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.