Dayforce Inc. (DAY)
Interest coverage
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 132,100 | -34,300 | -54,400 | 5,100 | 66,700 |
| Interest expense | US$ in thousands | 36,100 | 28,600 | 35,900 | 25,100 | 32,400 |
| Interest coverage | 3.66 | -1.20 | -1.52 | 0.20 | 2.06 |
December 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $132,100K ÷ $36,100K
= 3.66
To analyze Dayforce Inc.'s interest coverage over the past five years, we can see a fluctuating trend. In 2023, the interest coverage ratio improved significantly to 3.66, indicating that the company's ability to cover interest expenses from its earnings increased. This may suggest a healthier financial position compared to the prior year.
In contrast, in 2022 and 2021, Dayforce Inc. had negative interest coverage ratios of -1.20 and -1.52, respectively. A negative interest coverage ratio indicates that the company's earnings were insufficient to cover its interest expenses, which may raise concerns about its financial stability and ability to meet debt obligations.
In 2020, the interest coverage ratio improved to 0.20 but remained below 1, suggesting that the company was still not generating enough earnings to cover its interest payments comfortably.
However, in 2019, Dayforce Inc. demonstrated a relatively stronger performance with an interest coverage ratio of 2.06, indicating an ability to cover interest expenses comfortably with earnings.
Overall, the fluctuating interest coverage ratios of Dayforce Inc. over the past five years indicate varying levels of financial health and ability to service debt. It is essential for the company to maintain a sustainable interest coverage ratio above 1 to ensure financial stability and meet its debt obligations effectively.
Peer comparison
Dec 31, 2023