Parker-Hannifin Corporation (PH)
Solvency ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.16 | 2.43 | 2.90 | 2.93 | 2.42 |
The analysis of Parker-Hannifin Corporation's solvency ratios, based on the provided data, indicates a consistent absence of long-term debt or other obligations relative to its assets and capital structure over the specified period. Specifically, the debt-to-assets, debt-to-capital, and debt-to-equity ratios are reported as zero across all years from June 30, 2021, through June 30, 2025. This suggests that the company has maintained a debt-free financial position in this timeframe, relying primarily on equity or internal funding sources to finance its operations and growth activities.
The financial leverage ratio, however, demonstrates a different trend. Starting at a value of 2.42 on June 30, 2021, it increases to 2.93 in 2022, slightly declines to 2.90 in 2023, then decreases to 2.43 in 2024 and further to 2.16 in 2025. This ratio reflects the degree to which the company's assets are financed through liabilities versus equity, with values above 2 indicating that the company leverages debt to fund its assets or operations. The declining trend in the leverage ratio suggests a gradual reduction in the use of financial leverage over the period, which aligns with the absence of reported debt ratios.
Overall, the data portrays Parker-Hannifin Corporation as having no current long-term debt, maintaining a very conservative or potentially debt-free capital structure during the analyzed years. The decreasing leverage ratio further supports a strategic posture of lowering reliance on external borrowing, which enhances the company's solvency profile by diminishing financial risk and increasing financial stability.
Coverage ratios
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | |
|---|---|---|---|---|---|
| Interest coverage | 11.04 | 8.10 | 5.67 | 7.32 | 9.99 |
The analysis of Parker-Hannifin Corporation’s interest coverage ratios over the specified periods indicates fluctuations in its ability to meet interest obligations from operating earnings.
As of June 30, 2021, the interest coverage ratio stood at 9.99, reflecting a strong capacity to cover interest expenses, with earnings nearly ten times the interest obligations. The ratio declined to 7.32 by June 30, 2022, suggesting a reduction in relative earnings relative to interest expenses but still maintaining a comfortable coverage level.
The ratio further decreased to 5.67 on June 30, 2023, which may imply increased interest expenses or decreased earnings, potentially signaling a need to monitor profitability and debt management strategies. Despite this downward trend, the ratio remains above typical covenants thresholds, indicating continued ability to service interest obligations.
Subsequent projections show improvement, with the ratio rising to 8.10 on June 30, 2024, and further increasing to 11.04 by June 30, 2025. This upward trend suggests an anticipated strengthening of earnings or reduction in interest expense, thereby enhancing the company's ability to service its debt.
Overall, the historical and projected interest coverage ratios demonstrate Parker-Hannifin’s robust ability to meet its interest obligations, though periodic declines warrant ongoing attention to profitability and debt management to ensure sustained financial health.