Viavi Solutions Inc (VIAV)

The analysis of Viavi Solutions Inc.'s solvency ratios over the period from June 30, 2021, to June 30, 2025, reveals a consistent pattern indicative of a company with minimal or no financial leverage derived from debt financing.

Firstly, the Debt-to-assets ratio remains at zero throughout all the observed periods, indicating that the company has not employed any debt in its asset financing structure. This implies that the company's assets are funded entirely by equity or other non-debt sources, which substantially reduces financial risk associated with leverage.

Similarly, the Debt-to-capital ratio maintains a steady value of zero, reaffirming the absence of debt in the company's capitalization structure across all the years examined. This ratio confirms that debt does not constitute any part of the company's total capital structure during this period.

The Debt-to-equity ratio also consistently reports a value of zero, which indicates that the company’s equity accounts solely for its capitalization, with no recorded debt liabilities relative to shareholders' equity. This further emphasizes the company's reliance on equity financing and the lack of leverage.

Despite the absence of debt-related ratios, the Financial leverage ratio fluctuates slightly over the years, ranging from 2.55 to 2.72. This ratio measures the extent of a company's assets financed by shareholders' equity, including the effect of operational and accounting policies. Its consistently above-one value suggests that asset levels are more than twice the equity, indicating some degree of leverage derived from operational efficiencies or other non-debt sources rather than traditional debt financing. The slight variations indicate minor changes in the company's operational or asset structure but do not suggest any significant shifts in leverage policy.

Overall, the solvency profile of Viavi Solutions Inc. from June 2021 to June 2025 is characterized by an absence of traditional leverage ratios related to debt, supported by the zero debt-to-assets, debt-to-capital, and debt-to-equity ratios. The stable but elevated financial leverage ratio points to operational or internal factors influencing the company's asset-to-equity structure without introducing debt-related risks.

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Coverage ratios

The interest coverage ratio for Viavi Solutions Inc. has exhibited a notable decline over the analyzed period from June 30, 2021, to June 30, 2025. Specifically, the ratio was 9.90 in 2021, indicating a strong ability to cover interest expenses with operating earnings. This ratio decreased significantly to 3.79 in 2022 and further declined to 3.12 in 2023, reflecting a diminishing capacity to service interest obligations from operational income.

By June 30, 2024, the ratio fell sharply to 1.38, approaching a level that suggests the company's operating earnings are only slightly exceeding its interest expenses. This narrow margin raises concerns regarding financial stability and the company's capacity to comfortably meet interest payments without additional financing or operational improvements.

In the subsequent year, June 30, 2025, the ratio experienced a slight recovery to 2.29, indicating some improvement in the company's ability to cover interest costs, yet it remains substantially below the 2021 level. Overall, the trend demonstrates a declining trend in the company's interest coverage capacity, which warrants attention from stakeholders as it could signal increased financial risk and potential difficulties in managing debt obligations if the trend continues.