HP Inc (HPQ)
Interest coverage
| Jan 31, 2024 | Oct 31, 2023 | Jul 31, 2023 | Apr 30, 2023 | Jan 31, 2023 | Oct 31, 2022 | Jul 31, 2022 | Apr 30, 2022 | Jan 31, 2022 | Oct 31, 2021 | Jul 31, 2021 | Apr 30, 2021 | Jan 31, 2021 | Oct 31, 2020 | Jul 31, 2020 | Apr 30, 2020 | Jan 31, 2020 | Oct 31, 2019 | Jul 31, 2019 | Apr 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,648,000 | 3,456,000 | 3,183,000 | 3,487,000 | 3,997,000 | 4,559,000 | 5,113,000 | 5,238,000 | 5,343,000 | 5,359,000 | 5,056,000 | 4,454,000 | 3,918,000 | 3,462,000 | 3,414,000 | 3,714,000 | 3,816,000 | 3,877,000 | 3,927,000 | 3,866,000 |
| Interest expense (ttm) | US$ in thousands | 522,000 | 549,000 | 560,000 | 522,000 | 443,000 | 361,000 | 292,000 | 264,000 | 254,000 | 256,000 | 258,000 | 245,000 | 245,000 | 240,000 | 237,000 | 239,000 | 236,000 | 242,000 | 253,000 | 262,000 |
| Interest coverage | 6.99 | 6.30 | 5.68 | 6.68 | 9.02 | 12.63 | 17.51 | 19.84 | 21.04 | 20.93 | 19.60 | 18.18 | 15.99 | 14.42 | 14.41 | 15.54 | 16.17 | 16.02 | 15.52 | 14.76 |
January 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,648,000K ÷ $522,000K
= 6.99
Interest coverage is a key financial ratio that measures a company's ability to cover its interest expenses with its operating income. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
For HP Inc, the interest coverage ratio fluctuated over the past eight quarters, ranging from a low of 7.48 to a high of 21.35. The trend indicates a general decline in the interest coverage ratio over this period.
In Q1 2024, the interest coverage ratio was 8.17, which means that HP Inc generated 8.17 times more operating income than it needed to cover its interest expenses for that quarter. This suggests a healthy ability to meet its interest obligations.
A notable peak in the interest coverage ratio was observed in Q2 2022 at 21.35, indicating a very strong ability to cover interest payments with operating income. However, the ratio has since decreased, which could indicate either a decline in operating income or an increase in interest expenses.
Overall, while HP Inc's interest coverage ratio has fluctuated, it remains at a level that suggests the company has been able to comfortably cover its interest expenses in most periods. However, management should continue monitoring this ratio to ensure it remains at a sustainable level to meet its debt obligations.
Peer comparison
Jan 31, 2024