Extreme Networks Inc (EXTR)

Interest coverage

		Jun 30, 2025	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021
Earnings before interest and tax (EBIT)	US$ in thousands	20,201	-49,058	111,491	64,983	33,041
Interest expense	US$ in thousands	15,928	16,986	17,385	12,789	22,856
Interest coverage		1.27	-2.89	6.41	5.08	1.45

June 30, 2025 calculation

Interest coverage = EBIT ÷ Interest expense
= $20,201K ÷ $15,928K
= 1.27

The interest coverage ratio for Extreme Networks Inc. exhibits notable fluctuations over the analyzed period from June 30, 2021, to June 30, 2025. As of June 30, 2021, the ratio was 1.45, indicating that the company's earnings before interest and taxes (EBIT) were slightly insufficient to comfortably cover its interest expenses, suggesting potential liquidity pressures and a marginal capacity to meet interest obligations.

By June 30, 2022, the interest coverage ratio increased significantly to 5.08, reflecting a marked improvement in the company's ability to cover interest expenses from its operating earnings. This suggests enhanced operational performance or restructuring that positively impacted profitability.

The trend continued into June 30, 2023, with the ratio reaching 6.41, further strengthening the company's interest coverage position. This level indicates a robust capacity to meet interest obligations, implying improved profitability and possibly prudent financial management.

However, the ratio declined sharply to -2.89 by June 30, 2024. This negative ratio indicates that the company's earnings before interest and taxes were insufficient to cover interest expenses, likely due to losses or reduced operating income. A negative interest coverage ratio is a concerning indicator of financial distress, as it signals potential difficulties in meeting debt obligations normally covered by operating income.

By June 30, 2025, the interest coverage ratio partially recovered to 1.27. Although still above zero and thus indicating some capacity to cover interest expenses, this ratio is relatively low, suggesting limited margin of safety and ongoing concerns regarding the company's ability to comfortably service its debt obligations.

Overall, the interest coverage ratio trend demonstrates significant volatility with periods of strong coverage followed by notable deterioration. The company's financial health in terms of interest obligations appears to have been strained in the most recent period, highlighting a period of increased financial risk.