ABM Industries Incorporated (ABM)
Interest coverage
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 212,000 | 413,300 | 351,100 | 208,400 | 98,000 |
| Interest expense | US$ in thousands | 85,000 | 82,300 | 41,100 | 28,600 | 44,600 |
| Interest coverage | 2.49 | 5.02 | 8.54 | 7.29 | 2.20 |
October 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $212,000K ÷ $85,000K
= 2.49
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates a stronger ability to cover interest expenses with operating income.
In the case of ABM Industries Incorporated, the interest coverage ratio has fluctuated over the past five years. In 2024, the ratio was 2.49, reflecting a decrease from the previous year's ratio of 5.02. This decline may raise concerns about the company's ability to comfortably cover its interest obligations with operating income.
Comparing 2024 to 2022 and 2023, when the interest coverage ratios were 8.54 and 7.29, respectively, the recent decrease suggests a potential weakening in ABM Industries' ability to service its debt.
However, it is worth noting that the 2024 interest coverage ratio of 2.49 is still higher than the ratio of 2.20 in 2020, indicating some level of improvement since then. Despite the recent decline, ABM Industries may still have sufficient operating income to cover its interest payments, albeit to a lesser extent compared to previous years.
Overall, the trend in ABM Industries' interest coverage ratio highlights the importance of monitoring the company's ability to manage its debt and generate enough operating income to meet its financial obligations.
Peer comparison
Oct 31, 2024