Cardinal Health Inc (CAH)
Interest coverage
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 2,003,000 | 1,268,000 | 749,000 | 1,648,000 | 505,000 |
| Interest expense | US$ in thousands | 215,000 | 67,000 | 86,000 | 172,000 | 182,000 |
| Interest coverage | 9.32 | 18.93 | 8.71 | 9.58 | 2.77 |
June 30, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $2,003,000K ÷ $215,000K
= 9.32
The interest coverage ratio of Cardinal Health Inc. demonstrates a significant upward trend over the analyzed period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the ratio stood at 2.77, indicating that the company's earnings before interest and taxes (EBIT) were approximately 2.77 times its interest expenses, suggesting limited cushion for interest obligations and a potentially risky position in terms of debt servicing.
By June 30, 2022, the ratio experienced a substantial improvement, rising to 9.58. This indicates a pronounced increase in EBIT relative to interest expenses, substantially reducing the company's credit risk associated with interest obligations. The ratio remained relatively stable in the subsequent year, slightly decreasing to 8.71 by June 30, 2023, which still reflects a strong capacity to cover interest expenses.
The most notable change occurred by June 30, 2024, with the ratio reaching 18.93. This suggests a significant strengthening of the company's ability to meet its interest obligations, implying improved profitability or a reduction in interest expenses, or both. The elevated level of the ratio indicates a comfortable margin with respect to debt service.
In the final year under review, June 30, 2025, the ratio slightly decreased to 9.32 but remained well above the earlier levels, signifying that the company's earnings continue to comfortably cover its interest expenses, though the margin has narrowed somewhat compared to the peak in 2024.
Overall, the trend reflects a marked enhancement in Cardinal Health Inc.'s interest coverage capacity over this period, suggesting progressive financial strength concerning debt servicing. The significant increase in the ratio, especially in 2024, indicates improved earning power and/or more favorable debt management, resulting in reduced financial risk.
Peer comparison
Jun 30, 2025