Campbell’s Co (CPB)
Interest coverage
| Jul 31, 2025 | Jul 31, 2024 | Jul 28, 2024 | Jul 31, 2023 | Jul 30, 2023 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,124,000 | 1,000,000 | 1,006,000 | 1,312,000 | 1,316,000 |
| Interest expense | US$ in thousands | 328,000 | 249,000 | 249,000 | 188,000 | 188,000 |
| Interest coverage | 3.43 | 4.02 | 4.04 | 6.98 | 7.00 |
July 31, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,124,000K ÷ $328,000K
= 3.43
The interest coverage ratios for Campbell’s Co demonstrate a trend of declining financial cushion over the analyzed period. As of July 30, 2023, the interest coverage stood at 7.00, indicating that the company's earnings before interest and taxes (EBIT) were seven times greater than its interest expenses, reflecting a strong ability to meet interest obligations. Slight fluctuations are observed nearby on July 31, 2023, with a marginal decrease to 6.98, suggesting stability in earnings capacity during this period.
However, a significant decline is apparent in the subsequent year, with the ratio dropping to 4.04 by July 28, 2024, and marginally decreasing further to 4.02 by July 31, 2024. This decline indicates a reduction in profitability relative to interest expenses, though the ratio remains notably above the commonly referenced safety threshold of 1.5 to 2.0, implying the company retains sufficient earnings to cover its interest obligations.
Looking ahead to July 31, 2025, the interest coverage drops further to 3.43, signifying a continued weakening in the company’s ability to comfortably service its interest expenses. This downward trend highlights an erosion of the company's earnings buffer, potentially signaling increased financial risk if the trend persists or if interest obligations increase.
In summary, Campbell’s Co’s interest coverage ratios reveal a decline over time, from a robust level indicative of strong debt servicing capacity to a lower margin that, while still adequate, warrants ongoing monitoring for signs of financial stress or increased leverage.