Scholastic Corporation (SCHL)
Solvency ratios
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.10 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.01 | 0.15 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.01 | 0.18 |
| Financial leverage ratio | 1.64 | 1.61 | 1.59 | 1.70 | 1.72 |
Scholastic Corporation's solvency ratios indicate a consistently strong financial position over the past five years. The debt-to-assets, debt-to-capital, and debt-to-equity ratios have consistently remained at a very low level of 0.00, suggesting that the company has minimal debt in relation to its assets, capital, and equity. This reflects the company's ability to fund its operations primarily through equity and retained earnings rather than debt financing.
Furthermore, the financial leverage ratio has also shown a declining trend from 1.72 in 2020 to 1.64 in 2024. Although the financial leverage ratio is slightly higher than the other solvency ratios, the decreasing trend indicates an improvement in the company's ability to meet its financial obligations and leverage levels. Overall, the solvency ratios demonstrate that Scholastic Corporation has a solid financial foundation with minimal reliance on debt to support its operations.
Coverage ratios
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 9.53 | 81.14 | 31.90 | -1.95 | -28.93 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT). A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Looking at the historical data for Scholastic Corporation, we observe the following trends in interest coverage:
1. May 31, 2024: The interest coverage ratio was 9.53, which indicates that the company generated earnings 9.53 times its interest expenses. This suggests a healthy ability to cover interest payments.
2. May 31, 2023: The interest coverage ratio significantly improved to 81.14, demonstrating a substantial increase in the company's ability to cover interest obligations.
3. May 31, 2022: The interest coverage ratio was 31.90, indicating a strong ability to meet interest payments with earnings.
4. May 31, 2021: The interest coverage ratio turned negative at -1.95, which raises concerns as it implies that the company's EBIT was not sufficient to cover its interest expenses. This could suggest financial distress or challenges in generating earnings.
5. May 31, 2020: The interest coverage ratio significantly deteriorated to -28.93, indicating a sharp decline in the company's ability to cover interest payments with earnings.
Overall, Scholastic Corporation's interest coverage has shown volatility over the years, with particularly concerning performance in 2021 and 2020. It is essential for the company to sustain or improve its interest coverage ratio to ensure its financial stability and mitigate the risk of potential liquidity issues.