Viavi Solutions Inc (VIAV)

The solvency ratios of Viavi Solutions Inc indicate the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing.

The debt-to-assets ratio has been relatively stable over the past five years, ranging from 0.11 to 0.37, suggesting that Viavi Solutions maintains a moderate level of debt compared to its total assets. This indicates that a significant portion of the company's assets are financed through equity.

The debt-to-capital ratio has also remained consistent, hovering around 0.48 over the same period. This highlights the company's reliance on debt to finance its operations and growth initiatives, with approximately 48% of its capital structure being funded through debt.

The debt-to-equity ratio has shown variation but has generally been above 0.90 in recent years, indicating that Viavi Solutions relies heavily on debt to finance its operations compared to equity. This may pose higher financial risk due to the significant leverage utilized by the company.

The financial leverage ratio has fluctuated between 2.55 and 2.81 in the last five years, reflecting the company's overall leverage position. A higher financial leverage ratio suggests that Viavi Solutions relies more on debt to support its operations, which can amplify both returns and risks for shareholders.

In summary, Viavi Solutions Inc's solvency ratios demonstrate a consistent reliance on debt financing to support its operations, with variations in the level of leverage utilized over the past five years. Investors and stakeholders should closely monitor these ratios to assess the company's financial health and ability to manage its debt obligations effectively.

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Coverage ratios

Interest coverage is a financial ratio that measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates a company is more capable of meeting its interest obligations.

Looking at Viavi Solutions Inc's interest coverage over the past five years, we can see a fluctuating trend. In 2020 and 2021, the interest coverage ratios were relatively high at 9.90 and 9.53, respectively, indicating a strong ability to cover interest expenses. However, in 2022 and 2023, the ratios dropped to 3.79 and 3.24, respectively, which could be a cause for concern as they are lower than in the previous years.

The most recent data for June 30, 2024, shows a significant decline in the interest coverage ratio to 0.67, which suggests a potential challenge for Viavi Solutions Inc in meeting its interest obligations. A ratio below 1 indicates that the company's operating income is not sufficient to cover its interest expenses, raising red flags about its financial health and ability to service its debt.

Overall, the downward trend in Viavi Solutions Inc's interest coverage ratio over the past few years warrants further investigation into the company's financial stability and its ability to manage its debt obligations effectively.