FedEx Corporation (FDX)
Interest coverage
| May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 5,559,000 | 5,507,000 | 5,306,000 | 5,206,000 | 4,912,000 | 5,333,000 | 5,617,000 | 6,038,000 | 6,245,000 | 6,118,000 | 5,797,000 | 5,665,000 | 5,857,000 | 4,535,000 | 3,941,000 | 3,030,000 | 2,417,000 | 3,258,000 | 3,758,000 | 4,372,000 |
| Interest expense (ttm) | US$ in thousands | 279,000 | 446,000 | 1,120,000 | 1,212,000 | 1,234,000 | 1,409,000 | 809,000 | 775,000 | 822,000 | 1,273,000 | 1,295,000 | 1,324,000 | 1,348,000 | 1,219,000 | 1,038,000 | 855,000 | 672,000 | 596,000 | 725,000 | 853,000 |
| Interest coverage | 19.92 | 12.35 | 4.74 | 4.30 | 3.98 | 3.78 | 6.94 | 7.79 | 7.60 | 4.81 | 4.48 | 4.28 | 4.34 | 3.72 | 3.80 | 3.54 | 3.60 | 5.47 | 5.18 | 5.13 |
May 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $5,559,000K ÷ $279,000K
= 19.92
Based on the data provided, we observe fluctuations in FedEx Corporation's interest coverage ratio over the time periods analyzed. The interest coverage ratio reflects the company's ability to meet its interest obligations from its operating income. A higher ratio indicates that the company is more capable of servicing its debt.
In the most recent period ending May 31, 2024, FedEx Corporation exhibited a strong interest coverage ratio of 19.92, indicating a robust ability to cover its interest expenses. This is a positive sign for investors and creditors as it suggests a lower risk of default.
Looking at the historical trend, there was a notable increase in the interest coverage ratio from the third quarter of 2019 to the first quarter of 2022, which peaked at 7.60. However, there was a slight decline in the following quarters, hitting a low of 3.54 in the third quarter of 2020. Subsequently, there was a gradual improvement in the ratio until the most recent period.
Overall, despite some fluctuations, FedEx Corporation's interest coverage ratio has generally been at relatively healthy levels over the periods analyzed. This indicates that the company has been effectively generating enough operating income to cover its interest expenses, demonstrating financial stability and the ability to manage its debt obligations.