Copart Inc (CPRT)

The solvency ratios of Copart Inc., as of the specified dates, indicate a consistently low or negligible debt burden relative to its assets and capital structure. Specifically, the debt-to-assets ratio remains at zero across all observed periods, suggesting that the company carries no long-term or short-term debt in its balance sheets. Similarly, the debt-to-capital and debt-to-equity ratios are also recorded at zero, reinforcing the conclusion that Copart Inc. operates entirely without leverage from debt financing during these periods.

The financial leverage ratio, however, provides additional insight into the company's capital structure, which fluctuates between 1.29 and 1.10 over the analyzed timeframe. While the ratio decreased slightly from 1.29 in July 2021 to 1.10 in July 2025, it consistently remains above 1, indicating that the company employs some degree of leverage, possibly through other financial instruments or operational strategies, but not through traditional debt.

Overall, the data portray Copart Inc. as a company with a very conservative approach to debt, maintaining a debt-free or near-debt-free capital structure. The observed decrease in the financial leverage ratio over time suggests a gradual reduction in leverage, enhancing its solvency profile. These characteristics contribute to a strong solvency position, implying a lower financial risk and a solid capacity to meet obligations solely through equity and operating cash flows.

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Coverage ratios

The interest coverage ratio for Copart Inc. demonstrates notable fluctuations over the period from July 31, 2021, to July 31, 2025. As of July 31, 2021, the ratio stood at an exceptionally high level of 56.18, indicating an ample ability to meet interest obligations with operating earnings. This ratio further increased significantly to 82.43 by July 31, 2022, suggesting an even stronger capacity to cover interest expenses, potentially due to improved earnings or reduced interest costs.

However, a substantial decline is observed by July 31, 2023, when the ratio decreased sharply to 22.55. While still indicating a comfortable coverage of interest expenses, this decline signals a reduction in operating earnings or an increase in interest obligations relative to prior years. The downward trend continues into subsequent years, with the ratio decreasing to 10.79 by July 31, 2024, and marginally declining to 10.60 by July 31, 2025.

This overall downward trajectory suggests a weakening in Copart Inc.'s relative ability to service interest obligations over time. The decline from peak coverage of over 80 in 2022 to just above 10 in 2025 warrants attention, as it could reflect changes in earnings, increased leverage, or other factors impacting financial stability. While the ratios in the latter years still indicate positive coverage, the narrowing margin underscores the importance of monitoring earnings trends and debt levels moving forward.