DXC Technology Co (DXC)
Interest coverage
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 412,000 | -448,000 | -598,000 | -707,000 | -687,000 | 1,244,000 | 1,288,000 | 1,003,000 | 1,327,000 | -216,000 | 1,639,000 | 1,619,000 | 1,012,000 | -1,739,000 | -3,582,000 | -5,273,000 | -4,856,000 | -953,000 | -619,000 | 1,698,000 |
| Interest expense (ttm) | US$ in thousands | 298,000 | 285,000 | 263,000 | 229,000 | 200,000 | 180,000 | 162,000 | 179,000 | 204,000 | 238,000 | 282,000 | 317,000 | 361,000 | 379,000 | 390,000 | 398,000 | 383,000 | 373,000 | 361,000 | 340,000 |
| Interest coverage | 1.38 | -1.57 | -2.27 | -3.09 | -3.44 | 6.91 | 7.95 | 5.60 | 6.50 | -0.91 | 5.81 | 5.11 | 2.80 | -4.59 | -9.18 | -13.25 | -12.68 | -2.55 | -1.71 | 4.99 |
March 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $412,000K ÷ $298,000K
= 1.38
Interest coverage is a key financial ratio that helps assess a company's ability to pay its interest obligations on outstanding debt. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expenses. A higher interest coverage ratio indicates a stronger ability to meet interest payments.
DXC Technology Co's interest coverage ratio has been fluctuating over the past few quarters. In the most recent quarter, as of March 31, 2024, the interest coverage ratio stood at 1.38, indicating that the company's EBIT was just sufficient to cover its interest expenses. This represents a slight improvement compared to the previous quarter.
Looking back at historical data, DXC Technology Co experienced negative interest coverage ratios in several quarters, with the lowest being -13.25 in June 30, 2020. This suggests that the company's EBIT was insufficient to cover its interest payments during those periods, signaling a higher risk of default on its debt obligations.
However, the company has also shown periods of strong interest coverage, particularly in December 31, 2022, and September 30, 2022, where the interest coverage ratios were 6.91 and 7.95, respectively. These periods indicate a healthy financial position, with ample earnings to comfortably cover interest expenses.
In conclusion, DXC Technology Co's interest coverage ratio has exhibited volatility, with periods of both strength and weakness. Investors and creditors should closely monitor this ratio to assess the company's ability to meet its debt obligations and manage financial risks effectively.
Peer comparison
Mar 31, 2024