Jacobs Solutions Inc. (J)
Interest coverage
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 692,436 | 1,030,070 | 905,188 | 824,525 | 609,371 |
| Interest expense | US$ in thousands | 134,604 | 168,108 | 100,246 | 72,714 | 62,206 |
| Interest coverage | 5.14 | 6.13 | 9.03 | 11.34 | 9.80 |
September 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $692,436K ÷ $134,604K
= 5.14
Jacobs Solutions Inc.'s interest coverage ratio has shown a declining trend over the past five years, decreasing from 11.34 in 2021 to 5.14 in 2024. This indicates that the company's ability to cover its interest expenses with its operating profits has weakened over time. A higher interest coverage ratio is generally considered favorable as it signifies a greater capacity to meet interest obligations.
The decreasing trend in Jacobs Solutions Inc.'s interest coverage ratio may raise concerns about its financial health and ability to service its debt obligations. It suggests that the company may be facing challenges in generating sufficient operating income to cover its interest expenses. Investors and lenders may view this trend negatively, as a lower interest coverage ratio can increase the company's risk of defaulting on its debt.
It is essential for Jacobs Solutions Inc. to closely monitor and manage its interest coverage ratio to ensure financial stability and sustainability. The company may need to explore strategies to improve its profitability and operating efficiency to enhance its ability to cover its interest expenses effectively in the future.
Peer comparison
Sep 30, 2024