Neogen Corporation (NEOG)

The analysis of Neogen Corporation’s solvency ratios from the provided data reveals a consistent financial profile characterized by minimal or nonexistent leverage across multiple periods. Specifically, the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are all uniformly reported as zero throughout all recorded dates, indicating that the company has not employed long-term or short-term debt in its capital structure during the periods analyzed. This absence of debt suggests that Neogen has maintained a debt-free financial position, relying solely on equity or internal funding sources for its operations and growth initiatives.

Furthermore, the financial leverage ratio exhibits a slight variation over time, increasing from approximately 1.09 in early periods to a peak of 1.66 in the latest period (May 2025). In the initial periods, the leverage ratio remains relatively stable at around 1.09 to 1.12, indicating a low level of debt relative to equity or assets, aligning with the zero debt ratios. The gradual increase observed in later periods corresponds to a decline in total equity or asset base, a common phenomenon when a company’s leverage moves upward, although this remains within a modest range overall.

This profile suggests that Neogen Corporation operates with little to no reliance on external liabilities, emphasizing a conservative approach to financial management. Its solvency position remains robust, with low financial risk stemming from debt obligations. The incremental rise in financial leverage in recent periods may warrant monitoring; however, it does not currently indicate a significant departure from a debt-free stance. Overall, the data implies a stable, self-financed operations model with strong solvency and minimal risk associated with leverage.

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Coverage ratios

The analysis of Neogen Corporation’s interest coverage ratios over the specified periods reveals significant fluctuations that highlight evolving financial stability and risk levels.

Between August 31, 2020, and November 30, 2021, there was a marked upward trend in the interest coverage ratio, rising from 13.48 to an exceptionally high of 236.03. This indicates that during this period, the company generated substantially more earnings before interest and taxes (EBIT) than required to cover interest expenses, reflecting robust earnings and strong financial health.

From November 30, 2021, the ratio experienced a dramatic increase reaching a peak of 899.31 by February 28, 2022, suggesting exceptionally high earnings relative to interest obligations at that time. However, subsequent periods showed a notable decline; the ratio fell sharply to 43.12 by August 31, 2022, and then further diminished to 1.39 by November 30, 2022.

This downward trend continued into 2023 and beyond, with the interest coverage ratios approaching and falling below 2.0—specifically, recorded at 1.01 on February 28, 2023, 1.94 on May 31, 2023, and 1.49 on August 31, 2023. These figures suggest diminishing earnings capacity to cover interest expenses, raising concerns about increasing financial risk and decreased profitability or earnings stability.

The ratios in late 2023 and early 2024 indicate continued strain, with values around 2.00 and below, including a slight uptick to 2.00 on November 30, 2023, before declining again to 1.93 on February 29, 2024, and further dropping to 0.88 by May 31, 2024. The subsequent periods in late 2024 and early 2025 reflect negative interest coverage ratios, with values of -5.84, -5.94, and -6.30, respectively. Negative ratios imply that the company's earnings before interest and taxes are insufficient to cover interest expenses, and actual interest obligations are not being met by operational profitability, indicating potential liquidity concerns and elevated financial distress risk.

In summation, after an initial period of high and stable interest coverage from 2020 through early 2022, Neogen Corporation experienced a rapid decline in this metric, culminating in negative coverage figures. This trend suggests deteriorating earnings and increased leverage-related risks, emphasizing the need for cautious monitoring of the company's solvency and operational resilience moving forward.