Vestis Corporation (VSTS)
Solvency ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.39 | 0.00 | 0.00 | 0.00 | — |
| Debt-to-capital ratio | 0.56 | 0.00 | 0.00 | 0.00 | — |
| Debt-to-equity ratio | 1.27 | 0.00 | 0.00 | 0.00 | — |
| Financial leverage ratio | 3.25 | 3.60 | 1.34 | 1.33 | — |
The solvency ratios of Vestis Corporation indicate its ability to meet its financial obligations in the long term.
The Debt-to-assets ratio has shown a significant increase over the years from 0.00 in 2020 to 0.39 in 2024, which suggests that Vestis Corporation has taken on more debt in relation to its total assets. This could indicate increased leverage and potential financial risk.
The Debt-to-capital ratio also increased from 0.00 in 2020 to 0.56 in 2024, reflecting a higher proportion of debt in the company's capital structure. This could imply a greater reliance on borrowed funds to finance operations or growth.
The Debt-to-equity ratio rose from 0.00 in 2020 to 1.27 in 2024, signifying a higher level of debt relative to equity. This may indicate that Vestis Corporation is more leveraged and potentially less insulated from economic downturns or financial challenges.
The Financial leverage ratio peaked at 3.60 in 2023 and decreased to 3.25 in 2024. A high financial leverage ratio indicates a higher proportion of debt in the company's capital structure, which can amplify returns but also increase financial risk.
Overall, the trend in these solvency ratios suggests that Vestis Corporation has been gradually increasing its reliance on debt to finance its operations and investments, which could potentially raise concerns about its long-term financial stability and ability to manage debt obligations effectively.
Coverage ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 1.64 | 21,790.90 | 84.17 | — | 726.80 |
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt obligations. A higher interest coverage ratio indicates that a company is more capable of servicing its debt. In the case of Vestis Corporation, the interest coverage ratio has displayed significant fluctuations over the past five years.
In 2020, the interest coverage ratio was exceptionally high at 726.80, indicating a robust capacity to cover interest expenses. However, in 2021, the interest coverage ratio was not available, which may suggest a lack of profitability or a significant decrease in earnings relative to interest expenses.
In 2022, the interest coverage ratio improved to 84.17, reflecting a better ability to meet interest payments compared to the previous year. The interest coverage ratio increased further to 21,790.90 in 2023, which appears abnormally high and could be influenced by a specific event such as a significant one-time gain or a sharp decline in interest expenses.
Notably, in 2024, the interest coverage ratio decreased to 1.64, which is markedly lower than the preceding years. This decline indicates a potential weakening of Vestis Corporation's ability to cover interest costs with its earnings. A low interest coverage ratio may raise concerns about the company's financial health and its ability to service its debt obligations in the future.
Overall, while the fluctuations in Vestis Corporation's interest coverage ratio suggest varying financial performance and capacity to service debt over the years, the sharp decline observed in 2024 warrants further investigation and monitoring to assess the company's financial stability and risk profile.