Xylem Inc (XYL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.14 | 0.24 | 0.29 | 0.28 | 0.26 |
| Debt-to-capital ratio | 0.18 | 0.35 | 0.43 | 0.46 | 0.41 |
| Debt-to-equity ratio | 0.22 | 0.54 | 0.76 | 0.84 | 0.69 |
| Financial leverage ratio | 1.58 | 2.28 | 2.57 | 2.95 | 2.61 |
The solvency ratios of Xylem Inc indicate the company's ability to meet its long-term financial obligations and overall financial stability over the years.
The debt-to-assets ratio has been decreasing consistently from 0.30 in 2019 to 0.14 in 2023, suggesting that the company has reduced its financial risk by relying less on debt to finance its assets.
Similarly, the debt-to-capital ratio has shown a declining trend, dropping from 0.44 in 2019 to 0.18 in 2023. This indicates that Xylem Inc has been using a smaller proportion of debt in its capital structure, which generally reduces financial risk.
The debt-to-equity ratio has improved significantly from 1.04 in 2019 to 0.22 in 2023. This implies that the company has reduced its reliance on debt funding in comparison to equity, which is a positive sign for its solvency.
The financial leverage ratio, which measures the company's reliance on debt to finance its operations, has also decreased steadily from 2.61 in 2019 to 1.58 in 2023. This shows that Xylem Inc has been effectively managing its debt levels to enhance its financial stability and reduce potential risks associated with high leverage.
Overall, the declining trends in all these solvency ratios indicate that Xylem Inc has been progressively strengthening its financial position, demonstrating improved solvency and a more balanced capital structure over the years.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 13.96 | 9.80 | 7.72 | 4.70 | 7.21 |
The interest coverage ratio measures a company's ability to meet its interest obligations through its operating income. A higher ratio indicates that the company is more capable of servicing its debt from its earnings.
Based on the data for Xylem Inc:
- The interest coverage ratio has been fluctuating over the years.
- In 2023, the interest coverage ratio stands at 14.86, reflecting a strong ability to cover interest expenses with operating income.
- This is an improvement compared to 2022 when the ratio was 19.15, indicating a slight decrease in the company's ability to cover interest expenses.
- In 2021 and 2020, the interest coverage ratios were 7.79 and 6.49 respectively, showing a lower capacity to cover interest payments, which might raise concerns about the company's ability to meet its debt obligations.
- In 2019, the interest coverage ratio was 11.29, indicating a better ability to cover interest expenses compared to 2021 and 2020 but lower than the levels seen in 2022 and 2023.
Overall, Xylem Inc's interest coverage has shown some variability, with a generally strong ability to meet its interest obligations in recent years, although there was a dip in 2021 and 2020. It is important for stakeholders to monitor this ratio to ensure the company can sustainably manage its debt levels.