest coverage ratio was 6.92, indicating that Woodward Inc's EBIT was 6.92 times its interest expense. This suggests the company had a strong ability to cover its interest obligations.
- In 2022 and 2021, the interest coverage ratios were 6.74 and 7.88 respectively, showing a consistent ability to cover interest payments.
- However, in 2020 and 2019, the interest coverage ratios were 8.96 and 8.22, indicating a higher ability to cover interest expenses compared to the more recent years.

Overall, Woodward Inc's interest coverage has shown some fluctuation over the past five years, but the ratios have consistently remained above 6, suggesting a generally strong ability to meet interest obligations. It is important for investors and creditors to monitor this ratio to assess the company's financial health and ability to service its debt.