Catalent Inc (CTLT)

The solvency ratios for Catalent Inc indicate a consistent trend of low debt levels in relation to the company's assets, capital, and equity over the past five years. The debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio have all remained at 0.00 throughout the period, suggesting that the company has been operating with minimal to no debt obligations in comparison to its total assets, capital, and equity.

In terms of the financial leverage ratio, there has been some variability observed over the five-year period, ranging from 2.20 to 2.71. The upward trend in the financial leverage ratio from 2.20 in 2022 to 2.71 in 2024 indicates an increase in the company's reliance on debt financing relative to its equity. However, it is important to note that despite this increase, the financial leverage ratio remains relatively moderate, indicating that the company's debt levels are still manageable and not excessive.

Overall, based on the solvency ratios provided, Catalent Inc appears to have maintained a conservative approach to managing its debt levels, which has likely contributed to its overall financial stability and ability to meet its financial obligations effectively.

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Coverage ratios

Based on the interest coverage ratio of Catalent Inc over the past five years, it is evident that there have been fluctuations in the company's ability to cover its interest expenses. The interest coverage ratio measures the company's ability to pay interest on its outstanding debt using its operating income.

In 2020, Catalent Inc had an interest coverage ratio of 16.42, indicating that the company generated operating income that was 16.42 times higher than its interest expenses for that year. This suggests a strong ability to cover interest costs.

However, the interest coverage ratio significantly declined in the subsequent years, reaching -32.57 in 2024, which indicates that the company's operating income was insufficient to cover its interest expenses. This raises concerns about the company's financial health and its ability to meet its debt obligations.

The sharp decline in interest coverage from positive levels to negative levels over the years suggests a deterioration in Catalent Inc's financial performance and raises red flags about its ability to service its debt. Investors and creditors may view this trend negatively as it indicates increased financial risk. Further analysis of the company's income statement, cash flow statement, and overall debt levels is necessary to better understand the reasons behind this decline in interest coverage.