Xylem Inc (XYL)

The solvency ratios of Xylem Inc indicate a generally improving financial position over the years. The Debt-to-assets ratio has decreased from 0.28 in 2020 to 0.12 in 2024, showing a lower proportion of assets financed by debt. Similarly, the Debt-to-capital ratio has declined from 0.46 in 2020 to 0.16 in 2024, indicating a reduced reliance on debt for capital structure.

Furthermore, the Debt-to-equity ratio has shown a significant decrease from 0.84 in 2020 to 0.19 in 2024, suggesting a stronger equity position relative to debt. This trend reflects positively on the company's ability to meet its financial obligations through equity financing.

Additionally, the Financial leverage ratio has decreased from 2.95 in 2020 to 1.55 in 2024, demonstrating a lower level of financial leverage and implying lower financial risk for the company. Overall, these solvency ratios suggest that Xylem Inc has been effectively managing its debt levels and strengthening its financial position over the years.

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Coverage ratios

Based on the provided data for Xylem Inc's interest coverage ratio over the past five years, the trend shows a consistent improvement in the company's ability to cover its interest expenses.

As of December 31, 2020, the interest coverage ratio was 4.70, indicating that Xylem's operating income was 4.70 times its interest expenses. Over the next four years, the interest coverage ratio increased steadily, reaching 7.72 by December 31, 2021, 9.80 by December 31, 2022, 13.96 by December 31, 2023, and significantly improving to 22.93 by December 31, 2024.

This upward trend in the interest coverage ratio reflects a strengthened financial position for Xylem Inc, as higher ratios suggest the company has more than enough operating income to cover its interest obligations. It indicates improved financial health, reduced financial risk, and enhanced ability to meet its debt payments comfortably.