Intuit Inc (INTU)
Solvency ratios
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.17 | 0.22 | 0.23 | 0.13 | 0.19 |
| Debt-to-capital ratio | 0.23 | 0.26 | 0.28 | 0.17 | 0.28 |
| Debt-to-equity ratio | 0.30 | 0.35 | 0.39 | 0.21 | 0.40 |
| Financial leverage ratio | 1.74 | 1.61 | 1.69 | 1.57 | 2.14 |
The solvency ratios of Intuit Inc have shown fluctuations over the past five years.
The debt-to-assets ratio measures the percentage of a company's assets financed by debt. Intuit's debt-to-assets ratio has ranged from 0.13 to 0.23, with a decreasing trend in recent years. This indicates that Intuit has been able to reduce its reliance on debt to finance its assets, which is a positive sign for the company's solvency.
The debt-to-capital ratio represents the proportion of a company's capital that is debt. Intuit's debt-to-capital ratio has varied between 0.17 and 0.28, showing fluctuations over the years. The decreasing trend in recent years suggests that Intuit has been successful in reducing its debt relative to its total capital.
The debt-to-equity ratio compares a company's total debt to its total equity. Intuit's debt-to-equity ratio has ranged from 0.21 to 0.40, with fluctuations over the years. The decreasing ratio in the most recent year indicates a lower reliance on debt in relation to equity, which is a positive development for the company's solvency.
The financial leverage ratio measures the amount of assets a company has for each dollar of equity. Intuit's financial leverage ratio has ranged from 1.57 to 2.14, showing variability over the years. A lower financial leverage ratio indicates a lower level of financial risk, while a higher ratio suggests higher financial risk.
Overall, the trends in these solvency ratios indicate that Intuit has been managing its debt levels effectively to strengthen its financial position and solvency. The decreasing ratios in recent years reflect a lower reliance on debt and improved financial health for the company.
Coverage ratios
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 15.00 | 12.67 | 31.74 | 86.21 | 155.43 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a more comfortable ability to cover interest expenses.
Looking at Intuit Inc's interest coverage ratio over the past five years, we observe a declining trend. In July 2020, the interest coverage ratio was significantly high at 155.43, indicating a strong ability to cover interest payments. However, this ratio has been decreasing each year since then, with values of 86.21 in 2021, 31.74 in 2022, 12.67 in 2023, and 15.00 in 2024.
The drastic decrease in the interest coverage ratio from 2020 to 2022 may raise concerns about Intuit's ability to meet its interest obligations as its earnings are less able to cover interest expenses. Investors and creditors may perceive a declining interest coverage ratio as a red flag for the company's financial health and risk of defaulting on debt payments.
It is recommended that Intuit Inc closely monitors its interest coverage ratio and takes necessary steps to improve its ability to cover interest payments, such as increasing profitability or reducing debt levels, to ensure the company's financial stability and sustainability in the long term.