Carpenter Technology Corporation (CRS)

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	323,100	126,600	-18,200	-265,200	25,900
Interest expense	US$ in thousands	52,600	54,100	44,900	32,700	19,800
Interest coverage		6.14	2.34	-0.41	-8.11	1.31

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $323,100K ÷ $52,600K
= 6.14

The interest coverage ratio for Carpenter Technology Corporation has fluctuated over the past five years. In June 2024, the ratio improved significantly to 6.14, indicating the company generated 6.14 times more operating income than needed to cover its interest expenses. This suggests a strong ability to meet interest obligations from operating profits.

Compared to June 2023, where the ratio was 2.34, the company's interest coverage improved notably. However, in June 2022, Carpenter Technology Corporation had an interest coverage ratio of -0.41, indicating that its operating income was insufficient to cover interest expenses. This negative ratio may raise concerns about the company's ability to service its debt.

The trend worsened in June 2021, with an interest coverage ratio of -8.11, indicating a significant financial strain as operating income was substantially lower than interest payments. This raises red flags about the company's financial health and ability to meet debt obligations.

The ratio improved in June 2020 to 1.31, showing a slight recovery in the company's ability to cover its interest expenses. Overall, Carpenter Technology Corporation's interest coverage has been volatile, with recent improvements suggesting a better ability to service debt, albeit with some fluctuations in financial performance.