Cisco Systems Inc (CSCO)
Interest coverage
| Jan 31, 2025 | Oct 31, 2024 | Jul 31, 2024 | Jul 27, 2024 | Apr 30, 2024 | Apr 27, 2024 | Jan 31, 2024 | Jan 27, 2024 | Oct 31, 2023 | Oct 28, 2023 | Jul 31, 2023 | Jul 29, 2023 | Apr 30, 2023 | Apr 29, 2023 | Jan 31, 2023 | Jan 28, 2023 | Oct 31, 2022 | Oct 29, 2022 | Jul 31, 2022 | Jul 30, 2022 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 11,408,000 | 10,709,000 | 10,616,000 | 10,910,000 | 11,573,000 | 13,411,000 | 15,372,000 | 16,846,000 | 18,147,000 | 17,750,000 | 17,263,000 | 16,203,000 | 15,143,000 | 14,685,000 | 14,194,000 | 14,181,000 | 14,168,000 | 14,484,000 | 14,399,000 | 14,581,000 |
| Interest expense (ttm) | US$ in thousands | 1,658,000 | 1,611,000 | 1,550,000 | 1,252,000 | 954,000 | 708,000 | 462,000 | 453,000 | 444,000 | 442,000 | 440,000 | 436,000 | 432,000 | 423,000 | 414,000 | 400,000 | 386,000 | 376,000 | 364,000 | 359,000 |
| Interest coverage | 6.88 | 6.65 | 6.85 | 8.71 | 12.13 | 18.94 | 33.27 | 37.19 | 40.87 | 40.16 | 39.23 | 37.16 | 35.05 | 34.72 | 34.29 | 35.45 | 36.70 | 38.52 | 39.56 | 40.62 |
January 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $11,408,000K ÷ $1,658,000K
= 6.88
The interest coverage ratio is a financial metric that indicates a company's ability to cover its interest expenses with its operating income. In the case of Cisco Systems Inc, the interest coverage has been on a declining trend over the specified periods, with the ratio decreasing from 40.62 in July 2022 to 6.88 in January 2025.
A higher interest coverage ratio is generally preferred as it suggests that the company is more capable of meeting its interest obligations. Conversely, a lower interest coverage ratio may imply a higher risk of default on debt payments. In the case of Cisco Systems, the decreasing trend in the interest coverage ratio may raise concerns about the company's ability to comfortably cover its interest expenses using its operating income.
It is important for investors and stakeholders to monitor the interest coverage ratio closely, as a sustained decline in this ratio could signal financial distress and potential difficulties in servicing debt obligations. Cisco Systems Inc may need to address the declining trend in its interest coverage ratio to ensure sustainable financial health and investor confidence.
Peer comparison
Jan 31, 2025