Brinker International Inc (EAT)

Interest coverage

		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 23, 2020	Sep 23, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	229,900	216,100	210,800	189,300	145,700	131,700	116,700	116,000	161,300	217,500	220,200	202,500	201,400	47,200	36,200	57,600	64,500	181,700	211,000	217,400
Interest expense (ttm)	US$ in thousands	65,000	64,400	62,400	59,600	54,900	51,700	48,600	45,900	46,100	47,900	50,900	54,100	56,200	58,500	58,700	59,300	59,600	59,500	60,500	60,900
Interest coverage		3.54	3.36	3.38	3.18	2.65	2.55	2.40	2.53	3.50	4.54	4.33	3.74	3.58	0.81	0.62	0.97	1.08	3.05	3.49	3.57

June 30, 2024 calculation

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

Brinker International Inc's interest coverage ratio has shown some fluctuations over the past few quarters. The ratio indicates the company's ability to cover its interest expenses with its operating income.

The interest coverage ratio ranged from a low of 0.62 in March 2021 to a high of 4.54 in March 2022. This significant variability suggests that Brinker International's ability to cover its interest payments has been inconsistent over time.

On average, the company's interest coverage ratio over the periods provided has been 2.87. A ratio below 1 would indicate that the company is not generating enough operating income to cover its interest expenses, potentially signaling financial distress. However, Brinker International Inc's interest coverage has generally been above 1, indicating that it has been able to meet its interest obligations.

It is noteworthy that the interest coverage ratio improved towards the end of 2022 and the beginning of 2023, reaching levels above 3. This improvement suggests that the company's operating income was more than sufficient to cover its interest costs during those periods. However, there was a slight decline in the ratio in subsequent quarters.

Investors and creditors typically look for a consistent and healthy interest coverage ratio, ideally above 2, to ensure that the company can comfortably meet its interest obligations. Brinker International Inc may need to focus on maintaining a stable and adequate interest coverage ratio to demonstrate financial stability and sustainability.