Adobe Systems Incorporated (ADBE)

Interest coverage

		Nov 30, 2024	Nov 29, 2024	Dec 1, 2023	Nov 30, 2023	Dec 2, 2022
Earnings before interest and tax (EBIT)	US$ in thousands	7,100,000	6,741,000	6,912,000	6,032,000	6,120,000
Interest expense	US$ in thousands	169,000	169,000	113,000	113,000	112,000
Interest coverage		42.01	39.89	61.17	53.38	54.64

November 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $7,100,000K ÷ $169,000K
= 42.01

To analyze Adobe Systems Incorporated interest coverage based on the provided data:

1. The interest coverage ratio indicates a company's ability to meet its interest obligations from its earnings. A higher interest coverage ratio is generally considered favorable as it suggests that the company is more capable of servicing its debt.

2. In December 2022, Adobe Systems Incorporated had an interest coverage ratio of 54.64, indicating that the company's earnings were sufficient to cover its interest expenses approximately 54 times over. This suggests a strong ability to meet interest payments.

3. Over the subsequent years, the interest coverage ratio remained relatively stable, with slight fluctuations. In November 2023, the ratio was 53.38, followed by an increase to 61.17 in December 2023. These values indicate consistent earnings relative to interest expenses.

4. However, in November 2024, there was a notable decline in the interest coverage ratio to 39.89, followed by a slight improvement to 42.01 by the end of the month. These lower ratios may raise concerns about the company's ability to comfortably cover its interest obligations from its earnings.

5. Overall, despite some fluctuations in the interest coverage ratio, Adobe Systems Incorporated has generally maintained a healthy interest coverage level over the analyzed periods. The company's ability to generate earnings sufficient to cover its interest expenses indicates a sound financial position regarding debt servicing.

In conclusion, Adobe Systems Incorporated's interest coverage ratio demonstrates a consistent ability to meet its interest obligations, with occasional fluctuations that should be monitored for any potential impacts on the company's financial health.