Cintas Corporation (CTAS)

The solvency ratios for Cintas Corporation reflect its ability to meet its long-term financial obligations and manage its debt levels effectively.

1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets financed by debt. Cintas has shown a decreasing trend in this ratio over the past five years, from 0.33 in 2020 to 0.22 in 2024. This suggests that Cintas has been able to reduce its reliance on debt to fund its assets.

2. Debt-to-capital ratio: This ratio shows the extent to which a company is using debt to finance its operations compared to its total capital. Cintas has also seen a decline in this ratio from 0.44 in 2020 to 0.32 in 2024, indicating a decreasing reliance on debt financing.

3. Debt-to-equity ratio: The debt-to-equity ratio measures the company's financial leverage and its ability to meet its debt obligations. Cintas has demonstrated an improvement in this ratio over the past five years, decreasing from 0.79 in 2020 to 0.47 in 2024, showing a strengthening financial position in terms of debt obligations.

4. Financial leverage ratio: This ratio provides insight into how much debt a company is using to finance its assets relative to its equity. Despite some fluctuations, Cintas has maintained a consistent financial leverage ratio over the past five years, indicating that the company has managed its debt levels relative to its equity effectively.

Overall, the solvency ratios for Cintas Corporation show a positive trend of decreasing reliance on debt financing and improved financial leverage, suggesting that the company has been effectively managing its debt levels and maintaining a healthy financial position.

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Coverage ratios

Interest coverage ratio is a financial metric that indicates a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio suggests that the company is more capable of servicing its debt obligations.

Analyzing Cintas Corporation's interest coverage over the last five years, we observe an increasing trend in the ratio. The interest coverage ratio has grown from 11.04 in 2020 to 20.53 in 2024, indicating an improvement in the company's ability to cover its interest expenses with its operating income.

The consistent increase in the interest coverage ratio reflects positively on Cintas Corporation's financial health and capability to manage its debt effectively. This trend suggests that the company's earnings are sufficient to cover its interest payments, providing a buffer against potential financial risks associated with high debt levels.

Overall, the upward trend in Cintas Corporation's interest coverage ratio signifies a strengthening financial position and enhanced ability to fulfill its debt obligations, which may instill confidence in creditors and investors regarding the company's financial stability and sound management of debt.