QuinStreet Inc (QNST)

The analysis of QuinStreet Inc.'s solvency ratios based on the provided data indicates a consistent absence of debt in the company's capital structure, as reflected by the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio all being zero from June 30, 2021, through June 30, 2025. This suggests that the company has maintained a highly conservative approach with no recorded leverage involving debt financing during this period.

Conversely, the financial leverage ratio, which measures the extent of total assets relative to shareholders’ equity, shows a steady decline from 1.52 in June 2021 to 1.47 in June 2022 and 2023, then rising to 1.70 in June 2024 and 1.77 in June 2025. This upward trend in the financial leverage ratio, despite the absence of debt, could imply modifications in asset structure or equity levels, possibly indicating increased reliance on internal funding or retained earnings to finance assets. However, given that other debt ratios remain at zero, the primary interpretation is that the company's capital structure is equity-heavy with no leverage from debt, fostering a potentially strong solvency position with minimal financial risk associated with debt obligations.

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Coverage ratios

The interest coverage ratios for QuinStreet Inc over the specified periods demonstrate a notable volatility and a concerning trend of declining capacity to meet interest obligations. As of June 30, 2021, the company maintained a strong interest coverage ratio of 23.63, indicating substantial earnings relative to interest expenses and suggesting robust ability to service debt. However, a significant deterioration is observed by June 30, 2022, with the ratio declining to -4.36, signifying that earnings before interest and taxes (EBIT) were insufficient to cover interest expenses, resulting in a negative coverage ratio. This negative trend continues into June 30, 2023, with an even more negative ratio of -26.04, reflecting a worsening mismatch between earnings and interest obligations. The situation persists into June 30, 2024, with an increased negative ratio of -43.70, further emphasizing the deteriorated ability to meet interest costs from operating earnings. Notably, there is a substantial recovery projected by June 30, 2025, with the interest coverage ratio estimated at 15.08, indicating a substantial improvement in earnings relative to interest expenses and a likely return to a more sustainable financial position. Overall, the data depict a company that experienced a significant decline in its ability to cover interest payments starting from 2022, with some anticipated recovery by the mid-2025 period.