Smart Global Holdings Inc (SGH)

The solvency ratios of SMART Global Holdings Inc indicate the company's ability to meet its long-term financial obligations.

The debt-to-assets ratio has shown an increasing trend over the past five years, reaching 0.52 in August 2023, which means that 52% of the company's assets are financed by debt. This may raise concerns about the company's ability to cover its debts with its assets.

Similarly, the debt-to-capital ratio has also been increasing, reaching 0.78 in August 2023. This indicates that 78% of the company's capital is financed by debt, suggesting a higher reliance on borrowed funds compared to equity.

The debt-to-equity ratio has experienced a significant increase, reaching 3.55 in August 2023, indicating that the company's debt is 3.55 times its equity. This substantial increase may raise concerns about the company's financial leverage and its ability to absorb potential losses.

The financial leverage ratio has also been on an upward trend, reaching 6.77 in August 2023, indicating that the company's assets are financed through borrowing to a greater extent compared to equity. This suggests a higher financial risk for the company.

Overall, the increasing trend in these solvency ratios indicates a growing reliance on debt to finance the company's operations and investments, potentially increasing the financial risk and impacting the company's ability to handle future financial challenges.

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Coverage ratios

Interest coverage ratio measures a company's ability to pay interest expenses on its outstanding debt. SMART Global Holdings Inc's interest coverage ratio has fluctuated over the past five years. In the most recent period ending on August 25, 2023, the interest coverage ratio stands at 1.56, indicating a decline from the previous year. This suggests that the company's ability to cover its interest expense with its operating income has weakened, potentially raising concerns about its financial leverage and ability to service its debt. Furthermore, the declining trend over the past two years may indicate a need for the company to carefully manage its debt obligations and monitor its interest expenses in order to maintain financial stability and solvency.