American Woodmark Corporation (AMWD)

The analysis of American Woodmark Corporation's solvency ratios over the period from April 30, 2021, to April 30, 2025, reveals a consistent pattern of minimal or nonexistent long-term debt levels. The debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are all recorded at zero for each year, indicating that the company has maintained an entirely equity-financed capital structure during this timeframe, with no reported debt obligations. This suggests excellent financial stability and a strong solvency position, as the company does not rely on external debt financing to support its assets or operations.

The financial leverage ratio, which measures the proportion of assets financed by debt relative to equity, remains above 1.7 throughout the period, fluctuating between 2.20 in 2021 and 1.71 in 2025. Despite the absence of reported debt, this ratio's values imply that the company's total assets are funded predominantly by equity, with a relatively lower leverage compared to traditional, debt-dependent companies. The slight decline in the leverage ratio over the years indicates a trend toward even more conservative financial structuring, reinforcing the company's strong solvency profile.

Overall, the data demonstrate that American Woodmark Corporation maintains a prudent and conservative capital structure predominantly supported by equity, with negligible or no external debt. The stable and low leverage ratios reinforce the company's robust solvency position, suggesting a lower financial risk profile and a capability to withstand financial stress without reliance on debt financing.

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Coverage ratios

The interest coverage ratios for American Woodmark Corporation over the reported periods demonstrate significant fluctuations, reflecting variability in its earnings relative to interest expenses. As of April 30, 2021, the interest coverage stood at 4.49, indicating that the company's earnings before interest and taxes (EBIT) were approximately 4.5 times its interest obligations, suggesting a comfortable margin of safety at that time.

However, by April 30, 2022, the ratio declined sharply to -3.22, signifying that the company incurred a negative EBIT, thus failing to cover its interest expenses, which raises concerns about financial stress or deteriorating profitability during that period. Upon subsequent analysis, the interest coverage rebounded notably by April 30, 2023, reaching 8.43, reflecting a robust improvement in earnings that comfortably exceeded interest obligations.

The positive trend continued into April 30, 2024, with the ratio increasing to 19.52, indicating a significant strengthening of the company's ability to meet its interest commitments. This substantial increase suggests a period of strong operational performance or cost management, resulting in high EBIT relative to interest expenses.

By April 30, 2025, the ratio slightly declined to 14.01 but remained at a healthy level, still reflecting strong coverage of interest obligations. Overall, the trend from 2021 through 2025 indicates periods of financial stress followed by substantial recoveries, culminating in a consistent ability to cover interest expenses several times over in the later years. This pattern underscores the importance of examining underlying earnings quality and the factors driving these fluctuations to better understand the company's risk profile concerning its debt servicing capacity.