DXC Technology Co (DXC)

Interest coverage

Mar 31, 2025 Mar 31, 2024 Mar 31, 2023 Mar 31, 2022 Mar 31, 2021
Earnings before interest and tax (EBIT) US$ in thousands 888,000 407,000 -685,000 1,345,000 1,015,000
Interest expense US$ in thousands 265,000 298,000 200,000 204,000 361,000
Interest coverage 3.35 1.37 -3.42 6.59 2.81

March 31, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $888,000K ÷ $265,000K
= 3.35

Interest coverage ratio is a financial metric used to assess a company's ability to meet its interest payments on outstanding debt. It is calculated by dividing a company's earnings before interest and taxes (EBIT) by its interest expenses.

Analyzing the interest coverage trend of DXC Technology Co based on the provided data points shows fluctuations over the years.

- As of March 31, 2021, the interest coverage ratio was 2.81, indicating that the company generated EBIT that was 2.81 times higher than its interest expenses, suggesting a moderate ability to meet its interest obligations.

- By March 31, 2022, the interest coverage ratio improved significantly to 6.59, signaling a stronger ability to cover interest payments with its EBIT.

- However, by March 31, 2023, the interest coverage ratio turned negative at -3.42, which implies that the company's EBIT was not sufficient to cover its interest expenses during that period, raising concerns about its financial stability.

- The ratio improved slightly by March 31, 2024, standing at 1.37. Although still below the ideal level of 2 or higher, it shows a marginal increase in the ability to cover interest payments.

- As of March 31, 2025, the interest coverage ratio further improved to 3.35, indicating a better ability to meet interest obligations compared to the previous year.

Overall, the fluctuating trend in DXC Technology Co's interest coverage ratio suggests varying levels of financial health and ability to service its debt obligations across the years. It is essential for investors and creditors to closely monitor these fluctuations to gauge the company's financial stability.