MillerKnoll Inc (MLKN)

The analysis of MillerKnoll Inc.'s solvency ratios over the specified period reveals notable characteristics concerning its leverage and debt management.

Debt-to-Assets Ratio:
Throughout the reporting periods, the debt-to-assets ratio remains predominantly at zero, with a few exceptions where it briefly rose to 0.33 or 0.32 during September and December 2022, and March 2023. This pattern indicates that the company generally maintains a very low level of debt relative to its total assets, implying an operational posture characterized by minimal leverage and reliance on internal financing.

Debt-to-Capital Ratio:
Similar to the debt-to-assets ratio, the debt-to-capital ratio is nearly zero for most periods, with isolated spikes to approximately 0.52 or 0.50 in early September and December 2022, as well as March 2023. These short-term increases suggest moments where the company utilized some debt in its capital structure but predominantly maintained a debt-light approach. The rapid return to zero subsequently indicates a conservative debt policy or rapid deleveraging after those periods.

Debt-to-Equity Ratio:
The debt-to-equity ratio shows minimal variation from near zero to approximately 1.08 during early September 2022, and around 1.00 in December 2022 and March 2023. These figures support the observation of a largely debt-averse strategy, with occasional minor debt utilization. The ratios' low values further underscore the company's reliance on equity financing over debt.

Financial Leverage Ratio:
The financial leverage ratio exhibits consistent values ranging approximately from 2.92 to 3.23 throughout the observed timeline. This stability indicates that the company employs a moderate degree of leverage, leveraging its equity to support assets. Although the ratios suggest some financial leverage, they remain at a level indicative of prudent capital structure management, aligning with the minimal debt ratios observed earlier.

Overall Interpretation:
MillerKnoll Inc. has demonstrated a conservative approach toward leverage, maintaining very low debt levels relative to its assets and equity for the majority of the analyzed period. The sparse instances of elevated debt ratios appear to be short-lived, implying temporary financing strategies rather than a systemic reliance on debt. The stability of the financial leverage ratio suggests disciplined leverage management, ensuring that the company's solvency position remains solid, and its ability to meet obligations is unlikely to be overstressed at any point within this timeline. This financial stance indicates a focus on maintaining a strong equity position and limiting financial risk, which is characteristic of a low-leverage company with potentially favorable long-term solvency prospects.

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Coverage ratios

The interest coverage ratios for MillerKnoll Inc over the specified periods demonstrate notable fluctuations. Starting from a high of approximately 4.23 on May 31, 2022, the ratio remains relatively stable through August 31, 2022, at 4.24, indicating strong capacity to meet interest obligations during this period. However, a decline is observed beginning in September 2022, with the ratio decreasing to 3.98, and a further decline to 3.68 by November 30, 2022.

The downward trend becomes more pronounced moving into December 2022 and early 2023, with ratios falling to 2.87 and then to 2.71 in February 2023. This indicates a narrowing margin for covering interest expenses, reflecting potential challenges in maintaining previous levels of earnings relative to interest obligations. The decline continues into March 2023, with the ratio dropping to 2.24, and reaches a low of 1.73 by June 2023, highlighting an increased risk associated with interest payments.

Subsequently, a partial recovery is noted. Ratios increase to 1.86 in September 2023, then to approximately 2.09 in November 2023 and 2.73 in December 2023. The upward trend persists into early 2024, with ratios at 2.91 and 3.00 in February and March 2024 respectively, and a further rise to 3.02 by May 2024. This indicates an improvement in the company's earnings relative to interest expenses, though the ratio remains below the levels observed in late 2022.

Conversely, a significant deterioration is evident in late 2024 and early 2025, with ratios declining sharply to as low as 0.89 in February 2025 and dropping further to 0.66 by May 2025. Such levels suggest that the company's earnings are insufficient to reliably cover its interest obligations, marking a substantial increase in financial risk.

In summary, MillerKnoll Inc's interest coverage ratio has exhibited considerable volatility over the analyzed period. While initially strong, the ratio experienced a declining trend through late 2022 and mid-2023, signifying mounting challenges in interest coverage. Although there was some recovery in late 2023 and early 2024, the ratios substantially deteriorated again in 2025, indicating potential concerns regarding the company's ability to service interest expenses without strain.