Brinker International Inc (EAT)

Based on the provided data, Brinker International Inc exhibits notable variations in its solvency ratios over the analyzed period. The debt-to-assets ratio remains at zero across all years from June 30, 2021, through June 30, 2025, indicating an absence of reported debt relative to total assets, which suggests a primarily equity-financed structure or possibly the non-reporting or negligible level of debt.

Similarly, the debt-to-capital ratio and debt-to-equity ratio are unspecified (denoted by a dash) for the years June 30, 2021, through June 30, 2023, and are reported as zero for June 30, 2024, and June 30, 2025. This consistency at zero reinforces the inference that there are no significant debt obligations relative to the company's capital or equity during these periods.

Conversely, the financial leverage ratio reveals a contrast over the timeline. It is unspecified for June 30, 2021, through June 30, 2023. However, on June 30, 2024, the ratio is markedly high at 65.81, implying a substantial use of leverage—possibly indicating that the company employed a significant amount of debt or financial obligations relative to its equity or assets at that time. By June 30, 2025, the ratio decreases dramatically to 7.22, suggesting a reduction in leverage and a shift toward a less leveraged capital structure.

Overall, the data indicates that Brinker International Inc has maintained a position of minimal or negligible debt from 2021 through 2023. The spikes observed in the financial leverage ratio in 2024 may reflect strategic financial activities or restructuring efforts, but the subsequent decrease in 2025 suggests normalization or deleverage. The company’s solvency, as inferred from the ratios, appears stable with a low reliance on debt, although the exceptional leverage ratio in 2024 warrants further investigation to understand the underlying financial strategies during that period.

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Coverage ratios

The interest coverage ratios for Brinker International Inc over the specified periods reflect fluctuations in the company’s ability to meet its interest obligations from its operating earnings. As of June 30, 2021, the ratio stood at 3.58, indicating that the company generated approximately 3.58 times its interest expenses through its earnings before interest and taxes (EBIT). This level of coverage suggests a relatively comfortable ability to service interest commitments during that period.

By June 30, 2022, the ratio slightly declined to 3.50, representing a minor decrease in the company's capacity to cover interest expenses. Despite this slight dip, the ratio remained above 3, which generally indicates acceptable interest coverage and a manageable debt service profile.

The following year, June 30, 2023, saw a significant decline in the ratio to 2.65. This reduction points to a weakening in earnings relative to interest obligations, which could signal increased financial strain or lower profitability. Such a decrease warrants attention, as it indicates reduced buffer for interest payments and potentially increased financial risk.

In the subsequent period ending June 30, 2024, the ratio recovered to 3.54, suggesting an improvement in earnings capacity to cover interest expenses. This rebound could be attributed to operational improvements or other financial factors restoring the company's interest coverage to a more comfortable level.

However, the most notable change occurs by June 30, 2025, where the ratio significantly rises to 9.59. This increase indicates a substantial enhancement in earning capacity relative to interest obligations, suggesting that the company has either experienced a considerable improvement in profitability, reduced interest expenses, or a combination of both. Such a high ratio reflects a strong position in terms of debt servicing ability, providing a substantial margin of safety for interest payments.

In summary, the interest coverage ratios over the examined periods demonstrate a pattern of initial stability, a notable decline at midsummer 2023, followed by a recovery, and culminating in a strong improvement in 2025. These fluctuations highlight periods of financial stress and subsequent strengthening in Brinker International Inc’s ability to meet its interest obligations.