ABM Industries Incorporated (ABM)
Interest coverage
| Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | Oct 31, 2019 | Jul 31, 2019 | Apr 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 416,200 | 413,400 | 385,600 | 334,800 | 317,000 | 351,000 | 327,900 | 229,600 | 204,600 | 208,400 | 225,100 | 327,800 | 161,500 | 98,000 | 91,600 | 56,000 | 226,800 | 211,200 | 171,800 | 162,500 |
| Interest expense (ttm) | US$ in thousands | 83,800 | 82,300 | 77,700 | 67,900 | 54,600 | 41,000 | 31,100 | 26,300 | 26,300 | 28,600 | 32,700 | 40,200 | 42,900 | 44,600 | 46,400 | 45,500 | 47,800 | 51,100 | 52,300 | 52,300 |
| Interest coverage | 4.97 | 5.02 | 4.96 | 4.93 | 5.81 | 8.56 | 10.54 | 8.73 | 7.78 | 7.29 | 6.88 | 8.15 | 3.76 | 2.20 | 1.97 | 1.23 | 4.74 | 4.13 | 3.28 | 3.11 |
January 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $416,200K ÷ $83,800K
= 4.97
Interest coverage is a key financial ratio that measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is better positioned to meet its interest obligations.
ABM Industries Inc.'s interest coverage ratio has been relatively stable over the past eight quarters, ranging from 4.92 to 10.55. The company's interest coverage ratio in Q1 2024 was 4.97, which indicates that for every dollar of interest expense, the company generated $4.97 of operating income. This suggests that ABM Industries Inc. has a comfortable buffer to cover its interest payments.
Looking at the trend, the interest coverage ratio has been generally decreasing over the past quarters, moving from exceptionally high levels of 8.54 and 10.55 in Q4 2022 and Q3 2022, respectively, to the recent levels around 4.97 to 5.80. While the current ratio is still at an acceptable level, the downward trend warrants attention as it may indicate a potential risk in the company's ability to cover interest expenses in the future.
Overall, ABM Industries Inc.'s interest coverage remains within reasonable levels, though monitoring the trend closely is advisable to ensure the company's continued ability to meet its debt obligations.
Peer comparison
Jan 31, 2024