Accenture plc (ACN)
Solvency ratios
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 1.99 | 2.14 | 2.21 | 2.18 | 2.07 |
The solvency ratios for Accenture plc provide insights into the company's ability to meet its long-term financial obligations and the level of financial risk associated with its capital structure. Let's analyze each solvency ratio to understand Accenture's financial leverage over the past five years.
1. Debt-to-assets ratio: This ratio measures the proportion of a company's assets financed by debt. The consistent value of 0.00 over the past five years indicates that the company has not relied on debt to finance its assets and has maintained a debt-free capital structure.
2. Debt-to-capital ratio: This ratio expresses the percentage of a company's capital that is contributed by debt. The low but increasing trend from 0.00 in 2020 to 0.01 in 2023 suggests that a very small portion of Accenture's capital is financed by debt.
3. Debt-to-equity ratio: This ratio indicates the relative proportion of debt and equity used to finance a company's assets. Similarly to the debt-to-capital ratio, the consistent value of 0.00 signifies negligible reliance on debt for capitalization.
4. Financial leverage ratio: This ratio measures the level of a company's debt financing in its capital structure. The increasing trend from 2.07 in 2019 to 1.99 in 2023 indicates a decreasing reliance on debt to fund the company's operations. A lower financial leverage ratio is generally perceived as a positive sign, as it implies lower financial risk.
Based on the analysis of these solvency ratios, it is evident that Accenture plc has maintained a conservative and low-debt capital structure, with a strong emphasis on equity financing. The company's minimal reliance on debt for capitalization indicates a lower financial risk, which may contribute to greater financial stability and resilience in the long term.
Coverage ratios
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 190.53 | 192.98 | 130.05 | 203.50 | 270.33 |
The interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by the interest expense. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Based on the data provided, we see that Accenture plc did not report interest coverage ratios for the fiscal years ending in August 31, 2023, and August 31, 2020. However, for the available years, the interest coverage ratios are as follows:
- Aug 31, 2022: 4,283.12
- Aug 31, 2021: 291.71
- Aug 31, 2019: Not reported
The significant increase in the interest coverage ratio from 291.71 in 2021 to 4,283.12 in 2022 indicates a substantial improvement in Accenture's ability to cover its interest expenses. This could be attributed to a significant increase in EBIT or a decrease in interest expense during that period.
It is important to note that the absence of a reported interest coverage ratio for 2023 and 2020 may suggest that there were significant changes in the company's financial structure, such as debt issuance or refinancing, which could have impacted the interest coverage.
In order to fully interpret the trend and understand the drivers behind the fluctuations in the interest coverage ratio, additional information about Accenture's EBIT, interest expense, and overall financial performance would be needed. It is also essential to consider the industry benchmarks and peer comparisons to assess Accenture's position within the market.