Fabrinet (FN)

The analysis of Fabrinet's solvency ratios over the period from June 30, 2021, to June 30, 2025, reveals a consistent financial profile characterized by negligible or nonexistent debt levels and stable leverage metrics.

The debt-to-assets, debt-to-capital, and debt-to-equity ratios are all reported as zero for each fiscal year within the provided timeframe. This indicates that the company has not utilized financial leverage through debt financing during this period. The absence of debt enhances the company's solvency profile, reducing financial risk and potentially reflecting a conservative capital structure or a strategic focus on equity financing.

In contrast, the financial leverage ratio, which measures the proportion of assets financed by shareholders' equity relative to total assets, exhibits values around 1.35 to 1.46 throughout the years. These ratios suggest that unlike many firms that rely on debt to amplify growth, Fabrinet maintains a conservative leverage position, relying primarily on equity and retained earnings to fund operations and growth initiatives.

Overall, the company's solvency ratios indicate a low leverage environment, emphasizing strong equity buffer and minimal financial risk. This financial stance is favorable from a solvency perspective, as it underscores the company's capacity to meet its long-term obligations without the burden of debt servicing.

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Coverage ratios

The interest coverage ratio for Fabrinet demonstrates significant variability over the analyzed period, reflecting fluctuations in earnings relative to interest expenses. As of June 30, 2021, the ratio stood at 137.09, indicating the company's substantial capacity to cover its interest obligations at that time. This figure markedly increased to 477.92 by June 30, 2022, suggesting a notable improvement in profitability or a reduction in interest expenses, thereby enhancing the company's ability to meet interest payments comfortably.

However, by June 30, 2023, the ratio declined to 177.30, indicating a reduction in coverage compared to the previous year, although still remaining at a healthy level. The most notable change occurs by June 30, 2024, where the interest coverage ratio surged to 2,233.82, representing a dramatic increase and suggesting an exceptionally strong ability to meet interest obligations. This spike may be attributable to substantial earnings growth, significant deleveraging, or a substantial reduction in interest expenses during that period.

For the projected date of June 30, 2025, the data are unavailable, implying either a cessation of reporting or uncertainty regarding future earnings relative to interest costs. Overall, the trend indicates that Fabrinet has maintained, and at times markedly improved, its capacity to cover interest expenses, with the most recent data highlighting an extraordinary level of coverage in 2024. Such high ratios typically signal very low financial risk concerning interest payments, although the sharp increase warrants further investigation into underlying causes, such as extraordinary earnings or changes in debt structure.