Analysis of Solvency Ratios
Quarterly Data
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Price to Earnings (P/E) since 2010
- Price to Operating Profit (P/OP) since 2010
- Price to Book Value (P/BV) since 2010
- Price to Sales (P/S) since 2010
- Analysis of Debt
- Aggregate Accruals
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Solvency Ratios (Summary)
Generac Holdings Inc., solvency ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The analysis of the financial leverage ratios over the observed periods reveals several clear trends in the company's capital structure and debt servicing capacity.
- Debt to Equity Ratio
- This ratio exhibits a consistent and gradual decline from 1.65 at the end of the first quarter of 2018 to a low of 0.44 at the end of 2021. Thereafter, a slight increase is noted, reaching 0.57 by mid-2022. The initial continuous decrease suggests a steady reduction in reliance on debt financing relative to shareholder equity, enhancing financial stability. The small uptick in 2022 indicates a modest increase in leverage, warranting monitoring in subsequent periods.
- Debt to Capital Ratio
- Similarly, this ratio decreases steadily from 0.62 in early 2018 to 0.31 by the end of 2021, then increases slightly to 0.36 by mid-2022. This downward trend aligns with the debt to equity ratio trend, evidencing an overall reduction in debt as a proportion of total capital. The modest increase in 2022 again suggests a minor shift toward higher debt usage.
- Debt to Assets Ratio
- The ratio falls from 0.45 at the beginning of the period to a low point of 0.20 at the close of 2021, reflecting decreased leverage on the asset base. However, there is an increase thereafter to 0.25 by mid-2022, indicating a slight rise in asset financing through debt.
- Financial Leverage Ratio
- The financial leverage ratio shows a decrease from 3.64 in early 2018 to a trough of 2.20 by the end of 2021. A minor increase to 2.26 is observed in 2022. This pattern corroborates the lowering of debt relative to equity and assets, implying reduced use of borrowed funds and potentially lower risk exposure.
- Interest Coverage Ratio
- This ratio improves markedly over the timeframe, increasing from 6.45 to a peak of 22.99 at the end of 2021 and slightly decreasing afterward to 19.26 by mid-2022. The growing interest coverage indicates an enhanced ability to meet interest expenses from operational earnings, reflecting improved earnings or reduced interest burden, or a combination of both. The slight decline in 2022 warrants attention but remains at a strong level.
In summary, the company has steadily reduced its leverage from 2018 through 2021 across multiple related metrics, indicating a deliberate strengthening of the balance sheet and conservative capital management. The ratios show a reduced dependence on debt financing, supported by improving ability to cover interest expenses. The slight reversals in some ratios in 2022 suggest cautious monitoring as debt levels and leverage have marginally increased, yet remain comparatively low relative to the historical data.
Debt Ratios
Coverage Ratios
Debt to Equity
Generac Holdings Inc., debt to equity calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||
| Current portion of long-term borrowings and finance lease obligations | ||||||||||||||||||||||||
| Long-term borrowings and finance lease obligations, excluding current portion | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Stockholders’ equity attributable to Generac Holdings Inc. | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to equity1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Equity, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Debt to equity = Total debt ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's capital structure over the observed periods.
- Total Debt
-
The total debt exhibits a relatively stable pattern in the initial periods up to the end of 2020, fluctuating within a narrow range around 885 million to 947 million US dollars. Starting in early 2021, however, the total debt demonstrates a clear upward trajectory, rising from approximately 872 million US dollars in Q1 2021 to nearly 1.37 billion US dollars by Q2 2022. This increase indicates a growing reliance on debt financing during the recent periods.
- Stockholders’ Equity Attributable to Generac Holdings Inc.
-
Stockholders’ equity shows a consistent and strong upward trend throughout the entire timeframe. Beginning at around 570 million US dollars in Q1 2018, equity more than quadruples, reaching nearly 2.42 billion US dollars by Q2 2022. This steady growth suggests a robust accumulation of retained earnings and possible equity issuance, reflecting enhanced shareholder value and financial strength.
- Debt to Equity Ratio
-
The debt to equity ratio decreases significantly from 1.65 in Q1 2018 to a trough of 0.44 in Q1 2021, indicating a deleveraging phase wherein equity growth outpaced debt increases, thus enhancing the company’s financial leverage position. However, following this low point, the ratio reverses direction and rises to 0.57 by Q2 2022, associated with the noted increase in total debt during 2021 and 2022. Despite the recent rise, the ratio remains well below early period levels, signifying an overall stronger equity base relative to debt.
Overall, the financial data reflects a company that successfully expanded its equity base over the past several years while initially reducing leverage. The recent increase in debt levels has moderated the decline in the debt to equity ratio but overall financial leverage remains lower than in the initial periods. This pattern suggests a strategic balance between equity growth and selective debt financing to support ongoing operations or growth initiatives.
Debt to Capital
Generac Holdings Inc., debt to capital calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||
| Current portion of long-term borrowings and finance lease obligations | ||||||||||||||||||||||||
| Long-term borrowings and finance lease obligations, excluding current portion | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Stockholders’ equity attributable to Generac Holdings Inc. | ||||||||||||||||||||||||
| Total capital | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to capital1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Capital, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Debt to capital = Total debt ÷ Total capital
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the company's debt and capital structure over the examined periods.
- Total Debt
- The total debt exhibited a relatively stable pattern from early 2018 through 2020, fluctuating slightly but generally maintaining a level around 900,000 to 940,000 thousand US dollars. However, starting from 2021, a discernible upward trend in total debt is evident, accelerating significantly by mid-2022. This increase culminated in total debt rising to over 1,360,000 thousand US dollars by June 2022, indicating a substantial increase in borrowing or liabilities over this timeframe.
- Total Capital
- Total capital shows a consistent upward trajectory throughout the entire period under review. From about 1,510,000 thousand US dollars in early 2018, total capital progressively increased almost every quarter, reaching over 3,780,000 thousand US dollars by the middle of 2022. This sustained growth in capital denotes ongoing investment or retained earnings contributing to the company’s overall financial base.
- Debt to Capital Ratio
- The debt to capital ratio demonstrates a strong declining trend from the beginning of 2018 through late 2021, dropping from 0.62 to a low of approximately 0.31. This decline indicates an improving capital structure with proportionately less reliance on debt financing relative to total capital during this period. However, from late 2021 into 2022, the ratio reversed direction, increasing to around 0.36 by mid-2022. This rise suggests that the company’s debt levels grew faster than its capital base in recent quarters, reflecting a higher leverage position.
Overall, the company showed effective management of its capital and debt structure with a trend toward reduced leverage until late 2021. The recent increase in total debt and the uptick in the debt to capital ratio in 2022 warrant attention as they may imply greater financial risk or a strategic shift toward increased financing through debt. The consistent increase in total capital underscores growth but must be balanced against rising debt levels to maintain financial stability.
Debt to Assets
Generac Holdings Inc., debt to assets calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Short-term borrowings | ||||||||||||||||||||||||
| Current portion of long-term borrowings and finance lease obligations | ||||||||||||||||||||||||
| Long-term borrowings and finance lease obligations, excluding current portion | ||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Debt to assets1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Debt to Assets, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Debt to assets = Total debt ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the company's leverage and asset base over the observed periods.
- Total Debt
- Total debt remained relatively stable from early 2018 through early 2020, fluctuating slightly between approximately $890 million and $950 million. Beginning in mid-2021, total debt exhibited a marked upward trend, rising sharply from roughly $870 million to about $1.37 billion by mid-2022. This increase indicates a significant rise in borrowing or other liabilities during the latest periods.
- Total Assets
- The company's total assets showed consistent growth throughout the entire period. Starting at around $2.08 billion in early 2018, total assets increased steadily every quarter, reaching approximately $5.47 billion by mid-2022. This more than doubling of asset value suggests substantial investment or expansion activities over the timeframe, reflecting asset accumulation at an accelerating rate particularly after 2020.
- Debt to Assets Ratio
- The debt-to-assets ratio has generally declined from 0.45 in March 2018 to a low of 0.20 in March 2022, indicating improved leverage and a stronger asset base relative to debt. However, there is a slight uptick to 0.25 observed by June 2022, coinciding with the increase in total debt. Despite this recent uptick, the overall trend over the analyzed period points to a more conservative financial structure with lower reliance on debt to finance assets.
In summary, the financial data suggests the company has been expanding its asset base significantly while initially managing to reduce leverage, enhancing financial stability. The recent uptrend in total debt and the slight rise in the debt-to-assets ratio warrant careful monitoring, as they may indicate increasing financial risk or strategic shifts in capital structure.
Financial Leverage
Generac Holdings Inc., financial leverage calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Total assets | ||||||||||||||||||||||||
| Stockholders’ equity attributable to Generac Holdings Inc. | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Financial leverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Financial Leverage, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||
| RTX Corp. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Financial leverage = Total assets ÷ Stockholders’ equity attributable to Generac Holdings Inc.
= ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several significant trends in the company's financial position over the observed periods.
- Total Assets
- The total assets exhibited a consistent upward trajectory from March 31, 2018, through June 30, 2022. Beginning at approximately 2.08 billion US dollars, total assets increased steadily each quarter, surpassing 5.47 billion US dollars by the last recorded date. This growth suggests an expansion in the company's asset base, likely reflecting investments, acquisitions, or organic growth in business operations.
- Stockholders’ Equity Attributable to Generac Holdings Inc.
- Stockholders' equity followed a similar positive trend, rising from about 570 million US dollars at the end of the first quarter of 2018 to nearly 2.42 billion US dollars by mid-2022. The steady increase in equity indicates a strengthening of the company's net worth and possibly retained earnings accumulation. This rise in equity, alongside asset growth, reflects the company's ability to finance its assets progressively through owner investments and earnings.
- Financial Leverage
- Financial leverage, defined as the ratio of total assets to equity, decreased from 3.64 at the start of 2018 to a low of approximately 2.20 by the end of 2021. In 2022, this ratio showed a modest increase, climbing slightly above 2.20. The downward trend in financial leverage over most of the period indicates a reduction in reliance on debt financing relative to equity. This decrease in leverage suggests improved balance sheet stability and potentially lower financial risk. The slight uptick in 2022 warrants monitoring but remains at historically lower levels compared to earlier periods.
Overall, the company demonstrates robust asset growth matched by increasing equity, accompanied by a general decline in financial leverage through most of the timeline. These patterns collectively indicate enhancing financial strength and a prudent approach towards debt management.
Interest Coverage
Generac Holdings Inc., interest coverage calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Net income attributable to Generac Holdings Inc. | ||||||||||||||||||||||||
| Add: Net income attributable to noncontrolling interest | ||||||||||||||||||||||||
| Add: Income tax expense | ||||||||||||||||||||||||
| Add: Interest expense | ||||||||||||||||||||||||
| Earnings before interest and tax (EBIT) | ||||||||||||||||||||||||
| Solvency Ratio | ||||||||||||||||||||||||
| Interest coverage1 | ||||||||||||||||||||||||
| Benchmarks | ||||||||||||||||||||||||
| Interest Coverage, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | ||||||||||||||||||||||||
| Caterpillar Inc. | ||||||||||||||||||||||||
| Eaton Corp. plc | ||||||||||||||||||||||||
| GE Aerospace | ||||||||||||||||||||||||
| Honeywell International Inc. | ||||||||||||||||||||||||
| Lockheed Martin Corp. | ||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Interest coverage
= (EBITQ2 2022
+ EBITQ1 2022
+ EBITQ4 2021
+ EBITQ3 2021)
÷ (Interest expenseQ2 2022
+ Interest expenseQ1 2022
+ Interest expenseQ4 2021
+ Interest expenseQ3 2021)
= ( + + + )
÷ ( + + + )
=
2 Click competitor name to see calculations.
- EBIT Trend
- The Earnings Before Interest and Tax (EBIT) exhibited a generally increasing trend over the examined periods. Starting at $55.3 million in the first quarter of 2018, EBIT saw significant growth reaching a peak of $106.7 million by the end of 2018. This upward trajectory was interrupted in early 2019, where EBIT declined to around $71 million, but it rebounded in the latter half of 2019, approaching previous highs.
- In 2020, a noticeable fluctuation occurred with EBIT initially dropping to approximately $61.9 million in Q1 but then rising sharply, culminating in a new peak of $171.9 million by the end of 2020. The upward trend continued through 2021, with EBIT peaking at $193 million in Q1 and maintaining a high level through the year, before experiencing some volatility in early 2022, ending with a notable increase to $213.7 million in Q2 2022.
- Interest Expense Trend
- Interest expense remained relatively stable throughout the timeline, fluctuating modestly between approximately $7.7 million and $11 million. The expense slightly decreased in 2020 and 2021, reaching its lowest point around $7.7 million in mid-2021. In 2022, interest expense increased again to approximately $10.2 million by mid-year.
- Interest Coverage Ratio
- Interest coverage, defined as the ratio of EBIT to interest expense, showed a strong improving trend over the periods. Beginning at a ratio of 6.45 in early 2018, it consistently increased to reach a peak of 22.99 in Q3 2021. Even in early 2022, despite a slight decline from this peak, the interest coverage remained robust at 19.26, indicating significantly improved ability to cover interest expenses compared to the starting period.
- Overall Analysis
- The company's operating profitability, as measured by EBIT, showed considerable growth with some volatility, particularly around early 2019 and early 2020, which could correlate with external economic conditions or operational changes. Despite fluctuations in EBIT, interest expense remained relatively stable, leading to a marked improvement in interest coverage ratio. This suggests enhanced financial flexibility and reduced risk related to interest obligations over time. The strong increase in the interest coverage ratio particularly from 2020 onwards indicates stronger earnings capacity relative to interest payments, underscoring improved financial health in the latest periods.