Tapestry Inc (TPR)

The solvency ratios of Tapestry Inc provide insights into the company's ability to meet its long-term financial obligations and the extent to which the business relies on debt to finance its operations.

Over the past five years, the Debt-to-assets ratio has shown a steady increase, from 0.20 in 2020 to 0.52 in 2024. This suggests that the proportion of the company's assets financed by debt has significantly increased, indicating a higher level of financial risk.

Similarly, the Debt-to-capital and Debt-to-equity ratios have also shown an upward trend, reaching 0.71 and 2.42 respectively in 2024. These ratios indicate that a significant portion of Tapestry's capital structure is funded by debt, which could potentially lead to higher financial leverage and interest costs.

The Financial leverage ratio, which measures the extent to which the company is using debt to finance its assets, has also increased over the years, from 2.57 in 2021 to 4.62 in 2024. This highlights a greater reliance on debt to support the company's operations and growth.

Overall, the trend in Tapestry's solvency ratios indicates a shift towards a more leveraged financial structure, which could increase the company's financial risk and impact its ability to withstand economic downturns or challenging market conditions. Investors and stakeholders should closely monitor these solvency ratios to assess the company's long-term financial stability and risk profile.

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Coverage ratios

Tapestry Inc's interest coverage ratio has varied over the past five years. The ratio stood at 3.08 in June 30, 2024, indicating that the company generated enough operating income to cover its interest expenses 3.08 times over during that period. This represents a decrease from the previous year when the ratio was 16.04, suggesting a decrease in the company's ability to cover its interest costs.

Looking back, Tapestry Inc's interest coverage was relatively strong in the years 2022 and 2023, with ratios of 16.97 and 16.04 respectively. This indicates a healthy operating income relative to interest expenses during those years. However, in June 30, 2021 and June 30, 2020, the company faced challenges as reflected by interest coverage ratios of 13.06 and -7.64, respectively. A negative interest coverage ratio in 2020 suggests that the company's operating income was not sufficient to cover its interest expenses during that period.

Overall, Tapestry Inc's interest coverage has fluctuated in recent years, and a declining trend in the most recent year may indicate a potential challenge in servicing debt obligations. It would be important for the company to monitor and improve its interest coverage ratio to ensure it remains financially stable and capable of meeting its interest payments.