Aramark Holdings (ARMK)
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 | 1,292,980 | 637,478 | 282,247 | -258,379 | 909,067 |
| Interest expense | US$ in thousands | 441,262 | 381,533 | 413,713 | 389,434 | 352,812 |
| Interest coverage | 2.93 | 1.67 | 0.68 | -0.66 | 2.58 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,292,980K ÷ $441,262K
= 2.93
The interest coverage ratio for Aramark Holdings has shown varying trends over the past five years. In 2023, the interest coverage ratio improved to 2.93, indicating that the company earned $2.93 in operating income for every $1 of interest expense. This represents a positive sign as it suggests that Aramark's operating income is comfortably covering its interest payments.
The significant increase in the interest coverage ratio from 2022 to 2023 reflects an improvement in Aramark's ability to meet its interest obligations. In contrast, the company experienced a challenging financial situation in 2020 with a negative interest coverage ratio of -0.66, indicating that its operating income was insufficient to cover its interest expenses during that period.
Overall, the upward trend in the interest coverage ratio from 2020 to 2023 signifies an enhancement in Aramark's financial position and capacity to service its debt obligations. However, analysts should continue to monitor this ratio to ensure that the company's operating performance remains strong enough to support its interest payments in the future.
Peer comparison
Sep 30, 2023