Cisco Systems Inc (CSCO)

Interest coverage

		Jul 27, 2024	Jul 29, 2023	Jul 30, 2022	Jul 31, 2021	Jul 25, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	12,181,000	15,745,000	14,837,000	13,696,000	14,555,000
Interest expense	US$ in thousands	1,006,000	427,000	360,000	434,000	585,000
Interest coverage		12.11	36.87	41.21	31.56	24.88

July 27, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $12,181,000K ÷ $1,006,000K
= 12.11

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates that the company is more capable of servicing its interest payments.

Based on the data provided for Cisco Systems Inc over the past five years, we observe a fluctuating trend in the interest coverage ratio. In July 2020, the interest coverage ratio was 24.88, indicating that the company earned 24.88 times more operating income than it had to pay in interest expenses.

Subsequently, the ratio saw a substantial increase in July 2021 to 31.56, followed by further improvements in July 2022 and July 2023, reaching 41.21 and 36.87, respectively. This upward trend suggests that Cisco Systems Inc significantly strengthened its ability to cover interest payments during these periods.

However, in July 2024, the interest coverage ratio decreased to 12.11, reflecting a lower ability to cover interest expenses compared to the previous years. This decline may raise concerns about the company's profitability and financial stability in meeting its interest obligations.

Overall, while the historical data shows fluctuations in Cisco Systems Inc's interest coverage ratio, it is important for stakeholders to closely monitor future developments to assess the company's financial health and debt repayment capacity.