H&R Block Inc (HRB)

The analysis of H&R Block Inc.'s solvency ratios over the period from June 30, 2021, to June 30, 2025, reveals notable characteristics about the company's debt structure and leverage profile.

The Debt-to-assets ratio, Debt-to-capital ratio, and Debt-to-equity ratio consistently stand at zero throughout the analyzed period. This indicates that H&R Block Inc. maintains no reported debt relative to its assets, capital, or equity during these years. From a solvency perspective, this suggests that the company is entirely equity-financed with no reliance on debt funding, implying a very conservative financial stance regarding leverage and a low financial risk profile.

In contrast, the Financial leverage ratio exhibits significant fluctuations during the same period. Starting at 10.37 in June 2021, it increases substantially to 15.45 in June 2022, then skyrockets to 95.82 in June 2023. Subsequently, it declines to 35.53 in June 2024 and slightly recovers to 36.72 in June 2025. The dramatic spike in 2023 suggests a temporary increase in the company's financial leverage, possibly due to changes in asset base, financing arrangements, or accounting policies affecting the calculation. Despite the ratios indicating high leverage at some points, the absence of debt ratios implies that the leverage ratio may be influenced by factors beyond traditional debt levels, such as non-debt liabilities or particular accounting metrics.

Overall, the combination of zero debt ratios and variable leverage ratios implies that while H&R Block Inc. predominantly operates without traditional debt obligations, other factors have contributed to perceived leverage changes in its financial statements. This profile indicates a conservative capital structure with minimal financial risk stemming from debt, but the observed fluctuations in leverage ratios warrant further examination of the underlying accounting adjustments or other liabilities that might influence these ratios.

---

Coverage ratios

The interest coverage ratios for H&R Block Inc over the specified period demonstrate a consistent improvement in the company's ability to satisfy its interest obligations from fiscal year 2021 through fiscal year 2025.

As of June 30, 2021, the interest coverage ratio was 7.26, indicating that the company's earnings before interest and taxes (EBIT) were 7.26 times greater than its interest expenses. This suggests a comfortable margin of safety in meeting interest payments. By June 30, 2022, the ratio increased to 8.47, reflecting an enhancement in either earnings capacity or a reduction in interest expense relative to EBIT, thereby strengthening the company's interest payment coverage.

The upward trend continues into June 30, 2023, with the ratio rising to 10.75, further signifying an improved capacity to cover interest obligations. This trend persists into the subsequent fiscal years, with the ratio slightly decreasing to 10.64 as of June 30, 2024, and then increasing again to 11.00 by June 30, 2025. These fluctuations indicate sustained strong earnings relative to interest expenses, with the company maintaining a robust safety margin.

Overall, the progressive increase in the interest coverage ratio over this period suggests that H&R Block Inc has experienced improved profitability and/or reductions in interest obligations relative to its earnings. Such a trend enhances the company's financial stability and reduces the risk associated with its debt servicing obligations.