Emerson Electric Company (EMR)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	1,041,000	1,882,000	2,685,000	2,796,000	1,931,000
Interest expense	US$ in thousands	175,000	34,000	193,000	147,000	156,000
Interest coverage		5.95	55.35	13.91	19.02	12.38

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $1,041,000K ÷ $175,000K
= 5.95

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates a stronger ability to cover interest expenses with operating income.

Emerson Electric Company's interest coverage ratio has displayed significant fluctuations over the past five years. In Sep 30, 2024, the interest coverage ratio stands at 5.95, indicating that the company's operating income can cover its interest expenses nearly 6 times. This ratio has decreased from the previous year, where it was 55.35, suggesting a notable decline in the company's ability to cover interest payments.

Looking back, in Sep 30, 2023, the interest coverage ratio was exceptionally high at 55.35, indicating a robust ability to meet interest obligations. This was a substantial increase from the prior year, where the ratio was 13.91.

In Sep 30, 2022, the interest coverage ratio was 13.91, showing a good ability to cover interest payments. This figure marked an improvement from the ratio of 19.02 in Sep 30, 2021. Additionally, in Sep 30, 2020, the interest coverage ratio was 12.38, displaying a relatively strong ability to cover interest expenses.

Overall, while the interest coverage ratio for Emerson Electric Company has shown fluctuations, it is essential to closely monitor trends to assess the company's ability to meet its interest obligations and manage its debt effectively.