Kenvue Inc. (KVUE)

Based on the provided data, let's analyze the solvency ratios of Kenvue Inc. over the indicated periods:

1. Debt-to-assets ratio:
- The debt-to-assets ratio remained relatively stable around 0.29-0.30 over the observed periods, indicating that Kenvue Inc. finances approximately 29-30% of its assets through debt.

2. Debt-to-capital ratio:
- The debt-to-capital ratio slightly increased from 0.42 in December 2023 to 0.44 in December 2024, suggesting a marginal increase in the proportion of debt used to finance the company's capital structure.

3. Debt-to-equity ratio:
- The debt-to-equity ratio experienced a gradual rise from 0.71 in December 2023 to 0.78 in December 2024, indicating that Kenvue Inc. relied more on debt financing in comparison to equity to support its operations and growth.

4. Financial leverage ratio:
- The financial leverage ratio varied between 2.48 and 2.65 during the analyzed periods, showing fluctuations in the extent of financial leverage employed by Kenvue Inc. to generate returns for its shareholders.

Overall, the trends observed in these solvency ratios suggest that Kenvue Inc. has been maintaining a stable debt-to-asset ratio, while relying increasingly on debt financing relative to capital and equity. The financial leverage ratio highlights fluctuations in the company's leverage over time, reflecting potential shifts in its capital structure and financial risk profile.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. In the case of Kenvue Inc., the interest coverage ratios for the periods indicated are as follows:
- December 31, 2023: 9.76
- March 31, 2024: 6.65
- June 30, 2024: 4.48
- September 30, 2024: 4.32
- December 31, 2024: 4.27

A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations from its earnings. The downward trend in Kenvue Inc.'s interest coverage ratios over the periods from December 2023 to December 2024 may raise concerns about the company's ability to comfortably cover its interest expenses in the long run. It suggests that either the company's earnings are decreasing or its interest expenses are rising relative to its earnings.

Investors and creditors may view a declining interest coverage ratio as a red flag, as it could imply increased financial risk for the company. Management should closely monitor this ratio and take appropriate steps to improve it, such as increasing earnings or reducing debt levels.