Applied Industrial Technologies (AIT)
Solvency ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.19 | 0.22 | 0.26 | 0.35 | 0.37 |
| Debt-to-capital ratio | 0.25 | 0.29 | 0.36 | 0.46 | 0.50 |
| Debt-to-equity ratio | 0.34 | 0.41 | 0.56 | 0.84 | 1.01 |
| Financial leverage ratio | 1.75 | 1.88 | 2.13 | 2.44 | 2.71 |
Applied Industrial Technologies has exhibited a consistent improvement in its solvency ratios over the past five years. The debt-to-assets ratio has decreased from 0.37 in 2020 to 0.19 in 2024, indicating that the company has reduced its reliance on debt to finance its assets. Similarly, the debt-to-capital ratio has shown a declining trend from 0.50 in 2020 to 0.25 in 2024, reflecting a strengthening financial position in terms of capital structure.
The debt-to-equity ratio has experienced a notable decline from 1.01 in 2020 to 0.34 in 2024, signaling a significant improvement in the company's ability to cover its obligations with equity. This trend suggests that Applied Industrial Technologies has been successful in reducing its debt levels relative to shareholder equity.
Furthermore, the financial leverage ratio has progressively decreased from 2.71 in 2020 to 1.75 in 2024, indicating a reduction in the company's reliance on borrowed funds to generate returns for shareholders. This improvement in financial leverage reflects a healthier balance sheet and enhanced solvency position for Applied Industrial Technologies.
Overall, the trend in solvency ratios for Applied Industrial Technologies demonstrates a positive financial performance, with the company effectively managing its debt levels and enhancing its ability to meet its financial obligations. This improvement in solvency ratios reflects a stronger financial position and indicates a lower risk of financial distress for the company.
Coverage ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 25.25 | 19.14 | 13.31 | 6.75 | 2.48 |
The interest coverage ratio for Applied Industrial Technologies has shown a consistent upward trend over the past five years. From 2020 to 2024, the ratio has increased significantly from 2.48 to 25.25, indicating a substantial improvement in the company's ability to cover its interest expenses with its operating income.
This suggests that the company's operating profits have been increasing at a faster rate than its interest expenses. A higher interest coverage ratio is favorable as it indicates that the company is more capable of meeting its interest obligations from its earnings, and it also signifies a lower risk of default on its debt payments.
The substantial improvement in Applied Industrial Technologies' interest coverage ratio over the years is a positive sign of the company's financial health and its ability to manage its debt effectively. This trend reflects positively on the company's profitability and financial stability.