Kennametal Inc (KMT)
Interest coverage
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 170,223 | 183,210 | 227,069 | 107,052 | 36,500 |
| Interest expense | US$ in thousands | 26,472 | 28,496 | 25,914 | 46,375 | 35,154 |
| Interest coverage | 6.43 | 6.43 | 8.76 | 2.31 | 1.04 |
June 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $170,223K ÷ $26,472K
= 6.43
Kennametal Inc's interest coverage ratio has shown a fluctuating trend over the past five years. The ratio was 6.43 in both 2024 and 2023, indicating that the company's operating income is sufficient to cover its interest expenses more than six times. This demonstrates a consistent ability to meet its interest obligations with ease.
In 2022, the interest coverage ratio improved significantly to 8.76, suggesting a stronger ability to cover interest payments from operating income. This could be a positive sign of improved financial health and risk management.
However, in 2021 and 2020, the interest coverage ratios were lower at 2.31 and 1.04 respectively. These lower ratios indicate that Kennametal Inc's ability to cover interest expenses from operating income was weaker during these years, potentially posing higher financial risk.
Overall, while the company has shown fluctuations in its interest coverage ratio over the past five years, maintaining a ratio above 1 indicates that Kennametal Inc has generally been able to cover its interest expenses with operating income. It is important for the company to monitor and maintain a healthy interest coverage ratio to ensure financial stability and meet its debt obligations.