Berry Global Group Inc (BERY)
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 | 1,079,000 | 1,242,000 | 1,292,000 | 1,179,000 | 974,000 |
| Interest expense | US$ in thousands | 1,000 | 2,000 | 2,000 | 3,000 | 10,000 |
| Interest coverage | 1,079.00 | 621.00 | 646.00 | 393.00 | 97.40 |
September 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,079,000K ÷ $1,000K
= 1,079.00
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by the interest expense. A higher ratio indicates a better ability to cover interest payments.
Berry Global Group Inc's interest coverage ratio has shown a fluctuating trend over the past five years. As of September 30, 2023, the interest coverage ratio stands at 3.86, indicating that the company generated 3.86 times the earnings necessary to cover its interest expenses for that period. This represents a decrease from the previous year's ratio of 4.42, although it remains relatively above the 3x threshold typically considered a minimum acceptable level by creditors.
The downward trend from 2022 to 2023 may raise concerns about Berry Global's ability to meet its interest obligations using operating income alone. It is essential for investors and creditors to monitor this ratio closely to assess the company's financial risk and its ability to service its debt obligations.
Peer comparison
Sep 30, 2023