Coherent Inc (COHR)

The solvency ratios of Coherent Inc provide insights into the company's ability to meet its long-term financial obligations.

The Debt-to-assets ratio has shown a decreasing trend over the past five years, indicating that the company's reliance on debt to finance its assets has decreased. This trend suggests that Coherent Inc has been managing its debt levels relative to its total assets more effectively.

The Debt-to-capital ratio follows a similar pattern as the Debt-to-assets ratio, showing a decline over the years. This ratio measures the proportion of a company's capital that is financed through debt, indicating a lower reliance on debt to fund its operations and investments.

The Debt-to-equity ratio has shown fluctuations over the period under review, but overall there is a decreasing trend. This trend suggests that Coherent Inc is gradually reducing its reliance on debt to finance its operations and investments in relation to shareholders' equity.

The Financial leverage ratio reflects the extent to which a company is using debt to finance its operations and investments. The ratio has fluctuated over the past five years but has generally remained at moderate levels. A lower financial leverage ratio implies a lower dependency on debt financing, indicating a stronger financial position.

Overall, the decreasing trend in the Debt-to-assets, Debt-to-capital, and Debt-to-equity ratios, as well as the relatively stable financial leverage ratio, suggest that Coherent Inc has been managing its debt levels effectively and improving its solvency position over the years. However, it is also important to monitor these ratios in conjunction with other financial metrics to assess the company's overall financial health and ability to meet its long-term obligations.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher ratio indicates a stronger ability to cover interest payments.

In this case, Coherent Inc's interest coverage ratio has fluctuated in recent years. In Jun 2024, the interest coverage ratio was 0.33, indicating that the company's operating income was only able to cover 33% of its interest expenses. This suggests a relatively weak ability to meet its interest obligations.

The negative interest coverage ratio of -0.24 in Jun 2023 is concerning, as it implies that the company's operating income was insufficient to cover its interest expenses, resulting in a shortfall.

The interest coverage ratio improved significantly in Jun 2022 to 3.32, indicating that the company's operating income was more than sufficient to cover its interest payments. This positive trend continued in Jun 2021 with an even higher interest coverage ratio of 6.89, reflecting a strong ability to meet interest obligations.

However, there was a significant drop in the interest coverage ratio to 0.28 in Jun 2020, indicating a sharp decline in the company's ability to cover its interest expenses.

Overall, Coherent Inc's interest coverage has shown volatility in recent years, with fluctuations in its ability to cover interest payments. Management should closely monitor this ratio to ensure the company maintains a healthy financial position.