H B Fuller Company (FUL)
Interest coverage
| Dec 2, 2023 | Dec 3, 2022 | Nov 27, 2021 | Nov 28, 2020 | Nov 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 355,137 | 322,718 | 252,612 | 218,317 | 225,994 |
| Interest expense | US$ in thousands | 137,448 | 93,300 | 79,107 | 87,341 | 103,703 |
| Interest coverage | 2.58 | 3.46 | 3.19 | 2.50 | 2.18 |
December 2, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $355,137K ÷ $137,448K
= 2.58
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. A higher ratio indicates that the company is more capable of meeting its interest expenses.
Looking at the data for H.B. Fuller Company, we observe a fluctuating trend in the interest coverage ratio over the past five years. In 2023, the interest coverage ratio decreased to 2.75 from 3.92 in 2022, reflecting a potential decrease in the company's ability to cover its interest expenses. This decline is worth investigating further.
However, it's important to note that the ratios in all years are above 1, which indicates that the company is generating enough operating income to cover its interest expenses.
Overall, while the recent decrease in the interest coverage ratio raises some concerns, H.B. Fuller Company has historically maintained a reasonable level of interest coverage, suggesting a consistent ability to meet its interest obligations.