Dayforce Inc. (DAY)
Interest coverage
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 132,100 | 93,900 | 62,900 | 21,900 | -34,300 | -40,600 | -50,400 | -66,000 | -54,400 | -76,200 | -57,200 | -25,600 | 5,100 | 45,800 | 51,100 | 64,600 | 66,700 | 56,700 | 64,100 | 28,200 |
| Interest expense (ttm) | US$ in thousands | 36,100 | 35,900 | 34,400 | 32,000 | 28,600 | 30,300 | 32,900 | 36,100 | 35,900 | 31,200 | 27,100 | 23,800 | 25,100 | 26,600 | 28,500 | 30,400 | 32,400 | 34,000 | 35,000 | 69,900 |
| Interest coverage | 3.66 | 2.62 | 1.83 | 0.68 | -1.20 | -1.34 | -1.53 | -1.83 | -1.52 | -2.44 | -2.11 | -1.08 | 0.20 | 1.72 | 1.79 | 2.12 | 2.06 | 1.67 | 1.83 | 0.40 |
December 31, 2023 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $132,100K ÷ $36,100K
= 3.66
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates a stronger ability to meet interest obligations.
In the case of Dayforce Inc., the interest coverage ratio has shown some volatility over the past few quarters. From March 2020 to March 2021, the company's interest coverage ratio improved significantly, reaching a peak of 2.12 in March 2021. This indicates that the company's operating income was more than twice its interest expenses during that period.
However, starting from June 2021, the ratio started to decline, falling into negative territory in the last quarter of 2022 and the first quarter of 2023. A negative interest coverage ratio suggests that the company's operating income was insufficient to cover its interest expenses during those periods, which could be a cause for concern regarding its financial health and ability to meet debt obligations.
The ratio improved in the later quarters of 2023, reaching 3.66 at the end of the year. While this shows a positive trend compared to the previous periods of negative ratios, it is important for the company to sustain and improve this ratio further to ensure it has a comfortable cushion to cover its interest payments in the future.
Overall, Dayforce Inc. should focus on improving its operating income to ensure a healthier interest coverage ratio, which will be crucial for its long-term financial stability and ability to meet its debt obligations.
Peer comparison
Dec 31, 2023