Flex Ltd (FLEX)
Interest coverage
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,007,000 | 1,184,000 | 972,000 | 795,000 | 166,200 |
| Interest expense | US$ in thousands | 207,000 | 230,000 | 153,000 | 150,000 | 7,200 |
| Interest coverage | 4.86 | 5.15 | 6.35 | 5.30 | 23.08 |
March 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,007,000K ÷ $207,000K
= 4.86
Flex Ltd's interest coverage ratio has shown some fluctuations over the past five years. The ratio decreased from 23.08 in 2020 to 5.30 in 2021 but then improved to 6.35 in 2022 before declining to 5.15 in 2023 and further to 4.86 in 2024.
A higher interest coverage ratio indicates the company's ability to meet interest expenses comfortably with its operating income. The downward trend in Flex Ltd's interest coverage ratio over the last two years may raise some concerns regarding the company's ability to cover its interest payments with its earnings.
It is essential for investors and creditors to closely monitor Flex Ltd's interest coverage ratio in the future, as a declining trend could indicate potential financial distress or difficulty in meeting debt obligations. Further analysis of the company's financial health and cash flow position is recommended to assess its overall debt servicing capability.
Peer comparison
Mar 31, 2024