Cardinal Health Inc (CAH)
Interest coverage
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,251,000 | 730,000 | -621,000 | 502,000 | -3,537,000 |
| Interest expense | US$ in thousands | 51,000 | 84,000 | 149,000 | 180,000 | 238,000 |
| Interest coverage | 24.53 | 8.69 | -4.17 | 2.79 | -14.86 |
June 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,251,000K ÷ $51,000K
= 24.53
Cardinal Health Inc's interest coverage ratio has shown significant fluctuations over the past five years. The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt.
In June 2024, the interest coverage ratio improved to 24.53, indicating the company's strong ability to cover its interest payments with its operating income. This represents a substantial increase compared to the previous year, signifying a healthier financial position.
In June 2023, the interest coverage ratio was 8.69, suggesting a moderate ability to cover interest expenses with operating income. Although it decreased from the previous year, the ratio still indicated that Cardinal Health Inc was able to meet its interest obligations.
However, in June 2022, the interest coverage ratio was -4.17, which raises concerns as it indicates that the company's operating income was insufficient to cover its interest expenses. This negative ratio suggests potential financial distress and the need for closer scrutiny of the company's debt levels and operational efficiency.
In June 2021, the interest coverage ratio improved to 2.79, indicating a better ability to cover interest expenses compared to the previous year. This positive trend was a good sign for Cardinal Health Inc's financial health.
Lastly, in June 2020, the interest coverage ratio was -14.86, which was a concerning figure as it indicated a significant insufficiency in operating income to cover interest expenses. This should prompt a closer examination of the company's financial structure and potential risk factors.
Overall, Cardinal Health Inc's interest coverage ratio has shown fluctuations, with improvements in recent years. However, the negative ratios in 2020 and 2022 suggest the need for continued monitoring of the company's financial leverage and profitability.
Peer comparison
Jun 30, 2024