DR Horton Inc (DHI)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	6,438,800	6,468,700	7,754,100	5,493,100	3,129,500
Interest expense	US$ in thousands	203,700	203,500	162,500	152,200	153,300
Interest coverage		31.61	31.79	47.72	36.09	20.41

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $6,438,800K ÷ $203,700K
= 31.61

DR Horton Inc's interest coverage ratio has demonstrated a consistently strong and improving trend over the past five years. The ratio, which measures the company's ability to cover its interest expenses with its operating income, indicates a healthy financial position. The interest coverage ratios for the years ending in September 30, from 2020 to 2024, were 20.41, 36.09, 47.72, 31.79, and 31.61, respectively.

The notable upward trend in the interest coverage ratio from 2020 to 2022 suggests that the company's operational earnings have been more than sufficient to cover its interest expenses, indicating a decreased financial risk. The ratio peaking in 2022 at 47.72 reflects a significantly strong ability to meet interest obligations comfortably.

Although there was a slight decrease in the interest coverage ratio from 2022 to 2024, the ratio remains healthy and well above 1, indicating that DR Horton Inc continues to generate adequate operating income to comfortably cover its interest expenses. Overall, the consistent high values of the interest coverage ratio over the years reflect the company's ability to manage its debt obligations effectively and efficiently.