Liabilities and Debt Financing

One important ratio to consider is debt to equity, the proportion of debt compared to equity. Over the past five years, this ratio has increased from 1.33, 2.07, 2.88, 3.17, and 9.42 in 2022. These high values suggest that Red Robin carries financial risk with dwindling equity and increasing amounts of debt. Another important ratio is debt to asset which uncovers the amount of assets that are being backed by debt. Similar to debt to equity, this ratio increased year over year since 2018 with a debt to asset ratio of 0.99 in 2022. In other words, almost 100% of Red Robin's assets were being backed by debt which implies a severe level of risk. Lastly, another crucial ratio to consider is interest coverage ratio. This ratio illustrates Red Robin's capability to meet interest expenses from operating income. As predicted, Red Robin struggles to cover interest payments from operating income, with values of .13, .01, -.18, -.03, -.03 from 2018-2022. Ultimately. these values raise concern regarding the company's overall financial stability, through their ability to meet debt obligations. All in all, these three ratios make it appaerent that Red Robin struggles to mantain financially safe, and uncover a bountiful amount of risk within the company's overall financials.

Compared to its peer group, RRGB lags in the majority of ratios as compared to its competitors. Beginning with working capital to total assets, RRGB ranks last amongst its peers with a five year average -0.06. This value can be attributed to a negative working capital over the past five years, along with a decrease in total assets. Moving onto retained earnings to total assets, RRGB's five year average of 0.16 ranked third amongst its peers. Although the value is somewhat within the peer group, the discrepancy can be explained through a steadily decreased retained earnings over the past five years. Next, EBIT to total assets, RRGB ranks last with a five year average of -0.03, due to a decreasing operating income. In terms of MV of equity to total liabilities, RRGB also ranks last in its peer group with a five year average of 0.40. This is largely due to the company's decreasing equity over the past five years. Lastly, sales to total assets, Red Robin ranks first with a five year average of 1.26. This is a healthy sign for Red Robin, signaling that the company is able to generate stable revenue as compared to its assets. Ultimately, these ratios illustrate Red Robin's lack of financial efficiency, indicating a high level of bankruptcy risk for the short term.