CSW Industrials, Inc. (CSW)

The solvency ratios of CSW Industrials, Inc., as of the dates provided, indicate a consistent financial structure characterized by minimal reliance on debt. The debt-to-assets ratio remains at zero across all periods from March 31, 2021, through March 31, 2025, suggesting that the company has not employed any debt in its capital structure, thus maintaining a fully equity-funded balance sheet from an asset perspective.

Similarly, the debt-to-capital ratio and debt-to-equity ratio are both reported as zero throughout the same timeframe, reinforcing the conclusion that CSW Industrials, Inc. does not utilize debt financing. This zero debt ratio indicates a conservative financial stance with no leverage derived from borrowed funds, which can be advantageous in reducing financial risk and interest obligations.

The financial leverage ratio, however, exhibits a declining trend over the period, starting at 2.12 in 2021 and decreasing to 1.29 in 2025. This ratio, which measures the proportion of assets financed through debt relative to equity, suggests that the company has maintained higher leverage in earlier years but has gradually reduced its leverage. The decline indicates an increase in equity or a reduction in debt (if any existed earlier), aligning with the overall observation that CSW Industrials, Inc. has maintained a debt-free balance sheet.

In summary, CSW Industrials, Inc. exhibits an extremely conservative solvency profile characterized by zero debt ratios across multiple periods. The declining financial leverage ratio over time highlights a diminishing reliance, reinforcing the company's minimal leverage and robust equity position during the periods analyzed.

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Coverage ratios

The interest coverage ratios for CSW Industrials, Inc. over the specified period demonstrate significant variability, reflecting fluctuations in the company’s ability to meet its interest obligations with its earnings before interest and taxes (EBIT). As of March 31, 2021, the interest coverage ratio stood at 22.35, indicating a strong capacity to service interest expenses with EBIT. By March 31, 2022, this ratio declined to 17.74, still reflecting a healthy coverage but demonstrating a notable decrease. The ratio further decreased to 10.55 as of March 31, 2023, suggesting a reduction in earnings relative to interest obligations, which could indicate increased financial leverage or decreased operating profitability.

In the subsequent year, March 31, 2024, the ratio increased slightly to 12.13, implying a modest improvement in coverage; however, it remained considerably lower than the initial levels observed in 2021 and 2022. The most striking change occurs as of March 31, 2025, where the ratio jumps dramatically to 670.58. This extraordinary increase suggests an exceptional event, such as a substantial surge in earnings, a significant reduction in interest expense, or potentially an accounting anomaly or non-recurring item that temporarily boosts EBIT or reduces interest obligations.

Overall, the trend indicates that while the company experienced a decline in interest coverage from 2021 through 2023, it continued to maintain a ratio well above the generally accepted threshold of 3-4, which signals safe leverage levels. The spike in 2025 warrants further investigation to understand the underlying causes, as such an anomalous ratio could distort the overall assessment of the company’s financial stability concerning its interest obligations.