OSI Systems Inc (OSIS)

Solvency ratios provide insight into a company's ability to meet its long-term obligations and indicate its financial stability. Based on the data provided for OSI Systems Inc over the past five years:

1. Debt-to-assets ratio: This ratio shows the proportion of the company's assets financed by debt. A lower ratio indicates a lower reliance on debt for funding assets. OSI's debt-to-assets ratio has fluctuated, with a significant increase in 2020 and 2021, but a significant improvement in 2022 and 2024. Overall, the company's current debt-to-assets ratio of 0.07 indicates a relatively low level of debt compared to its total assets.

2. Debt-to-capital ratio: This ratio reflects the proportion of a company's capital structure that is financed by debt. A lower ratio signifies a lower debt component in the company's capitalization. OSI's debt-to-capital ratio has shown fluctuations over the years, with a notable decrease in 2022 and another improvement in 2024. The current ratio of 0.13 suggests that debt represents a moderate portion of the company's total capital.

3. Debt-to-equity ratio: The debt-to-equity ratio compares a company's debt to its equity, indicating the extent of leverage used in the business. A lower ratio signifies less financial risk and reliance on debt. OSI's debt-to-equity ratio has followed a similar trend to the debt-to-assets and debt-to-capital ratios, showing an improvement in recent years. The current ratio of 0.15 suggests that the company has a lower level of debt compared to its equity.

4. Financial leverage ratio: This ratio measures the extent to which a company is using debt to finance its assets. A higher ratio indicates higher financial leverage. OSI's financial leverage ratio has remained relatively stable around the 2.2 range over the past five years, suggesting a consistent level of financial leverage in the company's operations.

Overall, based on the solvency ratios analyzed, OSI Systems Inc has demonstrated an improvement in its solvency position over the years, with a lower reliance on debt for financing its operations and assets. This trend indicates a strengthened financial position and a reduced level of financial risk for the company.

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Coverage ratios

Interest coverage is a key financial ratio that assesses a company's ability to meet its interest obligations with its operating income. OSI Systems Inc's interest coverage ratio has shown some fluctuation over the past five years. In Jun 2024, the interest coverage ratio was 6.79, which indicates that the company earned nearly 6.79 times the amount needed to cover its interest expenses. This is a healthy ratio as it suggests that OSI Systems Inc has a comfortable buffer to meet its interest payments.

Comparing this to the previous years, the interest coverage ratio has remained relatively stable, ranging from 5.59 in Jun 2020 to 13.59 in Jun 2022. The peak in Jun 2022 indicates a significant improvement in the company's ability to cover its interest expenses. However, it is important to note that fluctuations in interest coverage ratios can be influenced by various factors such as changes in operating income and interest expenses.

Overall, OSI Systems Inc's interest coverage ratio has generally been in a healthy range over the past five years, providing assurance that the company has the financial capacity to meet its interest obligations. However, it would be important to continue monitoring this ratio to ensure ongoing financial stability.