Roivant Sciences Ltd (ROIV)

Roivant Sciences Ltd's solvency ratios indicate the company's ability to meet its long-term financial obligations. The debt-to-assets ratio has consistently decreased from 0.08 in 2022 to 0.03 in 2024, indicating that the company has a lower proportion of debt relative to its total assets, which is a positive sign for creditors and investors. This suggests that Roivant has a strong financial position in terms of its asset coverage for debt.

Similarly, the debt-to-capital ratio has also shown improvement from 0.14 in 2023 to 0.03 in 2024. This indicates that the company relies less on debt financing relative to its total capital structure. A lower debt-to-capital ratio typically signifies lower financial risk for the company.

The debt-to-equity ratio has followed a similar trend, decreasing from 0.16 in 2023 to 0.03 in 2024. This indicates that Roivant has reduced its reliance on debt in comparison to equity financing, which is favorable as it reflects a healthier balance between debt and shareholder equity.

Lastly, the financial leverage ratio has decreased from 2.06 in 2023 to 1.21 in 2024. This ratio measures the company's total assets relative to its equity, indicating the degree of financial leverage used by the company. The declining trend in this ratio suggests that Roivant's financial risk has decreased over the years as it relies less on debt financing.

Overall, based on the solvency ratios provided, Roivant Sciences Ltd has shown improvements in managing its long-term debt obligations and maintaining a more solid financial position over the years. This could enhance the company's creditworthiness and attractiveness to potential investors.

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Coverage ratios

The interest coverage ratio of Roivant Sciences Ltd has shown significant improvement over the past three years. In particular, the interest coverage ratio was 126.69 as of March 31, 2024, indicating that the company was able to cover its interest expense approximately 127 times from its operating income. This represents a strong improvement compared to the negative values in the previous two years, where the company's operating income was not sufficient to cover its interest expense.

The negative interest coverage ratios in March 31, 2023, and March 31, 2022, suggest that Roivant Sciences Ltd faced challenges in meeting its interest obligations with its operating income during those periods. However, the significant increase in the interest coverage ratio to a positive value in 2024 signifies that the company's profitability and ability to cover its interest expense have improved considerably.

Overall, the trend in Roivant Sciences Ltd's interest coverage indicates a positive turn, reflecting better financial health and a strengthened ability to meet its interest obligations. However, it will be important to monitor this metric in the future to ensure continued financial stability and sustainable growth.