Intuit Inc (INTU)
Interest coverage
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 3,630,000 | 3,141,000 | 2,571,000 | 2,500,000 | 2,176,000 |
| Interest expense | US$ in thousands | 242,000 | 248,000 | 81,000 | 29,000 | 14,000 |
| Interest coverage | 15.00 | 12.67 | 31.74 | 86.21 | 155.43 |
July 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $3,630,000K ÷ $242,000K
= 15.00
The interest coverage ratio measures a company's ability to meet its interest obligations on its debt. Intuit Inc's interest coverage has shown a declining trend over the past five years, decreasing from 155.43 in 2020 to 15.00 in 2024. This indicates that Intuit's ability to cover its interest expenses with its operating income has weakened significantly over this period.
The sharp decline in the interest coverage ratio could suggest that Intuit's operating income may not be sufficient to cover its interest payments, raising concerns about the company's financial health and solvency. Investors and creditors may view a declining interest coverage ratio as a red flag, as it could indicate a higher risk of default on debt obligations.
It is essential for Intuit to closely monitor its interest coverage ratio and take appropriate measures to improve it, such as increasing profitability, reducing debt levels, or refinancing debt at lower interest rates. This analysis highlights the importance of maintaining a healthy interest coverage ratio to ensure the long-term financial stability and sustainability of the company.
Peer comparison
Jul 31, 2024