XPO Logistics Inc (XPO)

The solvency ratios of XPO Logistics Inc indicate the company's ability to meet its long-term financial obligations and manage its debt levels effectively over the years.

1. Debt-to-assets ratio: This ratio measures the proportion of the company's assets financed by debt. XPO Logistics' debt-to-assets ratio has shown a slight increase from 0.32 in 2020 to 0.43 in 2024. This suggests that the company's reliance on debt to finance its assets has moderately increased over the years.

2. Debt-to-capital ratio: This ratio reflects the proportion of the company's capital structure that is financed by debt. XPO Logistics' debt-to-capital ratio ranged between 0.66 and 0.76 during the period, indicating that a significant portion of the company's capital was debt-funded. However, the ratio decreased to 0.67 in 2024, suggesting a slight improvement.

3. Debt-to-equity ratio: This ratio shows the extent to which the company's operations are funded by debt relative to equity. XPO Logistics' debt-to-equity ratio increased from 1.93 in 2020 to 3.09 in 2021, before gradually decreasing to 2.08 in 2024. The decreasing trend indicates a reduction in the company's reliance on debt financing.

4. Financial leverage ratio: This ratio measures the company's total debt relative to its equity. XPO Logistics' financial leverage ratio fluctuated between 4.82 and 7.66 over the years, with a downward trend observed from 2021 to 2024. This indicates an improvement in the company's ability to support its operations with equity rather than debt.

Overall, the analysis of XPO Logistics Inc's solvency ratios suggests that the company has managed its debt levels reasonably well, with a decrease in some ratios indicating a potential strengthening of its financial position and reduced reliance on debt financing over time. However, a continuous monitoring of these ratios is crucial to ensure sustainable financial health.

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Coverage ratios

Based on the data provided for XPO Logistics Inc, the interest coverage ratio has shown fluctuating trends over the past five years. As of December 31, 2020, the interest coverage ratio was low at 1.18, indicating that the company's operating income was only sufficient to cover its interest expenses 1.18 times over.

However, there has been a significant improvement in the company's financial health, as seen in the subsequent years. By December 31, 2021, the interest coverage ratio increased to 2.64, indicating a better ability to meet interest payments with operating income. This positive trend continued as of December 31, 2022, with an even higher interest coverage ratio of 6.48, suggesting a strong ability to cover interest expenses.

The interest coverage ratio slightly declined to 2.53 by December 31, 2023, but it remained at a level that indicates the company can comfortably meet its interest obligations. As of the most recent data available on December 31, 2024, the interest coverage ratio further improved to 2.96, showing continued strength in the company's ability to cover interest payments.

Overall, the increasing trend in XPO Logistics Inc's interest coverage ratio over the years indicates a positive financial performance and a growing capacity to honor its debt obligations from operating profits.