Cintas Corporation (CTAS)
Solvency ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | — | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | — | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | — | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | — | 2.12 | 2.21 | 2.46 | 2.23 |
The analysis of Cintas Corporation’s solvency ratios, based on the provided data, reveals a consistent pattern across multiple years. The debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are all reported as zero for each fiscal year from May 31, 2021, through May 31, 2024, indicating an absence of long-term and short-term debt in the company's capital structure during this period. This suggests that Cintas has maintained a debt-free or nearly debt-free balance sheet, relying primarily on equity or internal funds for its operations and growth initiatives.
Additionally, the financial leverage ratio, which measures the extent of a company's reliance on debt to finance its assets relative to equity, shows values above 2.0 for all four years: 2.23 in 2021, increasing to 2.46 in 2022, then decreasing to 2.21 in 2023, and further declining to 2.12 in 2024. These figures imply that while the company employs leverage, it does so predominantly through internal resources or equity, rather than debt.
Overall, the data suggests that Cintas Corporation has maintained a conservative leverage strategy with minimal to no debt, leading to strong solvency metrics characterized by a solid equity base and limited financial risk associated with indebtedness. The declining trend in the financial leverage ratio from 2022 to 2024 may reflect an even lower reliance on leverage over time.
Coverage ratios
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | |
|---|---|---|---|---|---|
| Interest coverage | 0.00 | 20.66 | 16.29 | 17.90 | 14.13 |
The interest coverage ratio for Cintas Corporation has exhibited notable fluctuations over the observed period from May 31, 2021, to May 31, 2025. As of May 31, 2021, the ratio stood at 14.13, indicating that the company's operating income was sufficient to cover its interest expenses approximately 14 times, reflecting a strong capacity for interest payments. This ratio increased significantly in the following year, reaching 17.90 by May 31, 2022, which suggests an improvement in earnings relative to interest obligations.
In 2023, the ratio slightly declined to 16.29, but remained at a high level, demonstrating continued substantial coverage of interest expenses. The upward trend resumed in 2024, with the ratio escalating to 20.66, indicating an even greater margin of safety in covering interest costs. This robust figure reflects enhanced earnings and possibly improved operational efficiency or profitability.
However, by May 31, 2025, the interest coverage ratio drops sharply to zero. This abrupt change may indicate that the company experienced a significant loss or a substantial reduction in operating income, potentially even reporting a net loss equal to or exceeding previous interest expenses, thereby rendering the ratio meaningless or zero in practical terms. This transition signifies a critical deterioration in the company's ability to meet its interest obligations based on earnings available before interest and taxes.
Overall, the provided data depicts a generally strong interest coverage position from 2021 through 2024, with ratios well above typical safety thresholds. The sudden decline to zero in 2025 warrants further investigation to understand the underlying causes, such as financial distress, extraordinary charges, or restructuring activities that significantly impacted the company's earnings capacity.