The Clorox Company (CLX)

The analysis of The Clorox Company’s solvency ratios, based on the provided data, reveals a consistent pattern over the observed periods. The Debt-to-Assets ratio remains at zero across all dates, indicating that the company has not reported any debt relative to its assets throughout the analyzed timeline. Similarly, the Debt-to-Capital and Debt-to-Equity ratios are uniformly at zero, signifying the absence of reported leverage or debt financing during these periods.

In contrast, the Financial Leverage Ratio exhibits significant variability, with values fluctuating markedly over the timeline. Initially, from June 2020 through December 2020, the ratio ranges from approximately 5.79 to 6.84, suggesting the company employed some level of financial leverage, possibly through other means or internal capital structures. During the period from March 2021 to December 2021, the ratio escalates considerably, peaking at 19.78 in December 2021, which indicates a significant increase in leverage, potentially through debt issuance or other financial strategies.

Following this peak, the leverage ratio declines sharply in 2022, reaching as low as 1.939 in March 2023, then fluctuates with notable spikes and dips. The ratio reaches extremely high levels, such as 1,939.33 in March 2023 and 204.15 in March 2025, which could imply accounting anomalies, extraordinary events, or leverage leverage built on non-traditional financial instruments or assumptions. Conversely, values such as 17.53 (June 2024), 17.53 (June 2024), and the intermediate figures indicate periods of moderate leverage.

The overall data suggests that, while traditional debt-based leverage ratios are reported as zero, the company’s financial leverage, as measured by this ratio, fluctuates dramatically, with periods of very high leverage. This discrepancy may reflect differences in reporting practices, capital structure adjustments, or non-traditional leverage strategies employed by the company over time. Nonetheless, the persistent zero debt ratios imply that debt or similar liabilities are not a prominent part of the company’s reported financial structure within this period, or that such data was not appropriately captured in this dataset.

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Coverage ratios

The interest coverage ratios of The Clorox Company over the analyzed period reveal notable fluctuations that reflect changes in the company's ability to meet its interest obligations. Between June 30, 2020, and December 31, 2021, the ratio exhibited a declining trend—from a high of 12.96 in June 2020 down to a low of 4.23 in December 2021—indicating a reduction in earnings relative to interest expenses and a potential rise in financial strain or diminished earnings capacity during this period.

Following this decline, the ratio experienced an uptick starting in early 2022, with values such as 7.15 in March 2022 and 6.72 in December 2022, suggesting some improvement in earnings coverage of interest expenses. However, by March 2023, the ratio sharply dropped to 2.40, corresponding with a period of increased financial stress or reduced profitability.

Subsequently, the ratio demonstrated some recovery: it increased to 3.94 by June 2023, and further improved to 7.21 by September 2024, before reaching 8.67 in December 2024 and a projected 11.94 in March 2025. These latter figures, notably the projected ratios, indicate a strengthened capacity to cover interest expenses, reflecting an overall improvement in earnings or a reduction in interest obligations.

Throughout the period, the ratios indicate periods of heightened financial risk, especially around late 2021 and early 2023, when the interest coverage approached levels below 3, signaling potential concerns regarding debt servicing capacity. Conversely, the recent upward trend in ratios suggests an overall recovery in earnings capacity, aligning with improved financial stability implied by the forecasts for 2024 and 2025.