Phibro Animal Health Corporation (PAHC)

The analysis of Phibro Animal Health Corporation’s solvency ratios over the period from June 30, 2021, to June 30, 2025, indicates a consistent absence of leverage related to debt financing. Specifically, the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are all reported as zero throughout all observed periods. This suggests that the company has not engaged in significant borrowing or debt issuance during these years, implying a reliance primarily on equity or internal funding sources for its operations.

In contrast, the financial leverage ratio exhibits notable variance over the same period. Starting at 3.53 in June 2021, it slightly increases to 3.55 in June 2022, then decreases marginally to 3.44 in June 2023. Subsequently, there is a rising trend to 3.83 in June 2024 and further to 4.76 in June 2025. The upward trajectory of this ratio in the latter years indicates a gradual increase in the company's use of financial leverage relative to its equity base, despite the absence of reported debt ratios. The increase could suggest a shift toward more aggressive leveraging strategies, possibly through alternative financing mechanisms not captured by traditional debt ratios, or changes in the capital structure that impact leverage measures.

Overall, the company’s solvency profile appears to be characterized by very low or negligible debt levels, with a trend toward a higher degree of leverage as reflected by the rising financial leverage ratio. This combination may suggest a strategic approach favoring internal funding, although the increasing leverage ratio warrants ongoing monitoring to understand its implications for the company’s financial stability and risk profile.

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Coverage ratios

The interest coverage ratio for Phibro Animal Health Corporation has exhibited notable fluctuations over the periods from June 30, 2021, to June 30, 2025. Specifically, the ratio increased from 7.08 in 2021 to 8.39 in 2022, indicating an improved ability to meet interest obligations during that period. However, this upward trend was followed by a substantial decline in 2023, with the ratio dropping sharply to 2.52. This decline suggests a decreased capacity to cover interest expenses using operational earnings, potentially signaling increased financial stress or a reduction in earnings before interest and taxes (EBIT).

The downward trend continued into 2024, with the ratio falling to an even lower level of 1.29. Such a ratio implies that the company's earnings are barely sufficient to cover interest expenses, raising concerns about liquidity and financial stability. This weak coverage ratio indicates increased risk for creditors and suggests that the company may face challenges in meeting its interest obligations without additional earnings growth, financing, or cost management.

In the subsequent year, 2025, the interest coverage ratio partially recovered to 2.97. Although this increase indicates some improvement in ability to meet interest payments, the ratio remains relatively low compared to prior years, reflecting ongoing concerns about the company's earnings capacity relative to its interest obligations.

Overall, the trend from 2021 through 2025 demonstrates a significant deterioration in interest coverage, with the most acute weakness observed in 2024. This pattern warrants close monitoring of operational performance and earnings levels, as sustained low coverage ratios could impact the company's borrowing costs, creditworthiness, and financial flexibility in the near term.