Adobe Systems Incorporated (ADBE)

Interest coverage

		Mar 1, 2024	Dec 1, 2023	Sep 1, 2023	Mar 3, 2023	Dec 2, 2022	Sep 2, 2022	Jun 3, 2022	Mar 4, 2022	Dec 3, 2021	Sep 3, 2021	Jun 4, 2021	Mar 5, 2021	Nov 27, 2020	Aug 28, 2020	May 29, 2020	Feb 28, 2020	Nov 29, 2019	Aug 30, 2019	May 31, 2019	Mar 1, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	6,231,000	6,781,000	6,429,000	6,179,000	6,120,000	6,071,000	6,032,000	5,926,000	5,818,000	5,546,000	5,189,000	4,803,000	4,292,000	4,062,000	3,849,000	3,572,000	3,363,000	3,095,746	2,943,211	2,903,373
Interest expense (ttm)	US$ in thousands	114,000	115,000	115,000	116,000	112,000	112,000	111,000	111,000	113,000	112,000	113,000	113,000	116,000	125,000	137,000	149,000	157,000	148,631	129,738	110,101
Interest coverage		54.66	58.97	55.90	53.27	54.64	54.21	54.34	53.39	51.49	49.52	45.92	42.50	37.00	32.50	28.09	23.97	21.42	20.83	22.69	26.37

March 1, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $6,231,000K ÷ $114,000K
= 54.66

The interest coverage ratio for Adobe Systems Incorporated has been consistently strong over the period indicated in the table. It has remained well above 20, indicating that the company has more than enough earnings to cover its interest expenses. This indicates a healthy financial position for Adobe, as a high interest coverage ratio means the company is at lower risk of defaulting on its debt obligations.

The ratio peaked at 58.97 in December 2023, showing the company's ability to cover its interest payments nearly 59 times over with its operating income. Despite some fluctuations, the trend overall has been positive, reflecting a consistent ability to generate earnings sufficient to cover interest expenses.

The steady and high interest coverage ratio indicates that Adobe Systems has a strong financial position and is efficiently managing its debt obligations. Investors and creditors typically view a high interest coverage ratio positively as it signifies the company's ability to make interest payments and potentially indicates a lower credit risk.