Cardinal Health Inc (CAH)

The comprehensive analysis of Cardinal Health Inc.'s solvency ratios reveals the following insights:

1. Debt-to-Assets Ratio: This ratio has consistently been recorded at zero across all periods from September 30, 2020, through June 30, 2025. A debt-to-assets ratio of zero indicates that the company has not reported any debt relative to its total assets during this timeframe. This could suggest that the company maintains a debt-free capital structure or that the data reflects negligible or non-existent debt obligations.

2. Debt-to-Capital Ratio: Similar to the debt-to-assets ratio, this ratio remains at zero throughout the observed periods. The absence of debt relative to capital indicates that the company’s capital structure is entirely equity-based, or debt levels are so minimal that they are effectively negligible in the ratio calculations.

3. Debt-to-Equity Ratio: The ratio has uniformly been zero, further corroborating the absence of reported debt and signaling that the company's equity entirely funds its assets without leverage from debt.

4. Financial Leverage Ratio: This ratio has varied between approximately 22.69 and 43.77 during the periods where data is available. The financial leverage ratio measures the extent to which a company relies on debt financing relative to its equity. The elevated values imply that, when debt is reported, it constitutes a significant part of the capital structure, amplifying financial leverage. However, the existing data is limited to specific periods, and the ratios suggest that the company’s leverage has seen fluctuations but is currently not publicly reported beyond September 2021.

In summary, during the recorded periods, Cardinal Health Inc. has reported no debt-related liabilities, resulting in all solvency ratios typically associated with leverage—debt-to-assets, debt-to-capital, and debt-to-equity—being zero. The only exception is the financial leverage ratio, which indicates variance in leverage levels during certain periods when data was available. These findings collectively suggest a capital structure predominantly or entirely devoid of debt, indicating strong solvency and potentially low financial risk from leverage. However, the absence of recent debt ratios warrants consideration of whether the company's leverage policy has changed or if the company's financial structure remains debt-free.

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Coverage ratios

The analysis of Cardinal Health Inc.'s interest coverage ratios over the specified periods reveals a highly variable financial performance relative to interest expenses.

Between September 30, 2020, and March 31, 2021, the company demonstrated solid interest coverage, with ratios fluctuating from 2.80 to 3.71. This indicates that during this period, earnings before interest and taxes (EBIT) comfortably covered interest obligations, reflecting manageable debt levels and stable profitability.

However, a significant deterioration is noted starting in June 30, 2021, when the ratio sharply declined to 2.79, followed by a substantial spike to 8.74 by September 30, 2021. This surge suggests a temporary improvement in earnings relative to interest expenses during that quarter.

The subsequent decline is dramatic and concerning: by December 31, 2021, the ratio plunged to 0.73, indicating that EBIT was barely sufficient to cover interest expenses, raising concerns about emerging financial strain. This downward trend continued into 2022, with negative interest coverage ratios reported on March 31 (-2.91), June 30 (-3.99), and September 30, 2022 (-6.40). Negative figures imply that earnings before interest and taxes were insufficient to meet interest obligations, signaling potential liquidity or operational challenges.

The ratio improved again starting December 31, 2022, reaching -0.51, which still indicates negative coverage but to a lesser extent. A turning point occurs in the first quarter of 2023, with a positive ratio of 5.18, suggesting a period of improved earnings strongly covering interest costs. This positive trend continued through subsequent quarters, with ratios of 7.08 (June 2023), 6.34 (September 2023), and remarkably higher ratios of 15.66 (December 2023), 11.81 (March 2024), and beyond into mid-2024 and 2025, where ratios ranged from approximately 10.77 to 20.73.

This overall progression indicates a period of significant financial recovery and enhanced profitability from late 2022 into mid-2024, resulting in a robust interest coverage position. The alternating periods of low or negative ratios earlier in the timeline reflect past financial difficulties or increased leverage, while the subsequent substantial increases suggest improved earnings capacity and possibly deleveraging or operational efficiencies.

In summary, Cardinal Health's interest coverage ratio has experienced considerable fluctuations over the analyzed period, with notable periods of financial distress marked by negative or minimal coverage ratios, followed by substantial improvements indicating strengthening financial health in recent periods.