Hormel Foods Corporation (HRL)
Interest coverage
| Oct 31, 2024 | Oct 27, 2024 | Oct 31, 2023 | Oct 29, 2023 | Oct 31, 2022 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,116,330 | 1,067,930 | 1,086,870 | 1,087,530 | 1,340,620 |
| Interest expense | US$ in thousands | 80,894 | 80,894 | 73,402 | 73,402 | 62,515 |
| Interest coverage | 13.80 | 13.20 | 14.81 | 14.82 | 21.44 |
October 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,116,330K ÷ $80,894K
= 13.80
Interest coverage ratio is a financial metric that measures a company's ability to pay its interest expenses on outstanding debt.
Based on the data provided for Hormel Foods Corporation, we observe a declining trend in the interest coverage ratio from October 31, 2022, where it stood at 21.44, to October 31, 2024, with a ratio of 13.80.
A higher interest coverage ratio indicates a greater ability of a company to meet its interest payment obligations from its operating income. A ratio above 1 suggests that the company generates enough operating income to cover its interest expenses.
Although Hormel Foods Corporation’s interest coverage ratio has been gradually decreasing over the given period, with the latest ratio of 13.80, the company still demonstrates a healthy ability to cover its interest expenses. However, it is essential for investors and stakeholders to monitor this trend closely to ensure the company maintains a comfortable level of financial sustainability.