Avnet Inc (AVT)

The analysis of Avnet Inc.'s solvency ratios reveals a consistent pattern over the period examined. Notably, the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are all reported as zero across all observed dates. This indicates that the company has maintained a zero-level of debt relative to its assets, capital, and equity, suggesting an entirely equity-financed capital structure during this timeframe. As such, there is no evidence of leverage or debt obligations impacting the company's solvency profile.

Meanwhile, the financial leverage ratio, which measures the extent of fixed financial costs relative to equity, has remained steadily above 2.2 throughout the period, with slight fluctuations. Starting from approximately 2.11–2.22 and gradually increasing to around 2.62–2.73 in the later periods, this ratio indicates that the company employs financial leverage, primarily through equity, to fund its assets. Since the debt ratios are zero, the high leverage ratio appears to be driven by accounting measures or other financing arrangements not captured in traditional debt metrics, possibly including preferred stock or other hybrid instruments not categorized as debt.

Overall, the data suggest that Avnet Inc. has operated with no recorded debt during the analyzed period, aligning with a conservative or potentially unleveraged capital structure. The elevated financial leverage ratio implies that the company may utilize significant fixed financing or accounting practices that result in a high leverage figure despite the absence of traditional debt, but the zero debt ratios confirm the lack of leverage risk associated with debt obligations.

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Coverage ratios

The analysis of Avnet Inc's interest coverage ratio over the specified period reveals significant fluctuations, reflecting changes in the company's ability to meet its interest obligations.

In the fiscal year ending September 30, 2020, the interest coverage ratio was negative at -0.68, indicating that the company's earnings before interest and taxes (EBIT) were insufficient to cover interest expenses, resulting in what is often considered a financial distress signal. This scenario persisted into December 2020, with a ratio of -0.65, underscoring ongoing financial challenges.

Beginning in March 2021, a marked improvement is observed, with the ratio turning positive at 1.71, suggesting a shift toward greater earnings capacity to cover interest payments. This upward trend continued throughout 2021 and into 2022, with ratios reaching 2.93 in June 2021, 4.79 in September 2021, and further ascending to 6.53 in December 2021. During this period, the company exhibited a strengthening ability to meet its interest obligations comfortably.

The positive momentum persisted into 2022, with ratios increasing to 8.22 in March, 9.30 in June, and remaining high at 8.62 in September 2022. However, a gradual decline began thereafter, with ratios decreasing to 7.53 by the end of 2022, and further to 6.06 in the first quarter of 2023. This downward trend continued into mid-2023, with ratios reaching 4.92 in June and 4.66 in September.

Looking into the later periods, the ratios exhibited a consistent decline, approaching levels indicative of tighter interest coverage, at 3.96 in December 2023 and dropping further to 3.46 in March 2024. The decline persisted into the subsequent quarters, with ratios of 3.24 in June, 2.57 in September 2024, and 2.40 in December 2024. The most recent data point for March 2025 shows a ratio of 2.38, with an anticipated further decrease to 2.02 in June 2025.

Overall, the interest coverage ratio demonstrates a transition from financial distress in 2020 to a period of strong coverage in 2021 and 2022, followed by a gradual weakening trend commencing in late 2022. The persistent decline towards approximately 2.0 suggests a narrowing margin of safety for servicing interest expenses, which could pose increased financial risk if the trend continues.