Cal-Maine Foods Inc (CALM)

The analysis of Cal-Maine Foods Inc.'s solvency ratios over the reported period reveals several notable patterns. The Debt-to-Assets Ratio, Debt-to-Capital Ratio, and Debt-to-Equity Ratio consistently remain at zero across all dates examined. This persistent absence of these debt metrics indicates that the company may not hold significant interest-bearing liabilities or long-term debt, suggesting a potentially debt-free or very low-debt capital structure during these periods.

In contrast, the Financial Leverage Ratio demonstrates a value greater than 1 at each point in time, fluctuating within a narrow range. Starting at approximately 1.31 in August 2022, it shows a slight decline to an estimated low of around 1.18 in late 2023, before increasing again to approximately 1.29 by early 2025. Since the Financial Leverage Ratio measures the proportion of a company's assets financed by shareholders' equity relative to total assets, a figure above 1 typically indicates that the company is leveraging equity to finance its assets. The observed ratios suggest moderate leverage levels, implying that although the company predominantly relies on equity or internal funds, it still employs some degree of financial leverage.

Overall, these ratios collectively suggest that Cal-Maine Foods Inc. maintains a conservative or debt-light capital structure, with an emphasis on equity financing. The consistently negligible or zero debt ratios point towards minimal external borrowings, which reduces financial risk and interest obligations. The moderate leverage ratios indicate prudent use of leverage to support operations without exposing the company to elevated solvency risks. This profile aligns with a financially stable firm with a low reliance on debt financing, emphasizing equity-based funding strategies.

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Coverage ratios

The analysis of Cal-Maine Foods Inc.'s interest coverage ratio over multiple reporting periods reveals considerable fluctuations, indicating varying levels of financial cushion to meet interest obligations.

In the fiscal period ending August 27, 2022, the interest coverage ratio was exceptionally high at 345.21, suggesting strong earnings relative to interest expenses. This ratio declined significantly by November 26, 2022, to 195.78, which remains indicative of a solid ability to cover interest payments. A further decline occurred by February 25, 2023, reaching 27.95, signaling a substantial reduction in earnings relative to interest obligations, potentially raising concerns about the company's capacity to meet interest requirements comfortably.

Subsequent periods show continued variability. The ratio decreased to 17.59 by May 31, 2023, and further to 16.25 by June 3, 2023, both still reflecting adequate interest coverage, but with a diminishing margin. Interestingly, the ratio rebounded markedly in the next reporting period on September 2, 2023, to 502.52, suggesting a significant improvement in earnings or a reduction in interest expenses during that timeframe.

In the most recent periods, the interest coverage ratio experienced dramatic increases, reaching 276.15 on November 30, 2023, and then dropping to 63.16 by December 2, 2023. The ratio escalated again substantially to 473.73 on February 29, 2024, and peaked at an extraordinary 1,357.36 on March 2, 2024. This upward trend continued dramatically, attaining 3,188.46 on May 31, 2024, and surging further to 24,542.62 by June 1, 2024, indicating an exceptionally strong capacity to service interest obligations during these periods.

The latest available data for November 30, 2024, reports a ratio of 30,242.62, maintaining a highly elevated level. For the subsequent period ending February 28, 2025, the ratio is not available, while the last reported figure on May 31, 2025, shows a ratio of 10,019.62, still demonstrating substantial interest coverage.

Overall, the interest coverage ratios exhibit significant variability across reporting periods, with initial high levels tapering off in early 2023, then experiencing extraordinary surges in 2024. These fluctuations may reflect changes in earnings, interest expenses, or both, possibly influenced by operational performance, one-time items, or financial restructuring activities. Despite the volatility, the ratios generally remain above critical thresholds, indicating an overall capacity to meet interest obligations, albeit with periods of reduced cushion that warrant attention from a risk perspective.