AAR Corp (AIR)
Interest coverage
| May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 101,500 | 133,800 | 107,700 | 59,000 | 19,300 |
| Interest expense | US$ in thousands | 43,200 | 12,200 | 2,400 | 5,000 | 9,300 |
| Interest coverage | 2.35 | 10.97 | 44.88 | 11.80 | 2.08 |
May 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $101,500K ÷ $43,200K
= 2.35
The interest coverage ratio for AAR Corp has exhibited significant fluctuations over the past five years. In May 2024, the interest coverage ratio was 2.35, indicating that the company's operating income was 2.35 times greater than its interest expenses for that period. This represents a decrease from the prior year, where the ratio was 10.97 in May 2023.
The substantial decline in the interest coverage ratio from 44.88 in May 2022 to 11.80 in May 2021 raises concerns about the company's ability to meet its interest obligations comfortably. However, the ratio improved in May 2023 before decreasing again in the most recent year, highlighting potential fluctuations in the company's financial health.
The interest coverage ratio of 2.08 in May 2020 reflected a weaker position compared to the current year, suggesting that the company may have faced challenges in meeting interest payments back then. Overall, the varying trend in the interest coverage ratio for AAR Corp indicates fluctuations in the company's ability to generate sufficient operating income to cover its interest expenses. Further analysis of the company's financial performance and debt management strategies would be necessary to comprehensively assess its financial stability.
Peer comparison
May 31, 2024