Papa John's International Inc (PZZA)

The solvency ratios for Papa John`s International, Inc. indicate the company's ability to meet its long-term debt obligations and financial stability over time.

The debt-to-assets ratio has been increasing steadily from 0.52 in 2019 to 0.90 in 2023, indicating that a higher proportion of the company's assets are financed through debt. This could potentially increase the risk associated with the company's financial structure.

The debt-to-capital ratio has also been increasing from 1.27 in 2019 to 2.38 in 2023, showing that a larger portion of the company's capital is derived from debt sources. This may suggest that the company is relying more on debt financing, which could increase its financial leverage and interest payment obligations.

Unfortunately, the information for the debt-to-equity ratio and financial leverage ratio is not provided in the table, making it challenging to assess the company's leverage and the proportion of debt in relation to equity.

In summary, the increasing trend in the debt-to-assets and debt-to-capital ratios for Papa John's International, Inc. over the past five years indicates a growing reliance on debt financing, which could potentially impact the company's financial risk and solvency position.

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Coverage ratios

The interest coverage ratio for Papa John`s International, Inc. has exhibited fluctuations over the past five years. The trend shows a decline from 2018 to 2019, as the ratio dropped significantly to 0.96, indicating a potential concern regarding the company's ability to cover its interest expenses with its earnings during that period.

However, there was a notable improvement in 2020 with the interest coverage ratio increasing to 5.30, signifying that the company had a better capacity to meet its interest obligations through its operating profits. This improvement continued in 2021 with a substantial rise in the ratio to 8.76, demonstrating a significant enhancement in Papa John`s International's ability to service its debt.

In 2022, the interest coverage ratio further increased to 4.79, indicating a healthy improvement, although lower than the previous year's ratio. The most recent data for 2023 shows a ratio of 3.38, which, while lower than the previous year, is still above the critical threshold of 1. This suggests that the company is generating enough operating income to cover its interest expenses, albeit at a slightly reduced capacity compared to the previous year.

Overall, the trend in Papa John`s International, Inc.'s interest coverage ratio reflects fluctuations over the years, with ups and downs in the company's ability to handle its interest payments. It is advisable for stakeholders to monitor this ratio closely to ensure sustained financial health and stability in the company's debt-servicing capabilities.