Adient PLC (ADNT)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	237,000	337,000	166,000	1,586,000	-287,000
Interest expense	US$ in thousands	187,000	132,000	192,000	229,000	203,000
Interest coverage		1.27	2.55	0.86	6.93	-1.41

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $237,000K ÷ $187,000K
= 1.27

Based on the data provided, Adient PLC's interest coverage ratio has fluctuated over the past five years. The interest coverage ratio reflects the company's ability to meet its interest obligations from its operating income.

In 2024, the interest coverage ratio was 1.27, indicating that the company's operating income was just sufficient to cover its interest expenses. This might raise concerns about the company's ability to service its debt obligations comfortably.

In 2023, the interest coverage ratio improved to 2.55, showing a better ability to cover interest expenses compared to the previous year. However, the ratio decreased in 2022 to 0.86, which could be a signal of potential financial distress as the company's operating income might not be adequate to cover its interest payments.

The significant improvement in 2021 with an interest coverage ratio of 6.93 suggests a strong ability to meet interest obligations from operating income. This could indicate better financial stability and a lower risk of default.

On the other hand, the negative interest coverage ratio in 2020 (-1.41) raises red flags as it implies that the company's operating income was insufficient to cover its interest expenses, potentially signaling financial distress.

Overall, the fluctuation in Adient PLC's interest coverage ratio over the years indicates varying levels of financial health and risk. It is essential for investors and stakeholders to monitor this ratio closely to assess the company's ability to meet its debt obligations in the future.