Coty Inc (COTY)

The interest coverage ratio for Coty Inc. over the specified periods indicates significant fluctuations and variability in the company's ability to meet its interest obligations through its operating earnings.

As of June 30, 2021, the interest coverage ratio was notably low at 0.08. This suggests that Coty Inc. was generating substantially less operating income than required to cover its interest expenses, raising concerns about its financial stability and liquidity position during that period. A ratio below 1.0 generally indicates that the company does not generate enough operating profit to cover its interest costs, which may signal difficulties in serviceability of debt without additional sources of funds or restructuring.

By June 30, 2022, the ratio improved markedly to 1.41. This improvement suggests an enhanced ability to cover interest expenses with operating income, reflecting some operational or financial adjustments that benefited the company’s earnings capacity. Despite this enhancement, the ratio remains relatively modest, indicating that interest coverage is still somewhat constrained and the company is potentially vulnerable if earnings decline again.

The ratio further increased to 2.06 as of June 30, 2023, indicating a more comfortable margin of coverage. This level implies that Coty Inc. was generating sufficient operating income to cover its interest expenses with some surplus, thereby strengthening its financial stability relative to previous periods. Such an improvement might be attributed to increased sales, cost management strategies, or other operational efficiencies.

However, the trend shows some weakening subsequently, as the interest coverage ratio decreased to 1.70 by June 30, 2024. Although still above the threshold of 1.0, this decline signals that the company's capacity to meet interest obligations has diminished somewhat from the previous year's level, potentially reflecting a slowdown in earnings or increased interest expenses.

By June 30, 2025, the interest coverage ratio drops to 0.00. This indicates that Coty Inc. was not generating any operating income to cover its interest expenses at this point in time, which may be due to losses, impairments, or other financial difficulties. This situation underscores a potential concern about the company's solvency and its ability to meet its debt obligations without external assistance or restructuring efforts.

Overall, the trend in the interest coverage ratio demonstrates periods of recovery and strain, with particular concern arising in the most recent period where the ratio falls to zero. This pattern underscores the importance of ongoing operational improvement and financial management to ensure sustainable coverage of interest expenses.

Peer comparison

Jun 30, 2025