Central Garden & Pet Company A (CENTA)

Central Garden & Pet Co.'s solvency ratios provide insight into the company's ability to meet its long-term financial obligations.

The debt-to-assets ratio indicates the proportion of the company's assets financed by debt. Over the past five years, this ratio has ranged from 0.30 to 0.38, with a slight downward trend. This suggests that Central Garden & Pet Co. has effectively managed its debt levels in relation to its total assets.

The debt-to-capital ratio measures the proportion of the company's capital that is financed by debt. Similarly, this ratio has displayed a slight downward trend over the past five years, indicating a decreasing reliance on debt in the company's capital structure.

The debt-to-equity ratio provides insight into the level of leverage within the company's capital structure. This ratio has ranged from 0.64 to 0.97 over the past five years, with a notable increase in 2021. However, the ratio for 2023 has decreased to 0.82, which suggests that the company has reduced its reliance on debt in relation to shareholders' equity.

Lastly, the financial leverage ratio measures the extent to which the company utilizes debt in its operations. Central Garden & Pet Co.'s financial leverage ratio has exhibited an upward trend over the past five years, indicating an increase in financial risk. However, the ratio has remained relatively stable in recent years.

Overall, these solvency ratios reflect Central Garden & Pet Co.'s prudent management of debt levels and a gradual reduction in reliance on debt financing, although the financial leverage ratio signals a slight increase in risk.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest payment obligations, indicating the extent to which earnings can cover interest expenses. Central Garden & Pet Co.'s interest coverage for the past five years has ranged from 4.24 to 4.95, indicating a consistent ability to cover interest payments with operating earnings.

The slight fluctuations in the interest coverage ratio over the years reflect changes in the company's operating income relative to its interest expenses. Despite these fluctuations, the ratios consistently remain above 1, indicating that the company has earned significantly more operating income than the interest owed on its outstanding debt.

A higher interest coverage ratio indicates a stronger ability to meet interest obligations from operating earnings. Central Garden & Pet Co.'s average interest coverage ratio of approximately 4.54 over the past five years reflects a healthy financial position and a strong ability to service its debt.

Overall, the trend in Central Garden & Pet Co.'s interest coverage ratio suggests a consistent and stable ability to meet its interest payment obligations, portraying a financially sound and sustainable position.