ConAgra Foods Inc (CAG)

The solvency ratios of ConAgra Foods Inc. demonstrate a generally stable financial position with regard to debt management over the observed period.

The Debt-to-assets ratio consistently remains low, fluctuating around approximately 0.37 to 0.39 from the second half of 2022 through mid-2024, indicating that less than half of the company's assets are financed by debt. The ratio drops to zero in several reporting periods, which suggests either the absence of debt or potential anomalies in reporting; however, the overall implication is that the company maintains a conservative debt level relative to its assets, enhancing its solvency profile.

The Debt-to-capital ratio follows a similar trend, maintaining values primarily around 0.45 to 0.51, although it shows slight variations over time. Values around 0.51 in late 2022 decrease to approximately 0.45 by mid-2023, and then stabilize near 0.47 in subsequent periods. These ratios suggest that approximately half of the company's capital structure is composed of debt, indicating a balanced approach toward leveraging.

The Debt-to-equity ratio indicates that debt constitutes roughly 0.81 to 1.02 times the equity over the observed periods. The ratio fluctuates slightly but remains around 0.81 to 1.02, reflecting a moderate level of leverage that suggests the company is not heavily reliant on debt relative to shareholders' equity, thus supporting a solid solvency position.

The Financial leverage ratio, which measures the degree of a company's fixed financial obligations compared to its earnings before interest and taxes, remains relatively stable around 2.36 to 2.61 throughout the period. The ratios indicate that for every dollar of equity, there are approximately 2.36 to 2.61 dollars of total assets financed through debt, further emphasizing moderate leverage levels that are typical for a stable company, providing a cushion against insolvency risk.

Overall, ConAgra Foods Inc. exhibits prudent leverage management, with low to moderate debt levels relative to assets, capital, and equity. The ratios suggest a consistent and conservative approach to financing, which is favorable from a solvency standpoint, implying that the company maintains sufficient financial stability to meet its long-term obligations.

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Coverage ratios

The analysis of ConAgra Foods Inc.'s interest coverage ratios over the specified periods reveals notable fluctuations, indicating varying levels of the company's ability to meet its interest obligations through earnings before interest and taxes (EBIT).

Between August 28, 2022, and November 30, 2022, the interest coverage ratio exhibits a recovery from 2.38 to 3.17, demonstrating an improvement in the company’s capacity to cover interest with its operating earnings. This upward trend suggests a period of strengthened financial performance or reduced interest expenses relative to earnings.

From late November 2022 to February 28, 2023, the ratio continues to trend upward significantly, reaching a peak of 5.55. This increase emphasizes a robust capacity to service interest obligations, likely attributable to increased earnings, lower interest costs, or both.

However, starting in May 2023, a downward trend emerges. The interest coverage drops from 4.22 on May 28, 2023, to 3.01 by May 31, 2023, signaling a potential weakening in earnings relative to interest expenses. This decline continues with the ratio declining further to 2.92 by August 31, 2023, indicating a reduced safety margin.

The trend remains volatile; the ratio subsequently increases to 3.79 on November 26, 2023, and further to 4.74 on November 30, 2023, reflecting some recovery in the company's ability to meet interest obligations. Nevertheless, the ratio fluctuates again, decreasing to 2.41 on May 26, 2024, and then sharply declining to 0.48 by May 31, 2024.

Subsequently, a dramatic deterioration is observed with the ratio reaching an exceptionally low level of 0.16 on August 31, 2024, and further dropping to 0.12 on November 30, 2024, indicating that the company's earnings are significantly insufficient to cover its interest expenses during this period.

A partial improvement occurs thereafter, with the ratio increasing to 1.92 on February 28, 2025, and further to 2.82 by May 31, 2025, suggesting a potential stabilization or improvement in earnings relative to interest costs.

Overall, the interest coverage ratio demonstrates periods of strength interspersed with periods of significant decline. The recent substantial decreases in 2024 suggest heightened financial risk, as the company faced challenges in generating sufficient earnings to comfortably cover interest obligations, potentially implying increased leverage or decreased operating profitability. The subsequent recovery indicates some positive change, but the overall trend toward lower ratios raises concerns about long-term debt servicing capacity.