AAR Corp (AIR)

The solvency ratios of AAR Corp have shown fluctuations over the past five fiscal years. The debt-to-assets ratio has increased over the years, indicating that AAR Corp's reliance on debt to finance its assets has also increased. This may signal a higher level of financial risk.

Similarly, the debt-to-capital and debt-to-equity ratios have also shown fluctuations, with a notable increase in the debt-to-capital ratio in 2024 compared to the previous year. The debt-to-equity ratio has also increased significantly in 2024, indicating that the company has higher levels of debt in relation to its equity.

The financial leverage ratio has also varied over the years, showing peaks in 2020 and 2024. This ratio suggests the extent to which AAR Corp is using debt to fund its operations, with a higher ratio implying higher financial risk.

Overall, the trend in these solvency ratios suggests that AAR Corp's reliance on debt has been increasing, potentially leading to higher financial leverage and associated risks. It would be important for stakeholders to closely monitor these ratios to assess the company's ability to meet its debt obligations and maintain financial stability in the future.

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Coverage ratios

Interest coverage is a financial ratio that indicates a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio suggests that the company is more capable of meeting its interest obligations.

Analyzing AAR Corp's interest coverage ratios over the past five years, we observe fluctuations in the company's ability to cover its interest expenses:

- In May 2024, the interest coverage ratio was 2.35, indicating that AAR Corp generated operating income 2.35 times higher than its interest expenses. This may raise some concerns about the company's ability to comfortably meet its interest payments.
- In May 2023, the interest coverage ratio improved significantly to 10.97, reflecting a strong ability to cover interest expenses almost 11 times. This suggests a more robust financial position compared to the previous year.
- Moving back to May 2022, the interest coverage ratio was exceptionally high at 44.88, indicating a substantial cushion to meet interest obligations. This could signal a period of outstanding financial performance.
- In May 2021, the interest coverage ratio decreased to 11.80 from the previous year but still remained at a healthy level, demonstrating the company's ability to comfortably cover interest expenses.
- In May 2020, the interest coverage ratio dropped to 2.08, indicating a lower ability to cover interest obligations. This may raise concerns about the company's financial health during that period.

Overall, AAR Corp's interest coverage ratios have shown variability over the past five years, with some years indicating strong financial health and others suggesting potential challenges in meeting interest expenses. Investors and analysts may want to delve deeper into the company's financial performance and debt management strategies to better understand the factors influencing these fluctuations.