Accenture PLC (NYSE:ACN)

The solvency position, as indicated by the provided ratios, demonstrates a generally stable financial structure with increasing leverage over the observed period. Initially, the company maintained a very conservative capital structure with minimal reported debt. However, a clear trend of increasing debt utilization emerges from late 2023, continuing through the forecast period.

Debt to Equity

The debt to equity ratio remained at zero for the first eleven quarters. A slight increase is observed beginning in August 2023, rising from 0.01 to 0.18 by August 2024, and stabilizing around 0.17 through the end of the forecast. This indicates a growing reliance on debt financing relative to equity.

Debt to Equity (Including Operating Lease Liability)

This ratio, which incorporates operating lease liabilities, presents a more substantial level of debt throughout the entire period. It exhibits a gradual decline from 0.19 to 0.12 between November 2020 and May 2023. Subsequently, it increases significantly, reaching 0.28 in August 2024, and then moderates to 0.27 by the end of the forecast. The inclusion of operating leases significantly impacts the perceived leverage.

Debt to Capital

Similar to the debt to equity ratio, debt to capital remained at zero for the majority of the observed period. An increase begins in August 2023, mirroring the trend seen in the debt to equity ratio, reaching 0.15 by August 2024 and stabilizing around 0.14. This suggests a growing proportion of debt in the company’s capital structure.

Debt to Capital (Including Operating Lease Liability)

This ratio follows a similar pattern to the debt to equity ratio including operating leases, showing a gradual decline initially, followed by a marked increase beginning in late 2023. It rises from 0.10 to 0.22 by August 2024, and then stabilizes around 0.21. The inclusion of operating leases again demonstrates a higher level of leverage.

Debt to Assets

The debt to assets ratio remained at zero for the first twelve quarters. A slight increase is observed beginning in May 2023, rising to 0.09 by August 2024, and stabilizing around 0.08. This indicates a growing proportion of assets financed by debt.

Debt to Assets (Including Operating Lease Liability)

This ratio shows a consistent level of debt relative to assets, ranging from 0.09 to 0.06 over the period. It increases from 0.06 to 0.14 by August 2024, and then moderates to 0.13 by the end of the forecast. The inclusion of operating leases again results in a higher ratio.

Financial Leverage

Financial leverage, as measured by this ratio, fluctuates between 1.89 and 2.21 throughout the period. A general downward trend is observed from 2020 to 2023, followed by a slight increase towards the end of the forecast period. This suggests a moderate level of financial risk.

Interest Coverage

The interest coverage ratio demonstrates a strong ability to meet interest obligations throughout the majority of the period, consistently above 130. However, a significant decline is observed beginning in November 2024, falling from 217.31 to 39.97 by November 2025. This decrease, while still positive, warrants attention as it indicates a reduced margin of safety in covering interest expenses, coinciding with the increased debt levels.

In summary, the company’s solvency position has shifted from a very conservative stance to one with increasing leverage, particularly from late 2023 onwards. While the company continues to demonstrate an ability to cover its interest obligations, the declining interest coverage ratio alongside the rising debt ratios suggests a potential increase in financial risk that should be monitored.

The debt to equity ratio remained consistently at zero for the period spanning November 30, 2020, through May 31, 2023. A notable shift occurred in the following quarter, with the ratio increasing to 0.01 in August 31, 2023, and remaining at that level through November 30, 2023. Subsequent quarters demonstrate a significant upward trend, culminating in a ratio of 0.16 by November 30, 2025, and remaining relatively stable through February 28, 2026.

Debt to Equity Ratio Trend

From a position of no debt relative to equity, the ratio began to increase in the latter half of 2023. The increase accelerated substantially in the first half of 2024, reaching 0.06 by May 31, 2024, and continuing to 0.18 by August 31, 2024. This indicates a growing reliance on debt financing relative to equity. The ratio then stabilized between 0.16 and 0.18 for the remainder of the observed period.

Magnitude of Change

The most substantial change in total debt occurred between February 28, 2024, and May 31, 2024, with an increase from US$182,776 thousand to US$1,678,903 thousand. This represents a significant increase in the company’s debt position. While debt levels fluctuated in subsequent quarters, they remained substantially higher than pre-2024 levels.

Equity Growth

Total shareholders’ equity demonstrated a consistent upward trend throughout the observed period, increasing from US$17,906,501 thousand on November 30, 2020, to US$31,210,676 thousand on February 28, 2026. However, the rate of equity growth was not sufficient to offset the substantial increase in debt observed from 2024 onwards, resulting in the rising debt to equity ratio.

The observed trend suggests a strategic shift towards increased debt financing. While the company maintains a strong equity base, the growing debt levels warrant continued monitoring to assess potential impacts on financial flexibility and risk profile.

The debt to equity ratio, including operating lease liabilities, demonstrates a generally decreasing trend from November 2020 through November 2023, followed by a significant increase and subsequent stabilization. This indicates a shift in the company’s capital structure over the analyzed period.

Initial Decreasing Trend (Nov 2020 – Nov 2023)

From November 2020 to November 2023, the debt to equity ratio declined steadily from 0.19 to 0.12. This suggests a strengthening financial position, potentially due to increased equity or a reduction in debt. The consistent decrease over multiple quarters indicates a deliberate strategy or favorable business conditions contributing to improved solvency.

Significant Increase (Feb 2024 – Aug 2024)

A substantial increase in the debt to equity ratio is observed between February 2024 and August 2024, rising from 0.12 to 0.28. This jump is primarily driven by a considerable increase in total debt, while equity also increased, but at a slower pace. This period likely reflects a significant financing event, such as a large debt issuance or a major acquisition funded by debt.

Stabilization (Nov 2024 – Aug 2025)

Following the peak in August 2024, the debt to equity ratio stabilizes, fluctuating between 0.26 and 0.28 through August 2025. While remaining elevated compared to prior periods, the ratio does not continue to climb, suggesting that the company has paused further debt accumulation. Both debt and equity show increases during this period, maintaining the ratio within a relatively narrow range.

Overall Trend

The overall trend reveals a transition from a conservative capital structure (lower debt to equity) to a more leveraged position, followed by a period of stabilization at the higher level. The initial decline suggests prudent financial management, while the subsequent increase warrants further investigation to understand the underlying reasons and potential implications for future financial performance.

The fluctuations in the ratio should be considered in conjunction with other financial metrics and industry benchmarks to gain a comprehensive understanding of the company’s solvency and financial risk.

The debt to capital ratio remained consistently at zero for the period spanning November 30, 2020, through May 31, 2023. A notable shift occurred in August 31, 2023, with the ratio increasing to 0.01, and remaining at that level through November 30, 2023. Subsequently, a significant increase is observed, rising to 0.06 by May 31, 2024, then decreasing to 0.03 by August 31, 2024. The ratio then experiences a substantial surge, reaching 0.15 by November 30, 2024, and holding steady through August 31, 2025. A slight decrease is then observed, with the ratio fluctuating between 0.14 and 0.15 over the final reporting periods.

Debt to Capital Ratio - Trend Analysis

The initial period demonstrates a financially conservative position, indicated by the absence of debt relative to capital. The subsequent increase suggests a strategic decision to incorporate debt financing. The large increase in total debt during the May 31, 2024 period is the primary driver of the ratio’s increase. The stabilization of the ratio in the latter periods indicates a consistent capital structure with the increased debt level.

The magnitude of the change in the debt to capital ratio warrants further investigation. The substantial increase in total debt in May 2024, coupled with a more moderate increase in total capital, significantly altered the company’s financial leverage. The consistency of the ratio in the following periods suggests that the company has maintained this new level of debt financing.

Total Debt

Total debt remained relatively stable between November 30, 2020, and August 31, 2023, fluctuating within a narrow range. The significant increase to 1,678,903 in May 31, 2024, represents a substantial change in the company’s debt profile. Subsequent periods show continued high levels of debt, with minor fluctuations.

Total Capital

Total capital exhibited a consistent upward trend from November 30, 2020, to August 31, 2025. While the increase in capital contributed to the overall capital structure, it did not offset the significant increase in debt observed in May 2024, leading to the observed increase in the debt to capital ratio.

In conclusion, the solvency position of the company has undergone a notable transformation. The shift from a debt-free position to a leveraged capital structure suggests a change in financial strategy. The consistent debt to capital ratio in the most recent periods indicates a deliberate and maintained approach to financial leverage.

The debt to capital ratio, including operating lease liabilities, demonstrates a generally decreasing trend from November 2020 through November 2023, followed by a significant increase and subsequent stabilization. This indicates a shift in the company’s capital structure over the observed period.

Initial Decreasing Trend (Nov 2020 – Nov 2023)

From November 2020 to November 2023, the debt to capital ratio declined steadily from 0.16 to 0.10. This suggests a strengthening financial position, potentially through increased equity financing, retained earnings, or debt reduction. The decrease, while consistent, was relatively gradual, indicating a controlled approach to capital structure management.

Significant Increase (Feb 2024 – Aug 2024)

A substantial increase in the debt to capital ratio is observed between February 2024 and August 2024, rising from 0.10 to 0.22. This jump is primarily driven by a significant increase in total debt, while total capital also increased, but to a lesser extent. This suggests a substantial new borrowing or a major acquisition financed with debt during this period.

Stabilization (Nov 2024 – Aug 2025)

Following the peak in August 2024, the debt to capital ratio stabilized, fluctuating between 0.21 and 0.22 through August 2025. This suggests that the company has maintained its increased debt levels without further significant changes to its capital structure. The consistency in this range indicates a deliberate choice to operate with a higher level of leverage.

Overall, the observed pattern indicates a period of decreasing leverage followed by a deliberate increase and subsequent maintenance of a higher debt level. Further investigation into the specific reasons behind the debt increase in early 2024 would be necessary to fully understand the implications of this shift in capital structure.

The debt-to-assets ratio remained consistently at zero for the period spanning November 30, 2020, through May 31, 2024. A significant increase in total debt is observed beginning with the reporting period ending February 29, 2024, and continuing through August 31, 2025. This increase is accompanied by a corresponding, though proportionally smaller, increase in total assets. Consequently, the debt-to-assets ratio begins to rise, stabilizing in the range of 8-9% for the final reporting periods.

Initial Period (Nov 30, 2020 – May 31, 2024)

Throughout this period, the entity maintained a financial position with no reported debt relative to its assets. This indicates a strong liquidity position and minimal reliance on borrowing. The ratio consistently registered as zero, suggesting a conservative capital structure.

Debt Increase (Feb 29, 2024 – Aug 31, 2025)

Starting in February 2024, a substantial increase in total debt is evident. Total debt rises from US$182,776 thousand to US$5,144,385 thousand over the course of the observed period. Simultaneously, total assets also increased, but at a slower rate, moving from US$51,307,471 thousand to US$67,064,216 thousand. This shift suggests a deliberate strategy to leverage debt financing, potentially for acquisitions, investments, or share repurchases.

Ratio Stabilization (May 31, 2024 – Aug 31, 2025)

Following the initial increase, the debt-to-assets ratio stabilizes between approximately 8% and 9%. This suggests that the entity has reached a comfortable level of leverage, balancing the benefits of debt financing with the associated risks. The consistent ratio indicates a controlled approach to debt management during this phase.

The dramatic increase in debt during the latter part of the observed period warrants further investigation to understand the underlying reasons and assess the potential impact on the entity’s financial health. While the ratio remains relatively low, the magnitude of the debt increase is noteworthy.

The debt to assets ratio, including operating lease liabilities, demonstrates a generally stable pattern for the initial reporting periods, followed by a significant shift in later periods. Throughout the period from November 30, 2020, to November 30, 2022, the ratio remained consistently between 0.07 and 0.09, indicating a relatively consistent capital structure. A gradual decline is observable during the period from May 31, 2022, to November 30, 2022, reaching a low of 0.07. However, subsequent periods reveal a marked increase in the ratio, beginning with February 29, 2024, and continuing through November 30, 2025.

Initial Stability (Nov 30, 2020 – Nov 30, 2022)

For the first eight reporting periods, the debt to assets ratio fluctuated within a narrow range, averaging approximately 0.08. This suggests a consistent reliance on debt financing relative to the company’s asset base during this timeframe. The slight variations observed are likely attributable to normal business fluctuations and asset revaluations.

Increase in Leverage (Feb 29, 2024 – Nov 30, 2025)

Beginning in February 2024, the ratio experiences a substantial increase. It rises from 0.06 in February 2024 to 0.14 in August 2024, and remains elevated, fluctuating between 0.13 and 0.14 for the subsequent periods. This indicates a significant increase in the proportion of assets financed by debt. The substantial jump in total debt, particularly evident from May 31, 2024, appears to be the primary driver of this change. The ratio concludes the analyzed period at 0.12, indicating continued elevated leverage.

Trend Analysis

The overall trend demonstrates a shift from a conservative capital structure to a more leveraged position. While the initial periods suggest a stable financial risk profile, the later periods indicate a potentially increased risk due to the higher debt levels relative to assets. Further investigation into the reasons behind the increased debt, such as acquisitions, share repurchases, or significant investments, would be necessary to fully assess the implications of this change.

The observed increase in the debt to assets ratio warrants further scrutiny to determine its sustainability and potential impact on the company’s financial flexibility and future performance.

The financial leverage ratio for the observed period demonstrates a generally decreasing trend, indicating a shifting reliance on debt financing relative to equity. Initially, the ratio fluctuates around 2.15-2.21 before exhibiting a more pronounced decline in later periods.

Overall Trend

From November 2020 through February 2023, the financial leverage ratio remained relatively stable, oscillating between 2.01 and 2.21. A consistent downward trend emerges from May 2023, continuing through February 2026, with the ratio decreasing from 1.98 to 2.15.

Initial Period (Nov 2020 - Aug 2022)

The ratio begins at 2.14 in November 2020 and experiences minor fluctuations, peaking at 2.21 in August 2021. It then decreases slightly to 2.05 by November 2022. This suggests a period of consistent, but not dramatically changing, capital structure.

Transition and Decline (Nov 2022 - Feb 2024)

A more noticeable decline begins in November 2022, with the ratio falling from 2.05 to 1.89 by February 2024. This indicates a reduction in financial leverage, potentially through debt repayment or increased equity contributions.

Recent Period (May 2024 - Feb 2026)

Following the low of 1.89, the ratio experiences a slight increase to 2.15 in February 2026. While this represents an increase, the ratio remains lower than levels observed in the earlier part of the analyzed period. This could be due to new debt issuance or a revaluation of assets.

Asset and Equity Relationship

The observed trend in financial leverage is supported by the concurrent changes in total assets and total shareholders’ equity. Total assets generally increased over the period, while shareholders’ equity experienced a more substantial growth rate, contributing to the decreasing leverage ratio.

In summary, the company has demonstrated a trend towards reduced financial leverage over the analyzed period, particularly from late 2022 onwards. This suggests a strengthening financial position and a decreased reliance on debt financing.

The interest coverage ratio exhibits considerable fluctuation over the observed period, spanning from November 2020 to November 2025. Initially, the ratio demonstrates a strong position, gradually increasing before experiencing a significant decline towards the end of the period.

Initial Strength and Fluctuations (Nov 2020 – Aug 2022)

From November 2020 through August 2022, the interest coverage ratio generally remained robust, consistently above 126. It began at 191.96 and peaked at 217.31 in November 2022. This indicates a strong ability to meet interest obligations with earnings before interest and tax. However, there were noticeable variations within this timeframe, suggesting sensitivity to changes in EBIT and interest expense.

Decline and Volatility (Nov 2022 – Feb 2024)

Beginning in November 2022, a clear downward trend emerges. The ratio decreased from 217.31 to 175.18 by February 2024. While still positive, this decline signals a weakening capacity to cover interest expenses. The ratio experienced a more pronounced drop to 80.38 in February 2025, indicating a substantial reduction in the cushion available to service debt.

Recent Performance (May 2024 – Nov 2025)

The period from May 2024 to November 2025 shows continued volatility, with the ratio fluctuating between 165.48 and 39.97. The most recent value, 39.97 in November 2025, represents the lowest point in the observed period and warrants close attention. This suggests a significantly diminished ability to comfortably cover interest payments with current earnings.

Earnings and Expense Relationship

A review of the underlying components reveals that the decline in the interest coverage ratio is primarily driven by a combination of factors. While EBIT experienced fluctuations, the most significant impact appears to stem from a substantial increase in interest expense, particularly from February 2025 onwards. This increase in interest expense, coupled with relatively stable or declining EBIT, directly contributed to the observed deterioration in the ratio.

Overall, the trend indicates a weakening solvency position concerning interest coverage. While the company initially demonstrated a strong capacity to meet its interest obligations, the recent decline and increased volatility suggest a growing vulnerability. Continued monitoring of both EBIT and interest expense is crucial to assess the sustainability of the company’s debt servicing capabilities.