Extreme Networks Inc (EXTR)

The solvency ratios of Extreme Networks Inc indicate the company's ability to meet its financial obligations and manage its debt levels over time. The debt-to-assets ratio has remained relatively stable around 0.17 to 0.16, indicating that the company has been able to maintain a conservative level of debt relative to its total assets.

The debt-to-capital ratio shows a slight increase over the period, reaching 0.88 as of June 30, 2024, indicating that a larger proportion of the company's capital structure is made up of debt. However, the ratio has fluctuated between 0.62 and 0.99 over the past few quarters, suggesting some variability in the company's capital structure.

The debt-to-equity ratio has shown more significant fluctuations, ranging from 1.61 to 73.10. The ratio peaked at 73.10 on September 30, 2020, indicating a high level of debt relative to shareholders' equity at that time. Subsequently, the ratio decreased but remained relatively high, suggesting that the company has been relying more on debt financing compared to equity.

The financial leverage ratio reflects the extent to which the company's assets are financed by debt. The ratio has shown fluctuations between 9.78 and 181.38, with a peak on September 30, 2020, indicating high financial leverage at that point in time. The ratio decreased thereafter but remained elevated, suggesting that Extreme Networks Inc has been carrying a significant amount of debt relative to its equity.

Overall, while the debt-to-assets ratio and debt-to-capital ratio demonstrate a relatively stable and moderate level of indebtedness, the debt-to-equity ratio and financial leverage ratio show higher variability and suggest the company has been using a significant amount of debt in its capital structure. Investors and stakeholders may want to monitor these solvency ratios closely to assess the company's financial health and risk profile.

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Coverage ratios

Extreme Networks Inc's interest coverage ratio has exhibited significant fluctuations over the past few quarters. The interest coverage ratio measures the company's ability to pay interest expenses on its outstanding debt using its operating income. A higher ratio indicates a stronger ability to cover interest payments.

Looking at the data provided:

- The interest coverage ratio was negative in several quarters, suggesting that the company did not generate enough operating income to cover its interest expenses. This can be a concerning sign as it implies financial distress.
- The ratio improved gradually from negative values to positive values in more recent quarters, indicating a better ability to cover interest payments with operating income.
- The interest coverage ratio peaked at 7.32 in the quarter ending September 30, 2023, indicating a strong ability to cover interest expenses at that time.
- However, the ratio declined in subsequent quarters but generally stayed above 1, which is the threshold for indicating that the company is able to meet its interest obligations.
- The significant fluctuations in the interest coverage ratio signal volatility in Extreme Networks Inc's financial performance and potential challenges in sustaining consistent profitability to cover interest payments.

Overall, Extreme Networks Inc's interest coverage ratio has shown improvement from negative values to positive values, but the company needs to continue monitoring and managing its financial performance to ensure it can consistently meet its interest obligations in the future.