Lamb Weston Holdings Inc (LW)
Interest coverage
| May 31, 2024 | May 26, 2024 | May 31, 2023 | May 28, 2023 | May 31, 2022 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,065,300 | 1,065,300 | 882,100 | 882,100 | 444,400 |
| Interest expense | US$ in thousands | 135,800 | 4,500 | 109,200 | 4,300 | 161,000 |
| Interest coverage | 7.84 | 236.73 | 8.08 | 205.14 | 2.76 |
May 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,065,300K ÷ $135,800K
= 7.84
Based on the provided data, Lamb Weston Holdings Inc's interest coverage ratio has exhibited significant fluctuations over the reporting periods. The interest coverage ratio, a measure of a company's ability to meet interest expenses on outstanding debt, indicates the company's capacity to fulfill its interest obligations.
As of May 31, 2022, the interest coverage ratio stood at 2.76, reflecting a relatively lower ability to cover interest payments with its earnings. However, by May 28, 2023, the ratio surged to 205.14, indicating a substantial improvement in the company's ability to cover interest expenses. The ratio then slightly decreased to 8.08 by May 31, 2023, but still remained at a healthy level.
In the subsequent periods, Lamb Weston Holdings Inc's interest coverage ratio experienced further positive fluctuations. By May 26, 2024, the ratio soared to 236.73, reflecting a significant increase in the company's earnings relative to its interest obligations. However, by May 31, 2024, the ratio decreased to 7.84, albeit remaining at a reasonable level.
The fluctuation in Lamb Weston Holdings Inc's interest coverage ratio may be attributed to changes in the company's earnings and interest expenses over the reporting periods. It is essential for investors and analysts to closely monitor this ratio to assess the company's ability to service its debt obligations and ensure financial stability.
Peer comparison
May 31, 2024