Premier Inc (PINC)

The analysis of Premier Inc’s solvency ratios reveals several noteworthy trends and characteristics based on the provided data up to September 2025.

1. Debt-to-Assets Ratio:
Throughout the entire period, this ratio remains consistently at 0.00, indicating that the company did not have any reported debt relative to its total assets during the observed timeframe. This suggests an absence of leverage via liabilities, implying that the company’s assets are financed entirely through equity or other non-debt sources. Such a position enhances financial stability but may also reflect a specific capital structure strategy or a lack of borrowed capital.

2. Debt-to-Capital Ratio:
Similarly, the debt-to-capital ratio remains at 0.00 throughout all examined periods, reinforcing that Premier Inc did not utilize debt financing relative to its total capital structure. This further underscores the company’s solvent position with no reliance on debt to support its operations or growth, thereby eliminating the risks associated with leverage and interest obligations.

3. Debt-to-Equity Ratio:
This ratio is also consistently at 0.00 from September 2020 through September 2025, confirming the absence of any reported debt compared to equity. The company's capital structure appears entirely equity-financed, which can be advantageous in terms of lower financial risk and ease of access to equity markets, albeit potentially at the expense of leveraging growth opportunities.

4. Financial Leverage Ratio:
Despite the absence of debt in the other ratios, the financial leverage ratio varies between 1.44 and 2.04 over the period. Initially, it hovers around 1.51 to 1.66, indicating moderate leverage—if any—stemming perhaps from other financial arrangements or accounting treatments. Notably, from March 2024 onward, the ratio increases gradually, reaching over 2.00 by June 2025. This upward trend suggests an escalation in leverage, possibly due to increased financial commitments, off-balance-sheet financing, or changes in accounting estimates that affect the leverage calculation.

Summary:
Premier Inc’s solvency profile over the observed period indicates a consistently debt-free capital structure, as evidenced by its zero ratios across debt-to-assets, debt-to-capital, and debt-to-equity measures. The company’s financial leverage has remained relatively moderate but shows signs of increasing in the later periods, which warrants monitoring for potential future leverage or financial risk. The absence of debt suggests a conservative approach to financing, favoring stability and low financial risk but potentially limiting growth financed through borrowed capital.

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Coverage ratios

The analysis of Premier Inc’s interest coverage ratios over the specified period indicates a variable trend with generally strong performance in the earlier part of the period, followed by noticeable fluctuations and some recent decline.

From September 30, 2020, to December 31, 2021, the interest coverage ratios remained robust, ranging from approximately 19.08 to 29.85. These figures suggest that the company consistently generated earnings well above its interest obligations, with ratios well above 1.0, which is generally considered the minimum for safe interest coverage. The peak in this period was observed at March 31, 2022, with a ratio approaching 29.94.

Subsequent quarters reveal a slight downward trend in the interest coverage ratio, culminating in a low of 17.75 at June 30, 2023. Despite this decline, the ratio still indicates a comfortable buffer over interest expenses. However, a more notable decrease is observed in the quarter ending March 31, 2024, where the ratio drops sharply to 11.66, reflecting a potential decrease in earnings or an increase in interest expenses.

The subsequent quarters display some recovery, with the ratio increasing to approximately 17.73 by September 30, 2024, before turning negative at December 31, 2024, at -6.99. A negative interest coverage ratio indicates that the company’s earnings before interest and taxes (EBIT) were insufficient to cover interest expenses, suggesting critical financial distress or extraordinary circumstances during that period. This deterioration marks a significant deviation from earlier periods of strong coverage.

In the most recent quarters, there is some improvement, with ratios returning to positive figures of 6.46 at March 31, 2025, and 1.18 at June 30, 2025. Although these figures are lower compared to earlier periods, they indicate a partial recovery in the company’s ability to meet interest obligations.

Overall, Premier Inc’s interest coverage ratio has experienced substantial fluctuations over time, with periods of strong coverage interspersed with phases of decline and even negative coverage. The recent negative ratio highlights a period of financial strain, while the subsequent partial recovery suggests efforts to stabilize earnings or reduce interest commitments. Continuous monitoring is warranted to assess whether the company can restore a stable and sufficiently high interest coverage ratio in future periods.