ScanSource Inc (SCSC)

ScanSource Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations and leverage levels over the past years:

1. Debt-to-Assets Ratio:
- The debt-to-assets ratio has remained relatively stable over the five-year period, ranging between 0.06 and 0.08. This ratio suggests that ScanSource has a low percentage of its total assets financed by debt, indicating a conservative approach to leveraging.

2. Debt-to-Capital Ratio:
- The debt-to-capital ratio has shown consistency around 0.13 to 0.17. This indicates that debt contributes to about 13% to 17% of the company's total capital structure, implying a moderate level of leverage relative to its equity.

3. Debt-to-Equity Ratio:
- The debt-to-equity ratio has fluctuated between 0.15 and 0.21, which shows the proportion of debt in relation to equity. ScanSource's debt has been around 15% to 21% of its equity, indicating that the company has been managing its debt levels relative to its equity position.

4. Financial Leverage Ratio:
- The financial leverage ratio has varied between 1.92 and 2.49. This ratio quantifies the firm's total debt relative to its equity. The decrease in this ratio over the years suggests a declining dependency on debt to finance its assets.

In general, ScanSource Inc appears to maintain a prudent solvency position with a conservative debt structure, indicating that the company has been managing its long-term obligations efficiently over the years. The decreasing trend in the financial leverage ratio signals a reduced reliance on debt financing, which can positively impact the company's financial stability and risk management.

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Coverage ratios

ScanSource Inc's interest coverage ratio has shown significant fluctuations over the past five years. In particular, the interest coverage ratio improved from negative in 2020 to 234.00 in 2024, indicating a substantial enhancement in the company's ability to cover its interest expenses with operating income. The notable increase in the interest coverage ratio suggests that the company's earnings are more than sufficient to meet its interest obligations, reflecting improved financial health and reduced default risk. The consistent positive trend in the interest coverage ratio from 2020 to 2024 is a positive indicator of ScanSource Inc's financial stability and ability to service its debt obligations.