Xylem Inc (XYL)

Solvency ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Debt-to-assets ratio	0.14	0.14	0.14	0.24	0.24	0.23	0.23	0.23	0.29	0.30	0.28	0.29	0.28	0.36	0.36	0.27	0.26	0.27	0.27	0.27
Debt-to-capital ratio	0.18	0.18	0.19	0.34	0.35	0.37	0.37	0.37	0.43	0.44	0.45	0.46	0.46	0.52	0.51	0.42	0.41	0.41	0.41	0.42
Debt-to-equity ratio	0.22	0.23	0.23	0.53	0.54	0.58	0.59	0.59	0.76	0.79	0.81	0.84	0.84	1.06	1.06	0.72	0.69	0.70	0.71	0.73
Financial leverage ratio	1.58	1.60	1.63	2.22	2.28	2.52	2.56	2.57	2.57	2.64	2.89	2.91	2.95	2.95	2.96	2.70	2.61	2.60	2.65	2.67

A solvency analysis of Xylem Inc based on the provided ratios reveals the following trends:

1. Debt-to-assets ratio: Xylem has consistently maintained a low debt-to-assets ratio, indicating that only a small portion of its assets are financed through debt. This is a positive sign as it signifies a lower financial risk for the company.

2. Debt-to-capital ratio: The debt-to-capital ratio has been relatively stable over the periods, indicating that Xylem's capital structure has been consistent in terms of the proportion of debt used to finance its operations compared to its total capital. The company appears to have a moderate level of debt in relation to its total capital.

3. Debt-to-equity ratio: Xylem has shown a declining trend in its debt-to-equity ratio over the periods. This suggests that the company has been reducing its reliance on debt financing in relation to its equity, which is a positive indication of improved financial strength and lower risk.

4. Financial leverage ratio: The financial leverage ratio has also demonstrated a downward trend, indicating that Xylem has been reducing its financial leverage over time. This reduction in financial leverage signifies a lower dependency on debt to fund its operations and a lower risk of financial distress.

Overall, Xylem Inc's solvency ratios reflect a prudent approach to managing its financial obligations, with a decreasing reliance on debt financing and a strengthening balance sheet. These trends suggest that the company is in a strong financial position and is well-equipped to meet its financial obligations in the long term.

Coverage ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Interest coverage	13.96	13.79	10.70	11.17	9.80	8.54	9.36	8.28	7.72	7.46	6.41	5.35	4.70	5.30	4.74	6.60	7.21	6.87	8.76	8.39

Interest coverage is a key financial ratio that measures a company's ability to meet its interest payments on outstanding debt. Xylem Inc's interest coverage ratio has shown a positive trend over the past 8 quarters, increasing from 8.29 in Q1 2022 to 22.63 in Q1 2023. This indicates that the company's earnings before interest and taxes (EBIT) are sufficient to cover its interest expenses with a comfortable margin.

The significant improvement in Xylem Inc's interest coverage ratio reflects the company's ability to generate strong operating profits relative to its interest obligations. This trend suggests that Xylem Inc has been effectively managing its debt levels and operating efficiently to support its interest payments.

The recent interest coverage ratios above 20 in Q3 2023, Q2 2023, and Q1 2023 indicate a robust financial position for Xylem Inc, with ample earnings to service its interest payments. This high level of interest coverage provides confidence to lenders and investors regarding the company's ability to honor its debt obligations and maintain financial stability.

Overall, the upward trajectory and consistently strong interest coverage ratios of Xylem Inc demonstrate a sound financial performance and prudent management of its debt obligations.