Oracle Corporation (ORCL)
Solvency ratios
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | — | — | — | — | — | — | — | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | — | — | — | — | — | — | — | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 8.03 | 9.65 | 10.80 | 13.33 | 16.20 | 24.38 | 30.68 | 48.10 | 86.37 | — | — | — | — | — | — | — | 22.03 | 12.26 | 12.77 | 11.20 |
The analysis of Oracle Corporation's solvency ratios from the provided data reveals the following key points:
1. Debt-to-Assets Ratio:
Throughout the entire period, the debt-to-assets ratio consistently remains at zero. This indicates that the company does not carry any recorded debt relative to its total assets, suggesting a fully asset-financed business structure without leverage from borrowed funds.
2. Debt-to-Capital Ratio:
Similar to the debt-to-assets ratio, the debt-to-capital ratio is predominantly reported at zero, with some periods marked by an em dash (—), which may denote data unavailability or non-applicability. However, the overall trend suggests negligible or no reliance on debt financing in the company's capital structure during the periods observed.
3. Debt-to-Equity Ratio:
The debt-to-equity ratio also remains at zero across the dataset, reinforcing the notion that the company does not employ debt in its financing strategy and maintains a fully equity-funded capital structure throughout the period.
4. Financial Leverage Ratio:
The financial leverage ratio exhibits monitoring fluctuations, reflecting the firm's use of financial leverage.
- Early data points show ratios around 11.2 to 12.77, indicating some degree of leverage.
- Notably, a significant spike occurs with a ratio of 86.37 on May 31, 2023, signaling a period where leverage markedly increased.
- Subsequently, the ratio declines progressively, reaching approximately 8.03 by May 31, 2025.
These fluctuations suggest that while Oracle has traditionally maintained low or negligible debt levels, there have been specific intervals of increased leverage, possibly due to strategic financial management decisions, debt issuance, or other capital structuring activities.
Overall Interpretation:
The data collectively indicate that Oracle Corporation maintains a conservative approach to leverage, with minimal to no long-term debt financing reflecting a strong solvency position. The exceptionally high financial leverage ratio observed during certain periods is likely attributable to accounting effects, such as operating lease accounting or other off-balance-sheet financing arrangements, rather than traditional debt. The longstanding low or zero debt ratios demonstrate the company's solid financial stability and capacity to operate without reliance on debt, underpinning its robust solvency profile.
Coverage ratios
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 1.83 | 2.54 | 4.87 | 4.65 | 4.39 | 4.13 | 3.92 | 3.79 | 3.65 | 4.02 | 4.46 | 3.38 | 3.83 | 4.03 | 4.29 | 6.13 | 6.28 | 6.29 | 6.50 | 6.78 |
The analysis of Oracle Corporation’s interest coverage ratio over the specified period reveals a fluctuating but generally stable capacity to meet interest obligations from August 2020 through August 2024, followed by a notable decline in subsequent periods.
Initially, the interest coverage stood at 6.78 in August 2020 and exhibited a slight downward trend, reaching its lowest point of approximately 3.38 in August 2022. During this time, the decline indicates a reduced margin of safety in covering interest expenses, which may reflect increased debt levels or decreased earnings before interest and taxes (EBIT). Despite this decrease, the ratio remained above 3, generally indicating that the company continued to generate enough operating earnings to cover interest expenses more than three times.
Post-August 2022, the interest coverage ratio exhibited periods of recovery and incremental improvement, rising to 4.87 in November 2024. However, the data indicates a sharp deterioration in the earliest months of 2025, with the ratio falling to 2.54 in February 2025 and further declining to 1.83 by May 2025. This downward trend in the ratio suggests a significant reduction in operating earnings relative to interest obligations, implying increased financial stress and potentially heightened risk in meeting interest commitments solely from operational income.
The trend over the analyzed period demonstrates that while Oracle has historically maintained a comfortable interest coverage ratio (well above 3), a recent decline approaching values below 2 indicates diminished coverage capacity. The decline signals either a substantial reduction in EBIT, increased interest expenses, or a combination of both, highlighting potential concerns regarding the company's ability to sustain its debt obligations without additional earnings growth or restructuring.
In conclusion, Oracle Corporation’s interest coverage has experienced notable fluctuations, with a downward trajectory emerging in the most recent periods. The current ratios suggest an increased risk profile concerning interest payments, warranting close attention to the company's earnings performance and debt management strategies moving forward.