J & J Snack Foods Corp (JJSF)
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 | 117,545 | 109,518 | 61,799 | 71,218 | 17,194 |
| Interest expense | US$ in thousands | 1,826 | 22 | 13 | 102 | 325 |
| Interest coverage | 64.37 | 4,978.09 | 4,753.77 | 698.22 | 52.90 |
September 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $117,545K ÷ $1,826K
= 64.37
The interest coverage ratio for J & J Snack Foods Corp has experienced significant fluctuations over the past five years, as indicated in the table. In the most recent fiscal year ending on September 30, 2024, the interest coverage ratio stood at a robust 64.37, indicating a substantial ability to cover interest expenses from operating income.
However, this figure starkly contrasts with the exceptionally high interest coverage ratios seen in the prior two years - 4,978.09 in 2023 and 4,753.77 in 2022. These extraordinarily high ratios could be indicative of certain anomalies such as non-recurring income or accounting adjustments that significantly boosted operating income relative to interest expenses in those years.
In 2021, the interest coverage ratio was 698.22, still considerably high but significantly lower than the preceding years. This suggests a potential normalization towards a more typical level of interest coverage.
The interest coverage ratio of 52.90 in 2020 reflects a decent ability to cover interest obligations with operating income, but it is much lower than the ratios observed in the subsequent years.
Overall, while the recent interest coverage ratio appears strong, the significant fluctuations in the ratios over the past five years warrant a closer examination to understand the underlying reasons for such variability and assess the sustainability of the company's ability to cover interest expenses in the long term.