The Clorox Company (CLX)

The financial data provided for The Clorox Company indicates a consistent pattern of zero values across several key solvency ratios, namely, the Debt-to-Assets Ratio, Debt-to-Capital Ratio, and Debt-to-Equity Ratio, throughout the examined periods from September 2020 to June 2025. This uniformity suggests that, within this timeframe, the company has reported no measurable debt obligations relative to its assets, capital, or equity.

Specifically, the Debt-to-Assets Ratio remains at 0.00 throughout all sample dates, implying that the company’s assets are fully financed without the use of debt, or that debt levels are negligible or not reported in the data provided. Similarly, the Debt-to-Capital Ratio and Debt-to-Equity Ratio are also recorded at zero, reinforcing the interpretation of a debt-free or extremely low-debt profile during these reporting periods.

The Financial Leverage Ratio presents a contrasting perspective. It exhibits significant variability, with ratios ranging from a low of 5.79 at the end of 2020 to extremely high figures such as 1,939.33 in March 2023, and fluctuating thereafter—reaching levels like 204.15 in March 2025 before declining again. These spikes suggest that, at certain points, the company’s leverage calculations may have been influenced by non-operational factors, such as accounting anomalies, extraordinary items, or changes in capital structure that are not reflected in debt-based ratios.

Overall, the static zero values in debt-related ratios indicate an absence or negligible use of leverage, consistent with a conservative financing approach or reporting limitations. Conversely, the highly volatile and occasionally extraordinarily elevated financial leverage ratios imply that other factors may have temporarily distorted the leverage metrics, or that the ratios are derived from very low denominators during periods of minimal debt or equity. As such, these ratios collectively suggest that The Clorox Company’s solvency profile is characterized by minimal reliance on borrowed capital, but interpretations of leverage should consider potential reporting anomalies or non-standard accounting treatments influencing the leverage ratios.

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Coverage ratios

The interest coverage ratio for The Clorox Company over the specified periods demonstrates notable fluctuations, reflecting changes in earnings relative to interest expenses. Beginning in September 2020, the ratio was at a robust 15.65, indicating strong ability to meet interest obligations. This upward trend continued through December 2020, reaching a peak of 16.79, signifying excellent coverage.

However, a significant decline commenced in March 2021, with the ratio dropping to 13.01, and further decreasing by June 2021 to 10.04. The downward trend persisted into the subsequent quarters, with the ratio declining sharply to 6.62 by September 2021 and further to 4.23 at the end of December 2021. This suggested a weakening in the company's ability to comfortably cover its interest expenses during this period.

The ratio experienced some recovery starting in early 2022, ascending to 7.15 in March and stabilizing around 6.67 in June. A slight reduction occurred again by September 2022 to 6.35 but remained relatively stable through December 2022 at 6.72. A notable decline was observed in March 2023, with the ratio falling sharply to 2.40, indicating a potential concern regarding interest coverage.

Subsequently, the ratio showed signs of improvement during 2023, rising to 3.94 in June and slightly decreasing to 2.82 in September. It stabilized at 2.85 in December 2023. The most recent data points for 2024 show a strengthening trend, with the ratio increasing to 5.14 in March, then further to 5.57 in June, and reaching 7.21 in September. Projections for the remainder of 2024 and into 2025 reflect a continued positive trajectory, with the ratio expected to reach 8.67 by December 2024, and further increasing to 11.94 in March 2025 before slightly declining again to 8.41 in June.

Overall, the interest coverage ratio has experienced periods of significant decline, particularly around early 2023, indicating increased difficulty in covering interest costs during that period. However, recent trends suggest a recovery and strengthening capability, with projected improvements into 2025. These movements may reflect underlying changes in earnings, interest expenses, or both, and highlight periods of potential financial stress and subsequent recovery within the company's operations.