Aecom Technology Corporation (ACM)
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 | 324,134 | 646,804 | 629,553 | 381,461 | 396,096 |
| Interest expense | US$ in thousands | 7,500 | 7,100 | 12,200 | 7,300 | 10,700 |
| Interest coverage | 43.22 | 91.10 | 51.60 | 52.25 | 37.02 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $324,134K ÷ $7,500K
= 43.22
The interest coverage ratio measures a company's ability to meet its interest obligations through its earnings. A higher ratio implies that the company is more capable of meeting interest payments. Let's analyze AECOM's interest coverage ratio over the past five years.
In 2023, AECOM's interest coverage ratio was 4.30, indicating that the company's earnings were 4.3 times its interest expense. This suggests a decline in the company's ability to cover its interest payments compared to the previous year. However, it is important to note that a ratio above 1.0 indicates that the company is generating enough earnings to cover its interest expenses.
In 2022, the interest coverage ratio was 6.84, which was a significant improvement from the prior year. This indicates that AECOM's earnings were nearly 7 times its interest expense, reflecting strong ability to meet interest obligations.
In 2021, the interest coverage ratio was 2.85, signaling a decline in the company's ability to cover its interest payments compared to the previous year. The decrease in the ratio from 2020 suggests a potential strain on the company’s earnings in meeting its interest obligations.
In 2020, the interest coverage ratio was 3.56, reflecting an improvement in the company's ability to cover its interest expenses, as compared to 2019. This improvement, however, was followed by the decrease in the subsequent year.
In 2019, the interest coverage ratio stood at 3.30, indicating that the company's earnings were 3.3 times its interest expense. This suggests a moderate level of ability to cover its interest payments.
In summary, AECOM's interest coverage ratio has exhibited fluctuations over the past five years. The company should aim to maintain a healthy interest coverage ratio to ensure it can meet its interest obligations comfortably. Additionally, investors and creditors may use this information to gauge the company's financial risk and its ability to fulfill its debt obligations.
Peer comparison
Sep 30, 2023