Deere & Company (DE)
Interest coverage
| Oct 31, 2024 | Oct 27, 2024 | Oct 31, 2023 | Oct 29, 2023 | Oct 31, 2022 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 12,554,000 | 12,542,000 | 15,472,000 | 15,490,000 | 10,189,000 |
| Interest expense | US$ in thousands | 3,348,000 | 3,348,000 | 2,453,000 | 2,453,000 | 1,062,000 |
| Interest coverage | 3.75 | 3.75 | 6.31 | 6.31 | 9.59 |
October 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $12,554,000K ÷ $3,348,000K
= 3.75
The interest coverage ratio measures a company's ability to meet its interest obligations from its operating income. For Deere & Company, the trend in interest coverage ratios has been decreasing over the past few years.
As of October 31, 2022, the interest coverage ratio was 9.59, indicating that Deere & Company's operating income was able to cover its interest expenses approximately 9.59 times. However, by October 31, 2024, the interest coverage ratio had decreased to 3.75, signaling a decline in the company's ability to cover its interest payments from its operating income.
A declining interest coverage ratio may suggest that Deere & Company could be facing challenges in generating enough operating income to comfortably cover its interest expenses. Investors and creditors may view a decreasing trend in interest coverage ratios as a potential indicator of financial risk, as it may imply a higher dependency on external financing to cover interest payments. Furthermore, a low interest coverage ratio could also indicate a reduced ability to take on additional debt in the future.
In conclusion, Deere & Company's declining interest coverage ratios should be carefully monitored, as they may point towards potential financial constraints and increased risk for the company.
Peer comparison
Oct 31, 2024