Scholastic Corporation (SCHL)

The analysis of Scholastic Corporation's solvency ratios from the provided data reveals a consistent financial position characterized by minimal leverage.

The debt-to-assets ratio consistently remains at 0.00 across all reported dates, indicating the absence of debt relative to total assets. This suggests that the company likely operates with zero debt obligations, relying entirely on equity financing or internal funds for its asset base. Similarly, the debt-to-capital ratio and debt-to-equity ratio are both recorded at 0.00 throughout the period, reinforcing the conclusion that Scholastic has not employed debt financing to fund its operations or growth initiatives during this timeframe.

Complementing these ratios, the financial leverage ratio exhibits a gradual increase from approximately 1.68 to 2.16 over the analyzed period. The initial ratio near 1.68–1.79 indicates a relatively low level of financial leverage, consistent with the absence of debt. The steady upward trend suggests that the company has begun to use some leverage, possibly through the issuance of equity or other financial instruments, but this increase has not yet resulted in a significant debt burden.

In summary, Scholastic Corporation has maintained an entirely debt-free capital structure from August 2020 through May 2025, as evidenced by the consistent zero values for debt-related ratios. The modest and gradually increasing financial leverage ratio implies a cautious or conservative approach to financial structuring, possibly favoring internal funding or equity capital over debt financing. Overall, the company’s solvency position appears robust, with minimal risks associated with leverage, although the upward trend in leverage ratio warrants attention for future capital structure decisions.

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Coverage ratios

The interest coverage ratios for Scholastic Corporation over the specified periods reveal significant fluctuations, indicating varying levels of ability to meet interest obligations through earnings before interest and taxes (EBIT). During the fiscal periods ending August 31, 2020, November 30, 2020, and February 28, 2021, the ratios were negative (-17.43, -26.65, and -18.68 respectively), signifying that the company experienced operating losses or had insufficient EBIT to cover interest expenses, reflecting a period of financial distress.

A marked improvement occurred by May 31, 2021, where the ratio slightly turned positive at 0.05, suggesting marginal capacity to cover interest, although it remained very weak. This upward trend continued in subsequent periods, with ratios reaching 2.46 on August 31, 2021, and 5.12 on November 30, 2021, indicating stronger earnings relative to interest obligations.

The most significant increase was observed during the fiscal year ending February 28, 2022, when the ratio soared to 3.46, followed by a substantial jump to 24.04 as of May 31, 2022. Ratios maintained high levels through August 31, 2022 (24.69) and November 30, 2022 (42.47), reflecting robust earnings capable of comfortably covering interest expenses during this period.

Subsequently, the interest coverage ratios showed a decline, dropping to 22.48 in February 2023 and further to 16.59 in May 2023. In the following quarters, the ratios decreased but remained positive at 8.63 as of August 31, 2023, and 10.51 on November 30, 2023. However, a further reduction is observed for February 29, 2024 (10.65) and May 31, 2024 (6.50), indicating a weakening in the company's ability to cover interest costs.

Notably, the ratio turned negative again on November 30, 2024, at -0.92, signifying that the company’s earnings were insufficient to meet interest expenses during that period. Towards the end of the analyzed timeline, the ratios recovered slightly to 0.85 on February 28, 2025, and 0.99 on May 31, 2025, but remain vulnerable.

Overall, the data depicts a cycle of financial instability with periods of substantial earnings capacity interspersed with episodes of severe distress. The trends indicate that while Scholastic Corporation experienced significant improvements in interest coverage during the past few years, recent declines and periods of negative coverage suggest increased financial risk and dependence on favorable operating conditions to sustain debt service obligations.