CarMax Inc (KMX)
Solvency ratios
| Feb 28, 2025 | Feb 29, 2024 | Feb 28, 2023 | Feb 28, 2022 | Feb 28, 2021 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 0.99 | 4.48 | 4.66 | 5.03 | 4.94 |
CarMax Inc demonstrates strong solvency based on its solvency ratios over the past five years. The Debt-to-assets ratio, the Debt-to-capital ratio, and the Debt-to-equity ratio have consistently been at 0.00% from February 28, 2021, to February 28, 2025, indicating that the company operates with minimal debt relative to its assets, capital, and equity.
Furthermore, the Financial leverage ratio has decreased significantly from 4.94 on February 28, 2021, to 0.99 on February 28, 2025. This implies that the company is relying less on debt financing and has a stronger equity base to support its operations. Overall, these solvency ratios suggest that CarMax Inc is in a stable financial position with a low level of financial risk and a strong capacity to meet its financial obligations.
Coverage ratios
| Feb 28, 2025 | Feb 29, 2024 | Feb 28, 2023 | Feb 28, 2022 | Feb 28, 2021 | |
|---|---|---|---|---|---|
| Interest coverage | 7.20 | 0.91 | 1.76 | 4.81 | 12.10 |
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations. CarMax Inc's interest coverage ratio has been fluctuating over the years.
As of February 28, 2021, the interest coverage ratio was strong at 12.10, suggesting that CarMax had more than enough operating income to cover its interest expenses. However, this ratio decreased significantly to 4.81 as of February 28, 2022, indicating a potential decrease in earnings relative to interest expenses.
The ratio continued to decline in the following years, reaching 1.76 on February 28, 2023, and falling further to 0.91 on February 29, 2024. These declining ratios may raise concerns about CarMax's ability to generate enough income to cover its interest payments.
However, there was a noticeable improvement in the interest coverage ratio as of February 28, 2025, with a ratio of 7.20. This indicates that CarMax's earnings improved relative to its interest obligations.
Overall, CarMax's interest coverage ratio has shown variability over the years, with periods of strength and weakness. It will be important for investors and stakeholders to monitor this ratio closely to assess CarMax's ability to meet its interest obligations in the future.