Greif Bros Corporation (GEF)
Interest coverage
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 454,500 | 593,900 | 586,900 | 571,300 | 301,800 |
| Interest expense | US$ in thousands | 134,900 | 96,300 | 61,200 | 92,700 | 115,800 |
| Interest coverage | 3.37 | 6.17 | 9.59 | 6.16 | 2.61 |
October 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $454,500K ÷ $134,900K
= 3.37
To analyze Greif Bros Corporation's interest coverage based on the provided data:
1. The interest coverage ratio for Greif Bros Corporation has shown a significant improvement over the years. In October 2020, the interest coverage ratio was 2.61, indicating that the company's operating income was only 2.61 times its interest expenses.
2. By October 2021, the interest coverage ratio more than doubled to 6.16, signaling a stronger ability to cover interest payments with operating income.
3. The trend continued to improve in October 2022, with the interest coverage ratio increasing to 9.59, reflecting a more robust financial position and a healthier ability to meet interest obligations.
4. However, there was a slight decrease in the interest coverage ratio in October 2023, dropping to 6.17. While still a respectable level, this dip should be monitored to ensure it does not signify a concerning trend.
5. By October 2024, the interest coverage ratio declined further to 3.37. This reduction may raise some concerns about the company's ability to cover interest expenses comfortably with its operating income.
In conclusion, Greif Bros Corporation's interest coverage ratio has shown fluctuations over the years, with substantial improvements followed by a decline in recent years. It is essential for stakeholders to closely monitor this ratio to ensure the company can maintain its ability to meet interest obligations effectively in the future.