ResMed Inc (RMD)

The analysis of ResMed Inc.'s solvency ratios over the period from June 30, 2021, to June 30, 2025, indicates a consistent trend toward a highly conservative leverage profile. The Debt-to-assets ratio, Debt-to-capital ratio, and Debt-to-equity ratio are all reported as zero across this entire timeframe, signifying that the company has not employed any debt financing during this period. This zero debt position suggests that ResMed Inc. relies solely on equity funding, reflecting a very conservative approach to capital structure management and implying minimal financial risk related to leverage.

Conversely, the Financial leverage ratio has remained above 1.4 throughout the period, fluctuating between 1.41 and 1.64. This ratio, typically measuring the proportion of total assets financed by shareholders’ equity relative to total assets, indicates that ResMed maintains a level of financial leverage that suggests its assets are funded more by equity than by debt, but with some degree of leverage present. The slight decline in this ratio from 1.64 in 2021 to 1.37 in 2025 may reflect a trend toward even lower leverage or increased equity capital relative to total assets.

Overall, the data portrays ResMed Inc. as a company with negligible or no debt obligations, focusing on a low-risk financial structure predominantly supported by equity. The stable and conservative nature of the debt ratios combined with a consistent leverage ratio underscores a strong solvency position with minimal concern regarding financial distress stemming from leverage or debt servicing.

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Coverage ratios

The interest coverage ratios of ResMed Inc. over the analyzed period demonstrate notable fluctuations, reflecting variations in the company's capacity to meet its interest obligations through its earnings before interest and taxes (EBIT). As of June 30, 2021, the ratio stood at 38.03, indicating a robust ability to cover interest expenses, with earnings significantly exceeding interest obligations. The ratio increased further to 44.05 by June 30, 2022, suggesting an improvement in profitability or a reduction in interest expenses, which enhanced the company's interest coverage margin.

However, a decline was observed in the subsequent year, with the ratio decreasing to 24.53 as of June 30, 2023. Despite this reduction, the interest coverage remained comfortably above common thresholds, implying that the company still maintained a strong capacity to service its interest commitments, albeit with somewhat less cushion compared to prior years.

Projected figures for June 30, 2024, show a modest recovery to 28.82, indicating a potential stabilization or slight improvement in the underlying earnings relative to interest expenses. Notably, there is a significant forecasted escalation in the interest coverage ratio for June 30, 2025, reaching 407.77. This extraordinary increase suggests a projected substantial improvement in EBIT or a significant reduction in interest obligations, likely reflecting a strategic shift, refinancing, or extraordinary earnings growth.

Overall, the trend indicates that ResMed Inc. has consistently maintained healthy interest coverage ratios, with the most recent projection suggesting a remarkably strong ability to meet its interest expenses moving forward. The fluctuations across the period illustrate both the company's resilience and the variability in its earnings capacity, but the ratios remain well above typical minimum thresholds for financial stability.