Applied Materials Inc (AMAT)
Interest coverage
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 7,954,000 | 7,827,000 | 7,007,000 | 4,406,000 | 3,506,000 |
| Interest expense | US$ in thousands | 238,000 | 228,000 | 236,000 | 240,000 | 237,000 |
| Interest coverage | 33.42 | 34.33 | 29.69 | 18.36 | 14.79 |
October 29, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $7,954,000K ÷ $238,000K
= 33.42
Based on the provided data, the interest coverage for Applied Materials Inc. has exhibited a generally positive trend over the past five years.
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payments from its earnings.
In 2019, the interest coverage ratio was 14.14, suggesting that the company's operating income was 14.14 times its interest expense for that year. This shows a moderate ability to cover interest payments.
Over the subsequent years, the interest coverage ratio steadily improved. By 2023, the ratio had reached 32.16, indicating a significant strengthening of the company's ability to cover interest payments.
This improvement implies that the company's profitability and operating income have increased in relation to its interest expenses, reflecting a more sound financial position and lower risk of defaulting on debt obligations.
Overall, the consistent increase in interest coverage over the past five years is a positive indicator of Applied Materials Inc.'s financial health and ability to comfortably meet its interest obligations.
Peer comparison
Oct 29, 2023