ConAgra Foods Inc (CAG)

Interest coverage

		May 31, 2025	Feb 28, 2025	Nov 30, 2024	Aug 31, 2024	May 31, 2024	May 26, 2024	Feb 29, 2024	Feb 25, 2024	Nov 30, 2023	Nov 26, 2023	Aug 31, 2023	Aug 27, 2023	May 31, 2023	May 28, 2023	Feb 28, 2023	Feb 26, 2023	Nov 30, 2022	Nov 27, 2022	Aug 31, 2022	Aug 28, 2022
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	1,179,100	815,400	53,400	70,000	213,700	1,080,600	2,096,300	2,150,200	2,097,500	1,658,600	1,280,300	1,252,100	1,307,300	1,799,300	2,290,400	1,779,000	1,260,300	938,100	549,200	939,300
Interest expense (ttm)	US$ in thousands	418,600	423,900	441,700	440,800	442,000	449,000	444,000	443,200	442,400	437,600	438,100	436,300	434,500	426,100	412,400	405,100	397,800	394,100	396,900	394,000
Interest coverage		2.82	1.92	0.12	0.16	0.48	2.41	4.72	4.85	4.74	3.79	2.92	2.87	3.01	4.22	5.55	4.39	3.17	2.38	1.38	2.38

May 31, 2025 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,179,100K ÷ $418,600K
= 2.82

The interest coverage ratios for ConAgra Foods Inc. over the period from late 2022 through early 2025 reflect significant fluctuations, indicative of varying financial health and risk levels concerning the company's ability to meet its interest obligations.

During the latter part of 2022, the ratio showed variability, with a low of approximately 1.38 recorded at the end of August 2022 and November 2022, and a notable increase to approximately 3.17 by the end of November 2022. This suggests that the company's capacity to cover interest expenses was relatively weak in August but improved significantly by November 2022.

In early 2023, the interest coverage ratio improved markedly, reaching a peak of approximately 5.55 in late February 2023. The subsequent months saw a decline, but the ratio remained relatively strong, with values around 4.22 at the end of May 2023, indicating that the company's earnings before interest and taxes (EBIT) were significantly exceeding its interest expenses, thus reflecting lower financial risk.

From August 2023 onwards, the ratio experienced a decline. Notably, the figure dropped to approximately 2.92 at the end of August 2023 and increased slightly to 3.79 by late November 2023. These values, while lower than the peak in early 2023, still indicate a healthy position with EBIT comfortably exceeding interest obligations.

However, subsequent data points reveal a concerning downward trend starting in early 2024. The interest coverage ratio fell sharply to approximately 0.48 by May 2024 and further declined to about 0.16 by August 2024. These extremely low figures suggest that the company's earnings were insufficient to cover its interest expenses, indicating heightened financial risk and potential liquidity challenges.

Toward the end of 2024 and early 2025, the ratio recovered somewhat, with values rising to roughly 1.92 in late February 2025 and 2.82 in May 2025. These levels indicate some improvement but still reflect a precarious position, with EBIT just exceeding interest expenses at best.

Overall, the company's interest coverage ratio has demonstrated considerable volatility over the analyzed period. Periods of strong coverage prevailed in early 2023, but a notable deterioration began in 2024, culminating in alarmingly low ratios, which underscore increased financial risk and the potential for difficulties in meeting interest obligations without additional earnings growth or changes in capital structure.