Adient PLC (ADNT)
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 | 337,000 | 166,000 | 1,586,000 | -287,000 | 56,000 |
| Interest expense | US$ in thousands | 132,000 | 192,000 | 229,000 | 203,000 | 137,000 |
| Interest coverage | 2.55 | 0.86 | 6.93 | -1.41 | 0.41 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $337,000K ÷ $132,000K
= 2.55
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Adient plc's interest coverage ratio has fluctuated over the past five years, ranging from a low of 0.25 in 2020 to a high of 8.86 in 2021, and standing at 3.43 as of September 30, 2023.
The significant increase in the interest coverage ratio from 2020 to 2021 reflects an improvement in the company's ability to cover its interest expenses with operating income. However, the ratio decreased in 2022 before increasing again in 2023. This fluctuation may indicate varying levels of profitability and financial stability over the years.
While a ratio above 1 suggests that the company is generating enough operating income to cover its interest expenses, the fluctuations in Adient's interest coverage ratio indicate potential variability in the company's ability to service its debt obligations. It would be important to closely monitor Adient's financial performance and profitability trends to assess the sustainability of its interest coverage ratio in the future.
Peer comparison
Sep 30, 2023