Deluxe Corporation (DLX)
Interest coverage
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 210,096 | 215,971 | 228,933 | 226,278 | 207,702 | 210,923 | 211,391 | 201,561 | 213,903 | 200,449 | 194,133 | 198,948 | 205,615 | 198,710 | 215,492 | 210,507 | 102,627 | 133,801 | -272,009 | -250,962 |
| Interest expense (ttm) | US$ in thousands | 123,282 | 122,611 | 124,706 | 126,409 | 125,616 | 122,916 | 114,715 | 104,215 | 94,523 | 85,523 | 83,218 | 71,318 | 55,518 | 40,418 | 24,024 | 20,695 | 23,171 | 25,671 | 29,281 | 32,310 |
| Interest coverage | 1.70 | 1.76 | 1.84 | 1.79 | 1.65 | 1.72 | 1.84 | 1.93 | 2.26 | 2.34 | 2.33 | 2.79 | 3.70 | 4.92 | 8.97 | 10.17 | 4.43 | 5.21 | -9.29 | -7.77 |
December 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $210,096K ÷ $123,282K
= 1.70
The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher ratio indicates a greater ability to cover interest expenses. In the case of Deluxe Corporation, the interest coverage ratio fluctuated over the years based on the provided data.
From March 31, 2020, to June 30, 2021, Deluxe Corporation had negative interest coverage ratios, indicating that the company did not generate enough operating income to cover its interest expenses, which could raise concerns about its financial stability and ability to service its debt.
However, starting from March 31, 2021, the interest coverage ratio improved significantly and remained positive until December 31, 2024, albeit with a gradual decline observed over this period. The ratios ranged from 1.65 to 10.17 during this time frame.
Deluxe Corporation's interest coverage has shown some volatility, but the positive trend from 2021 to 2024 suggests an improvement in the company's ability to cover its interest obligations with operating income. It is essential for the company to maintain a healthy interest coverage ratio to ensure its ability to meet debt obligations and remain financially stable in the long term.