Coty Inc (COTY)
Solvency ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.32 | 0.33 | 0.36 | 0.39 | 0.47 |
| Debt-to-capital ratio | 0.50 | 0.52 | 0.58 | 0.65 | 0.72 |
| Debt-to-equity ratio | 1.00 | 1.10 | 1.40 | 1.89 | 2.63 |
| Financial leverage ratio | 3.16 | 3.32 | 3.84 | 4.79 | 5.57 |
Coty Inc's solvency ratios reflect its ability to meet its financial obligations in the long term. The trend analysis of the ratios over the past five years indicates an improvement in the company's solvency position.
The debt-to-assets ratio has decreased from 0.47 in 2020 to 0.32 in 2024, indicating that Coty Inc relies less on debt to finance its assets, which is a positive signal for creditors and investors.
Similarly, the debt-to-capital ratio has shown a decreasing trend from 0.72 in 2020 to 0.50 in 2024, suggesting that Coty Inc has reduced its dependence on debt for capital funding.
The debt-to-equity ratio, which measures the proportion of debt relative to equity, has also decreased from 2.63 in 2020 to 1.00 in 2024. This indicates a significant reduction in the financial risk associated with high debt levels.
The financial leverage ratio, which reflects the company's ability to meet its long-term obligations, has shown a declining trend from 5.57 in 2020 to 3.16 in 2024. This indicates that Coty Inc's financial leverage has decreased over the years, improving its solvency position.
Overall, the decreasing trend in these solvency ratios reflects a positive development in Coty Inc's financial stability and ability to meet its long-term debt obligations. Investors and creditors may view these improvements favorably as they indicate a healthier financial position for the company.
Coverage ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.17 | 3.64 | 2.76 | -0.61 | -4.93 |
The interest coverage ratio for Coty Inc has shown a fluctuating trend over the past five years. In 2024, the interest coverage ratio was 2.17, indicating that the company earned 2.17 times the amount needed to cover its interest expenses. This represents a decrease from the previous year (3.64 in 2023). The decline suggests that Coty Inc's ability to cover its interest payments decreased in 2024.
Looking back, the interest coverage ratio improved in 2023 compared to 2022 (2.76), indicating a positive trend in the company's ability to cover interest expenses. However, the ratios in 2021 (-0.61) and 2020 (-4.93) were negative, indicating that Coty Inc did not generate enough earnings to cover its interest obligations during those years.
Overall, while the improvement in interest coverage from negative ratios in 2020 and 2021 to positive ratios in 2022 and 2023 was positive, the decrease in 2024 signals a potential concern regarding the company's ability to comfortably meet its interest payments from its earnings. It would be essential for Coty Inc to closely monitor and manage its financial health to ensure sustainable interest coverage in the future.