Wolfspeed Inc (WOLF)
Solvency ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.77 | 0.63 | 0.26 | 0.24 | 0.24 |
| Debt-to-capital ratio | 0.87 | 0.72 | 0.30 | 0.28 | 0.27 |
| Debt-to-equity ratio | 6.98 | 2.57 | 0.42 | 0.39 | 0.38 |
| Financial leverage ratio | 9.05 | 4.06 | 1.61 | 1.63 | 1.55 |
Wolfspeed Inc's solvency ratios indicate the company's ability to meet its long-term financial obligations. The debt-to-assets ratio has been increasing over the past five years, reaching 0.77 in 2024, suggesting that a significant portion of the company's assets are financed by debt.
Similarly, the debt-to-capital and debt-to-equity ratios have also been on an upward trend, indicating higher leverage levels compared to previous years. The debt-to-capital ratio stood at 0.87 in 2024, while the debt-to-equity ratio was notably high at 6.98, signaling that the company relies heavily on debt to finance its operations and growth.
Furthermore, the financial leverage ratio, which measures the extent of a company's financial leverage, also shows a substantial increase over the years, reaching 9.05 in 2024. This high financial leverage implies that the company's operations are funded to a large extent through debt financing, posing potential risks in times of economic downturn or rising interest rates.
Overall, Wolfspeed Inc's solvency ratios suggest a significant reliance on debt for financing its operations and investments, which could expose the company to financial risks if not managed effectively. Investors and stakeholders should carefully monitor these ratios to assess the company's long-term financial health and sustainability.
Coverage ratios
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | -1.81 | -6.71 | -6.65 | -10.52 | -4.72 |
Based on the data provided for Wolfspeed Inc's interest coverage ratio over the past five years, the trend indicates a fluctuating and concerning pattern. The interest coverage ratio has been consistently below 1, indicating that the company's earnings before interest and taxes (EBIT) are insufficient to cover its interest expenses. This raises red flags about the company's ability to meet its interest obligations from its operating income.
Furthermore, the declining trend in the interest coverage ratio from -4.72 in 2020 to -1.81 in 2024 suggests a worsening situation in terms of the company's ability to service its debt. A consistently negative interest coverage ratio indicates that Wolfspeed Inc may be at a high risk of defaulting on its interest payments.
Overall, the data reveals a concerning financial position for Wolfspeed Inc with regards to its ability to cover its interest expenses, highlighting the importance of improving its profitability and/or reducing its debt levels to enhance financial stability.