FedEx Corporation (FDX)
Interest coverage
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 5,441,000 | 6,581,000 | 6,427,000 | 5,797,000 | 7,956,000 |
| Interest expense | US$ in thousands | — | 745,000 | 401,000 | 689,000 | 793,000 |
| Interest coverage | — | 8.83 | 16.03 | 8.41 | 10.03 |
May 31, 2025 calculation
Interest coverage = EBIT ÷ Interest expense
= $5,441,000K ÷ $—K
= —
The interest coverage ratios for FedEx Corporation over the specified periods exhibit notable fluctuations, indicating variable capacity to meet interest obligations from operating earnings. On May 31, 2021, the ratio stood at 10.03, reflecting that the company's earnings before interest and taxes (EBIT) comfortably covered interest expenses approximately ten times over. This substantial coverage signals a strong ability to service interest obligations during that period.
In the subsequent year, May 31, 2022, the ratio declined to 8.41, revealing a slight reduction in coverage, yet still maintaining a robust margin. This decrease may suggest increased interest expenses or a decline in operating earnings, although the company remained well-positioned to meet its interest commitments.
By May 31, 2023, the interest coverage ratio experienced a significant increase to 16.03. This improvement indicates a substantial enhancement in FedEx’s operating earnings relative to its interest expenses, signifying an even stronger financial position and a reduced risk of financial distress concerning debt servicing.
However, on May 31, 2024, the ratio decreased to 8.83, roughly halving the previous peak but still indicating healthy interest coverage. This reduction could imply a moderation in operating earnings or an increase in interest expenses, yet the ratio remains well above commonly accepted thresholds for concern.
For the projected period ending May 31, 2025, the data no longer provides a ratio, denoted by a dash, which may reflect uncertain or incomplete forecasts regarding EBIT or interest expenses, or the absence of a specified estimate.
Overall, the interest coverage ratios across the observed periods demonstrate a pattern of strong capacity to meet interest obligations with occasional fluctuations. The peak in 2023 signifies an exceptionally solid financial footing in that year. While the declines observed in 2022 and 2024 suggest some variability, the ratios remain comfortably above typical warning levels, indicating that FedEx has maintained a relatively conservative position concerning its debt servicing capacity over the analyzed timeframe.