Zurn Elkay Water Solutions Corporation (ZWS)

The solvency ratios of Zurn Elkay Water Solutions Corporation provide insight into the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio:
- The debt-to-assets ratio measures the proportion of the company's assets financed by debt.
- The ratio has been relatively stable at around 0.19 in 2023 and 2022, indicating that Zurn Elkay has a low reliance on debt to fund its assets.
- The decreasing trend from 2021 to 2023 suggests that the company has become more efficient in managing its debt relative to its assets.

2. Debt-to-capital ratio:
- The debt-to-capital ratio is a broader measure of the company's overall debt structure compared to the equity in the capital structure.
- Zurn Elkay's debt-to-capital ratio has also shown consistency, hovering around 0.24 to 0.25 in 2023 and 2022.
- This stable ratio indicates a balanced approach to financing between debt and equity.

3. Debt-to-equity ratio:
- The debt-to-equity ratio compares the company's total debt to its shareholders' equity and reflects the leverage level of the firm.
- Zurn Elkay's debt-to-equity ratio has seen significant improvements, dropping from 4.22 in 2021 to 0.31 in 2023.
- The decrease suggests that the company has reduced its reliance on debt financing and strengthened its equity position.

4. Financial leverage ratio:
- The financial leverage ratio measures the proportion of a company's total assets that are financed by debt.
- Zurn Elkay's financial leverage ratio has shown a downward trend from 8.53 in 2021 to 1.66 in 2023.
- The decreasing ratio indicates that the company has reduced its financial risk by decreasing its dependence on debt to fund its operations.

In summary, based on the solvency ratios analyzed, Zurn Elkay Water Solutions Corporation appears to have effectively managed its debt levels, improved its financial position, and reduced its overall financial risk over the years.

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Coverage ratios

Interest coverage ratio is a financial metric used to evaluate a company's ability to meet its interest obligations on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.

In the case of Zurn Elkay Water Solutions Corporation, the interest coverage ratio has been improving over the past five years. The ratio has increased from 2.25 in March 2019 to 5.03 in December 2023. This indicates that the company's earnings before interest and taxes are sufficient to cover its interest expenses over the years.

A higher interest coverage ratio suggests that the company is in a better position to meet its interest payments and is less risky to creditors. It also indicates that the company has a stronger financial position and is more likely to withstand economic downturns or fluctuations in its operating performance.

Overall, the trend in Zurn Elkay Water Solutions Corporation's interest coverage ratio shows an improving financial health and ability to service its debt obligations effectively.