Brinker International Inc (EAT)

Interest coverage

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	229,900	145,700	161,300	201,400	64,500
Interest expense	US$ in thousands	65,000	54,900	46,100	56,200	59,600
Interest coverage		3.54	2.65	3.50	3.58	1.08

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $229,900K ÷ $65,000K
= 3.54

Brinker International Inc's interest coverage ratio has shown a fluctuating trend over the last five years. In 2024, the interest coverage ratio improved to 3.54 compared to the previous year's 2.65. This indicates an increase in the company's ability to cover interest expenses with its operating income. The ratio was also higher than in 2020 when it was at 1.08, reflecting a significant improvement in financial stability.

Although the interest coverage ratio in 2024 was not the highest over the five-year period, it remained relatively consistent with the ratios in 2022 and 2021, which were 3.50 and 3.58 respectively. This suggests that Brinker International Inc has consistently been able to generate sufficient operating income to cover its interest payments over the past few years, indicating financial strength and stability in managing debt obligations.

Overall, an interest coverage ratio above 1 indicates that the company is generating enough operating income to cover its interest expenses. Brinker International Inc's trend of maintaining a ratio above 1 and even showing improvement in recent years reflects a positive sign of financial health and ability to meet its debt obligations.