Aramark Holdings (ARMK)

Interest coverage

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	706,971	766,101	807,799	830,249	862,926	783,252	727,756	687,764	628,365	562,468	488,828	352,183	191,469	-34,795	-436,638	-539,660	-264,900	35,163	551,579	772,090
Interest expense (ttm)	US$ in thousands	366,716	396,889	427,646	454,873	441,262	434,155	413,386	389,467	381,533	367,132	387,381	393,974	401,366	693,865	583,506	488,552	389,434	89,583	170,447	253,301
Interest coverage		1.93	1.93	1.89	1.83	1.96	1.80	1.76	1.77	1.65	1.53	1.26	0.89	0.48	-0.05	-0.75	-1.10	-0.68	0.39	3.24	3.05

September 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $706,971K ÷ $366,716K
= 1.93

The interest coverage ratio for Aramark Holdings has been fluctuating over the past few quarters. It indicates the company's ability to cover its interest expenses with its operating income.

From December 2019 to March 2022, the interest coverage ratio steadily declined from a healthy level of 3.24 to a concerning low of 0.48. This downward trend suggests a potential strain on the company's ability to meet its interest obligations from its earnings during this period.

However, from March 2022 to September 2024, there seems to be some improvement in the interest coverage ratio, albeit still at relatively low levels below 2.0. This indicates that Aramark Holdings may be gradually recovering its ability to cover interest payments with operating income, but caution is warranted due to the persistent low ratios.

Overall, the trend in the interest coverage ratio for Aramark Holdings shows fluctuations and a recent improvement but still underscores the need for close monitoring of the company's financial health and debt repayment capabilities.