Embecta Corp (EMBC)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022
Earnings before interest and tax (EBIT)	US$ in thousands	166,800	221,500	309,600
Interest expense	US$ in thousands	6,900	8,800	3,200
Interest coverage		24.17	25.17	96.75

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $166,800K ÷ $6,900K
= 24.17

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. In the case of Embecta Corp, the interest coverage ratios for the last three years were 24.17 in 2024, 25.17 in 2023, and 96.75 in 2022.

Embecta Corp has exhibited a consistently strong interest coverage ratio over the past three years. A high interest coverage ratio indicates that the company is generating more than enough operating income to cover its interest expenses, which is a positive sign of financial health and stability.

The significant decrease in interest coverage ratio from 2022 to 2023 may have been due to various factors such as changes in operating income or interest expenses. Despite this slight decrease, the ratio remained well above the generally accepted benchmark of 2, suggesting that Embecta Corp has remained comfortably able to meet its interest obligations.

Overall, the trend of high interest coverage ratios suggests that Embecta Corp has a strong ability to service its debt and indicates a lower risk of default on its interest payments.