AutoZone Inc (AZO)
Solvency ratios
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.48 | 0.40 | 0.36 | 0.38 | 0.53 |
| Debt-to-capital ratio | 2.31 | 2.37 | 1.52 | 1.19 | 1.49 |
| Debt-to-equity ratio | — | — | — | — | — |
| Financial leverage ratio | — | — | — | — | — |
The solvency ratios measure the ability of a company to meet its long-term obligations and its leverage position. Let's analyze Autozone Inc.'s solvency ratios based on the provided data.
1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets that are financed by debt. The increasing trend in the debt-to-assets ratio from 0.38 in 2020 to 0.49 in 2023 suggests that Autozone Inc. has been relying more on debt to finance its assets. This may indicate increased financial risk as a higher proportion of assets is funded by debt.
2. Debt-to-capital ratio: This ratio measures the proportion of a company's capital structure that is financed by debt. In the case of Autozone Inc., the debt-to-capital ratio has fluctuated, with a significant increase from 1.19 in 2020 to 2.32 in 2022, and then a decrease to 2.28 in 2023. The higher ratio in 2022 may signal a more leveraged position, which could increase the financial risk and interest burden.
3. Debt-to-equity ratio: Unfortunately, the data for this ratio is not provided, so we cannot analyze the trend or provide insights into the company's level of leverage compared to its equity.
4. Financial leverage ratio: Similarly, the data for this ratio is not provided, so we cannot perform an analysis based on the information given.
In conclusion, the analysis of Autozone Inc.'s solvency ratios indicates a trend of increasing reliance on debt financing, as shown by the rising debt-to-assets ratio and the fluctuations in the debt-to-capital ratio. This trend may reflect a need for additional financing for the company's operations or investments. However, without the debt-to-equity ratio and financial leverage ratio, a complete assessment of the company's leverage position and solvency cannot be made.
Coverage ratios
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 10.90 | 16.48 | 14.59 | 11.66 | 11.49 |
The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings. A higher ratio indicates a greater ability to cover interest payments.
Looking at Autozone Inc.'s interest coverage over the past five years, we can see a somewhat declining trend, although the values remain relatively high and generally above 10, which is considered a healthy level.
In 2023, the interest coverage ratio was 11.34, indicating that the company's earnings were 11.34 times its interest expenses. This represents a decrease from the previous year's 17.07. While this decrease may raise some concerns, a ratio of 11.34 still suggests that Autozone Inc. has ample earnings to cover its interest payments.
In 2022, the interest coverage ratio was relatively high at 17.07, indicating a strong ability to meet its interest obligations. This was an improvement from the previous year's 15.07, demonstrating the company's robust earnings relative to its interest expenses.
In 2021, the interest coverage ratio was 15.07, which was slightly lower compared to the previous year but still at a healthy level. In 2020 and 2019, the interest coverage ratios were 12.02 and 11.99 respectively, both showing adequate earnings to cover interest payments.
In conclusion, Autozone Inc.'s interest coverage has shown some fluctuation over the past five years, yet the company has consistently maintained a robust ability to meet its interest obligations. While the decreasing trend in recent years may warrant further attention, the overall levels of interest coverage remain at a satisfactory range, indicating the company's ability to handle its debt obligations.