Worthington Steel Inc (WS)

The solvency ratios of Worthington Steel Inc. demonstrate a notable absence of leverage derived from debt, as evidenced by the consistently zero values across the debt-to-assets, debt-to-capital, and debt-to-equity ratios throughout the analyzed periods from February 2023 to May 2025. This suggests that the company has not utilized debt financing during this timeframe, indicating a capital structure that is entirely equity-financed or relies solely on internal funds.

Meanwhile, the financial leverage ratio, which measures the proportion of assets financed by shareholders' equity relative to total assets, exhibits fluctuations over the period. It starts at 1.71 in February 2023, increases to 1.89 in August 2023, and reaches a peak of 1.97 in February 2024. Subsequently, it declines to approximately 1.72 by November 2024 before rising slightly to 1.83 in May 2025. These variations reflect changes in the company's asset structure or equity base over time, although the ratios remain below levels that typically indicate high leverage.

Overall, the data indicates that Worthington Steel Inc. maintains a highly conservative financial position with no reported debt, relying solely on equity or internal resources for its operations and growth. The relatively stable and low financial leverage ratios further underscore a conservative approach to financial management, minimizing solvency risks associated with leverage.

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Coverage ratios

The interest coverage ratios for Worthington Steel Inc. demonstrate a significant fluctuation over the specified periods, indicating considerable variation in the company's ability to meet its interest obligations from operating earnings.

Starting with the earliest reported period on February 28, 2023, the ratio stands at 34.31, which suggests a strong capacity to cover interest expenses, with earnings approximately 34 times the interest costs. This high level of coverage indicates a robust financial position during this period.

Subsequent periods show a notable increase, with the ratio escalating to 57.85 on May 31, 2023, and further rising to 87.66 by August 31, 2023. The peak is observed on November 30, 2023, at 149.38, signifying an exceptionally strong ability to service interest obligations at that time.

However, a downward trend begins thereafter, with the ratio decreasing to 65.29 on February 29, 2024, and continuing decline with values of 34.18 on May 31, 2024, and 20.88 on August 31, 2024. This reduction indicates a diminishing margin of safety in covering interest expenses, although the ratio remains above 1, pointing to continued interest coverage.

Further periods show the ratio dipping below 20, with 19.53 on November 30, 2024, and declining further to 17.00 on February 28, 2025, and 11.14 on May 31, 2025. Although these values are lower, they still reflect that the company’s operating earnings exceed interest obligations, albeit with decreased strategic buffer.

Overall, the trend suggests that while Worthington Steel Inc. historically maintained very comfortable interest coverage, recent figures indicate a diminishing margin, potentially reflecting changes in earnings, increased debt levels, or other operational factors impacting profitability. This pattern warrants ongoing monitoring to assess whether the company's capacity to meet interest commitments remains sustainable in the longer term.