United Natural Foods Inc (UNFI)

Solvency ratios measure a company's ability to meet its long-term financial obligations. Let's analyze United Natural Foods Inc.'s solvency ratios based on the provided data.

1. Debt-to-assets ratio: This ratio indicates the percentage of a company's assets that are financed by debt. A lower ratio is generally favorable, as it suggests lower financial risk. United Natural Foods Inc.'s debt-to-assets ratio has been decreasing over the past five years, indicating an improving ability to finance assets through equity rather than debt.

2. Debt-to-capital ratio: This ratio measures the proportion of a company's capital that is contributed by debt. A lower ratio indicates a lower reliance on debt for funding. United Natural Foods Inc.'s debt-to-capital ratio has also been decreasing, suggesting a reduced dependence on debt financing and a stronger capital structure.

3. Debt-to-equity ratio: This ratio compares a company's total debt to its shareholder equity. A decreasing trend in this ratio indicates a decreasing financial risk for the company and a stronger equity position. United Natural Foods Inc.'s debt-to-equity ratio has been steadily declining, a positive sign for the company's financial stability.

4. Financial leverage ratio: This ratio measures the extent to which a company uses debt to finance its assets. A high ratio indicates a higher proportion of debt in the company's capital structure. Generally, a decreasing trend in this ratio is favorable as it suggests lower financial leverage and reduced risk. United Natural Foods Inc.'s financial leverage ratio has decreased significantly over the past five years, indicating a decreased reliance on debt to fund its operations.

Overall, United Natural Foods Inc.'s solvency ratios show a consistent trend of improvement over the past five years, reflecting a stronger financial position and reduced financial risk. These positive trends suggest that the company has managed its long-term financial obligations effectively and has improved its overall financial stability.

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Coverage ratios

United Natural Foods Inc.'s interest coverage ratio measures its ability to pay interest expenses on outstanding debt. It is calculated by dividing the company's earnings before interest and taxes (EBIT) by its interest expenses. A higher ratio indicates a greater ability to cover interest payments.

Looking at the data provided, we can see that United Natural Foods Inc.'s interest coverage has fluctuated over the past five years. In 2023, the interest coverage ratio is 1.10, indicating that the company's EBIT is only sufficient to cover its interest expense by a minimal margin.

Comparing this to the previous year, the interest coverage ratio was much healthier at 2.30, suggesting that the company had a stronger capacity to meet its interest obligations in 2022. However, the ratio decreased in 2021 to 1.70, although it was slightly higher than in 2020 when it was 1.74. This indicates that the company's ability to cover interest expenses was relatively consistent in 2021 and 2020.

In 2019, the interest coverage ratio was just 0.86, demonstrating a significant decline in the company's ability to meet its interest obligations compared to the more recent years.

Overall, United Natural Foods Inc.'s interest coverage has shown volatility over the past five years, with periods of stronger and weaker capacity to cover interest expenses. This ratio is crucial for potential lenders and investors, as it provides insight into the company's financial risk and ability to manage its debt obligations.