Dave & Buster’s Entertainment (PLAY)

The solvency ratios of Dave & Buster’s Entertainment provide insight into the company's ability to meet its long-term financial obligations.

The Debt-to-assets ratio, which measures the proportion of the company's assets financed by debt, shows a fluctuating trend over the period. It started at 0.33 in January 2023, decreased to 0.00 in subsequent periods, but then increased to 0.34 by February 2024. A lower ratio indicates a lower reliance on debt to finance assets.

The Debt-to-capital ratio, indicating the proportion of debt in the company's capital structure, follows a similar pattern as the Debt-to-assets ratio. It was initially 0.75, dropped to 0.00, then rose to 0.84. This ratio also suggests the company's ability to use capital resources other than debt.

The Debt-to-equity ratio highlights the relationship between debt and shareholders' equity in funding the company's operations. Dave & Buster’s had a significant ratio of 2.98 in January 2023, dropped to 0.00 subsequently, before jumping to 5.11 by February 2024. A high ratio implies a higher reliance on debt financing.

The Financial leverage ratio, which compares the company's total assets to its equity, increased over time, indicating a higher level of financial risk. It was 9.16 in January 2023, grew to 14.95 by January 2024, and reached 27.54 by January 2025. This suggests the company's financial structure became more leveraged.

In summary, while the Debt-to-assets and Debt-to-capital ratios show varying levels of debt usage, the Debt-to-equity ratio indicates a significant reliance on debt in the past. The increasing Financial leverage ratio implies higher financial risk, which may be a concern for investors and creditors evaluating the company's solvency.

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Coverage ratios

Dave & Buster’s Entertainment's interest coverage ratio has been fluctuating over the past few years. As of January 29, 2023, the ratio was 3.00, indicating that the company generated three times the operating income to cover its interest expenses. However, the ratio decreased slightly to 2.95 by January 31, 2023.

In the following year, the interest coverage ratio declined further to 2.23 as of January 31, 2024, suggesting that the company's ability to meet its interest payments decreased. Despite this decrease, the ratio improved to 2.41 by February 4, 2024.

By January 31, 2025, the interest coverage ratio dropped significantly to 1.52, indicating a potential strain on the company's ability to cover its interest expenses with operating income. This downward trend in the interest coverage ratio raises concerns about the company's financial health and its ability to meet debt obligations comfortably.