Apple Inc (AAPL)
Interest coverage
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 117,669,000 | 122,034,000 | 111,852,000 | 69,964,000 | 69,313,000 |
| Interest expense | US$ in thousands | 3,933,000 | 2,931,000 | 2,645,000 | 2,873,000 | 3,576,000 |
| Interest coverage | 29.92 | 41.64 | 42.29 | 24.35 | 19.38 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $117,669,000K ÷ $3,933,000K
= 29.92
The interest coverage ratio is a measure of a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expense. A higher interest coverage ratio indicates a stronger ability to meet interest obligations.
Looking at the interest coverage ratio for Apple Inc over the past five years, we see a consistently high and healthy trend. In Sep 30, 2023, the interest coverage ratio stands at 29.06, which indicates that Apple's earnings before interest and taxes are 29.06 times greater than its interest expenses for that period. This signifies a strong ability to meet its interest payments.
The ratios for the previous years also show consistently high values, with ratios of 40.75, 41.19, 23.07, and 17.88 for the years 2022, 2021, 2020, and 2019 respectively. This demonstrates a consistent ability to cover interest expenses with earnings.
The high and consistent interest coverage ratios for Apple Inc reflect its strong financial position and ability to generate earnings to comfortably cover its interest obligations. This indicates a lower risk of insolvency due to an inability to meet interest payments. It also suggests that the company has the capacity to take on additional debt if needed, as its earnings are more than sufficient to cover interest expenses.
Overall, the trend of Apple Inc's interest coverage ratios indicates a stable and financially healthy position, providing confidence to creditors and investors about the company's ability to manage its debt obligations.
Peer comparison
Sep 30, 2023