Lumentum Holdings Inc (LITE)
Solvency ratios
| Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.64 | 0.60 | 0.54 | 0.55 | 0.54 | 0.44 | 0.43 | 0.43 | 0.35 | 0.00 | 0.00 | 0.00 | 0.22 | 0.00 | 0.22 | 0.33 | 0.34 | 0.34 | 0.34 | 0.29 |
| Debt-to-capital ratio | 0.72 | 0.68 | 0.66 | 0.66 | 0.65 | 0.55 | 0.55 | 0.55 | 0.44 | 0.00 | 0.00 | 0.00 | 0.29 | 0.00 | 0.29 | 0.38 | 0.39 | 0.39 | 0.39 | 0.35 |
| Debt-to-equity ratio | 2.61 | 2.13 | 1.96 | 1.91 | 1.84 | 1.24 | 1.23 | 1.24 | 0.78 | 0.00 | 0.00 | 0.00 | 0.40 | 0.00 | 0.40 | 0.62 | 0.64 | 0.64 | 0.65 | 0.54 |
| Financial leverage ratio | 4.11 | 3.57 | 3.64 | 3.47 | 3.42 | 2.83 | 2.86 | 2.87 | 2.22 | 2.16 | 1.79 | 1.79 | 1.80 | 1.73 | 1.80 | 1.87 | 1.88 | 1.88 | 1.92 | 1.84 |
Lumentum Holdings Inc's solvency ratios have exhibited fluctuations over the recent quarters. The debt-to-assets ratio has been increasing in the past few quarters, indicating that a significant portion of the company's assets is financed by debt. This could potentially increase financial risk.
Similarly, the debt-to-capital and debt-to-equity ratios have shown an upward trend, suggesting that the company is increasingly relying on debt financing as opposed to equity. This could signal lower financial flexibility and higher leverage levels.
The financial leverage ratio has also been on the rise, indicating that Lumentum Holdings Inc's financial structure is becoming more leveraged over time. A higher financial leverage ratio implies a higher proportion of debt in the company's capital structure compared to equity.
Overall, the increasing trend in these solvency ratios may raise concerns about Lumentum Holdings Inc's ability to meet its financial obligations in the long term, especially if the company faces economic downturns or challenges in generating sufficient cash flows to service its debt. Investors and stakeholders should closely monitor these solvency ratios to assess the company's financial health and risk profile.
Coverage ratios
| Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | -26.25 | -7.56 | -6.06 | -4.19 | -1.88 | 0.62 | 1.91 | 3.15 | 3.93 | 4.16 | 7.58 | 8.09 | 7.94 | 7.95 | 4.84 | 4.11 | 3.85 | 3.44 | 1.14 | 0.24 |
Interest coverage is a critical financial ratio that indicates a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher interest coverage ratio signifies that the company is more capable of meeting its interest obligations.
Analyzing Lumentum Holdings Inc's interest coverage over the last few quarters, we observe a notable fluctuation in the ratio. The trend indicates periods of both strength and weakness in the company's ability to cover its interest expenses.
From December 2019 to March 2020, the interest coverage ratio was below 1, indicating that Lumentum Holdings Inc did not generate enough operating income to cover its interest expenses during those quarters. This is a concerning sign as it suggests a higher risk of defaulting on debt obligations.
However, from June 2020 to June 2021, there was a significant improvement in the interest coverage ratio, showing a positive trend as the ratio increased steadily. This indicates that the company's operating income started to better cover its interest expenses, reflecting a more stable financial position.
In the most recent quarters, the interest coverage ratio deteriorated significantly, particularly from December 2022 to June 2024, where the ratio dropped into negative territory. A negative interest coverage ratio indicates that the company's operating income is insufficient to cover its interest expenses, raising concerns about its financial health and ability to service its debt.
Overall, it is essential for stakeholders to closely monitor Lumentum Holdings Inc's interest coverage ratio, as it provides insights into the company's financial risk and ability to meet its debt obligations. The recent negative trend in the ratio requires further investigation into the company's financial management and operational performance to address the challenges that may be impacting its ability to cover interest expenses.