Commercial Metals Company (CMC)

Interest coverage

		Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020	Aug 31, 2019
Earnings before interest and tax (EBIT)	US$ in thousands	1,162,090	1,565,860	585,922	433,816	339,147
Interest expense	US$ in thousands	40,127	50,709	51,904	61,837	71,373
Interest coverage		28.96	30.88	11.29	7.02	4.75

August 31, 2023 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,162,090K ÷ $40,127K
= 28.96

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. Commercial Metals Co.'s interest coverage has been consistently increasing over the past five years, rising from 4.77 in 2019 to 29.12 in 2023. This trend indicates that the company's earnings are more than adequate to cover its interest expenses, demonstrating improved financial stability and reduced risk of default. The significant increase in the ratio reflects the company's enhanced profitability and cash flow generation, suggesting a positive outlook for its ability to meet debt obligations in the future. Overall, the upward trend in Commercial Metals Co.'s interest coverage ratio indicates a strengthened financial position and sound debt management.