ScanSource Inc (SCSC)

The analyzed solvency ratios for ScanSource Inc. over the period from June 30, 2021, to June 30, 2025, reveal a consistent financial structure characterized by a negligible or non-existent debt component. Specifically, the debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio are all reported as zero across all the observed periods, indicating that the company has not utilized or reported any debt financing during this timeframe. This suggests that the company operates entirely with equity financing, which inherently implies a high degree of solvency and low financial leverage associated with debt.

The financial leverage ratio, however, shows variation throughout the period, fluctuating between 2.29 and 1.92. The ratio was highest at 2.40 in June 2022 and slightly decreased to 1.92 by June 2024. Despite this fluctuation, the ratio remains within a moderate range, indicating that the company's assets are financed primarily through equity with comparatively low reliance on debt. The declining trend in the leverage ratio may suggest a reduction in leverage or an increase in equity relative to assets.

Overall, the data portray ScanSource Inc. as a financially healthy entity with minimal to no debt obligations, reflected in the zero debt-related ratios. The consistent zero figures across multiple years underscore a conservative capital structure that emphasizes equity financing, thereby reducing financial risk and enhancing solvency. The moderate and relatively stable financial leverage ratio further supports the conclusion that the company maintains a strong solvency position with limited financial leverage risk.

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Coverage ratios

The interest coverage ratio of ScanSource Inc. demonstrates significant variability over the period from June 30, 2021, to June 30, 2025. At the end of fiscal year 2021, the ratio stood at 9.30, indicating that the company generated nearly ten times its interest expense through earnings before interest and taxes (EBIT), reflecting strong capacity to meet interest obligations.

In the following year, 2022, the ratio nearly doubled to 19.19, further emphasizing a substantial improvement in the company's ability to cover interest expenses, which could be attributed to expanded earnings, reduced interest costs, or a combination of both.

However, there was a notable decline in fiscal year 2023, with the ratio decreasing to 7.16. Although still above 1, suggesting that the company retains the ability to meet its interest payments comfortably, this reduction signals a weakening in interest coverage, potentially due to earnings pressure, increased interest expenses, or both.

The subsequent year, 2024, shows a modest recovery with the ratio rising to 8.66, indicating some improvement in operations or financial management that enhanced the company's capacity to cover interest obligations.

By the fiscal year 2025, the ratio drops to 0.00, a stark change that suggests the company either reported no earnings before interest and taxes or experienced a situation where EBIT was insufficient or unavailable, rendering it impossible to cover interest expenses. This could reflect significant operational difficulties, extraordinary losses, or a restructuring event, and warrants further investigation into the company's financial statements for that period.

Overall, the trend indicates fluctuating interest coverage, with periods of strong coverage in 2021 and 2022, followed by a decline in 2023 and 2024, culminating in a potential liquidity or profitability crisis in 2025.