Vestis Corporation (VSTS)

The solvency ratios of Vestis Corporation provide valuable insights into the company's financial stability and ability to meet its long-term obligations. The debt-to-assets ratio, debt-to-capital ratio, and debt-to-equity ratio have consistently been at 0.00 over the past three years, indicating that the company has not relied on debt to finance its operations and investments during this period.

However, the financial leverage ratio has shown significant fluctuations, increasing from 1.33 in 2021 to 3.60 in 2023. This indicates that the company's reliance on debt to fund its operations has increased substantially in the current year. A higher financial leverage ratio implies a higher proportion of debt in the company's capital structure, which could potentially increase financial risk and the cost of debt financing.

It is important for Vestis Corporation to carefully manage its debt levels to ensure a healthy balance between debt and equity financing. The company may need to evaluate its capital structure and debt management strategies to maintain a sustainable financial position and solvency in the long term.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest obligations with its earnings before interest and taxes (EBIT). It indicates how many times a company can cover its interest expense with its operating income.

In the case of Vestis Corporation, there has been a substantial increase in the interest coverage ratio from 2020 to 2023. In 2020, the interest coverage ratio was 726.80, suggesting that the company's earnings were sufficient to cover its interest expenses approximately 726 times over. However, in 2021, the interest coverage ratio was not available, but this may be due to a lack of data or a significant change in the company's financial reporting during that period.

In 2022, the interest coverage ratio improved to 84.17, indicating a considerable increase in the company's ability to cover its interest payments from its operating income compared to the previous year. This improvement suggests better financial health and a reduced risk of default on debt obligations.

By September 30, 2023, Vestis Corporation's interest coverage ratio reached a significantly high level of 21,790.90. This substantial increase indicates that the company's earnings are significantly more than enough to cover its interest expenses, reflecting a very strong financial position and a low risk of default on debt payments.

Overall, the trend of increasing interest coverage ratio over the years highlights Vestis Corporation's improving financial performance and ability to manage its debt obligations effectively.