Lamb Weston Holdings Inc (LW)
Interest coverage
| May 26, 2024 | May 28, 2023 | May 29, 2022 | May 30, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,065,300 | 882,100 | 444,400 | 474,800 | 556,900 |
| Interest expense | US$ in thousands | 4,500 | 4,300 | 5,000 | 6,400 | 6,800 |
| Interest coverage | 236.73 | 205.14 | 88.88 | 74.19 | 81.90 |
May 26, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,065,300K ÷ $4,500K
= 236.73
Interest coverage is a key financial ratio that indicates a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio is generally seen as favorable as it suggests that the company is generating sufficient income to cover its interest expenses.
Analyzing Lamb Weston Holdings Inc's interest coverage over the past five years, we observe a positive trend in the ratio. The interest coverage ratio has consistently improved from 81.90 in May 2020 to 236.73 in May 2024. This indicates that the company's operating income has been increasingly sufficient to cover its interest expenses over the years.
The significant increase in the interest coverage ratio from 74.19 in May 2021 to 236.73 in May 2024 is particularly noteworthy. It suggests that Lamb Weston Holdings Inc has become more financially stable and capable of servicing its debt obligations comfortably.
Overall, the improving trend in Lamb Weston Holdings Inc's interest coverage ratio reflects positively on the company's financial health and its ability to manage its debt effectively.
Peer comparison
May 26, 2024