McKesson Corporation (MCK)
Interest coverage
| Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,883,000 | 3,644,000 | 4,486,000 | 4,800,000 | 4,713,000 | 4,392,000 | 3,187,000 | 2,379,000 | 1,928,000 | 2,300,000 | -5,343,000 | -5,132,000 | -5,039,000 | -5,193,000 | 2,538,000 | 2,509,000 | 2,489,000 | 1,051,000 | 1,374,000 | 1,437,000 |
| Interest expense (ttm) | US$ in thousands | 252,000 | 251,000 | 256,000 | 250,000 | 248,000 | 212,000 | 184,000 | 174,000 | 178,000 | 187,000 | 201,000 | 206,000 | 217,000 | 411,000 | 357,000 | 308,000 | 249,000 | 73,000 | 139,000 | 204,000 |
| Interest coverage | 15.41 | 14.52 | 17.52 | 19.20 | 19.00 | 20.72 | 17.32 | 13.67 | 10.83 | 12.30 | -26.58 | -24.91 | -23.22 | -12.64 | 7.11 | 8.15 | 10.00 | 14.40 | 9.88 | 7.04 |
March 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,883,000K ÷ $252,000K
= 15.41
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates that the company is more capable of servicing its debt obligations.
Looking at McKesson Corporation's interest coverage over the past few quarters, we can see some fluctuations. The ratio has generally been above 10, which is considered healthy.
The trend shows that McKesson's interest coverage has been relatively stable, with some variability quarter over quarter. It peaked in Jun 2023 at 19.20 and has generally remained above 10, indicating that the company has a comfortable buffer to cover its interest expenses using its operating income.
However, it's worth noting that the ratios for Sep 2021, Jun 2021, Mar 2021, and dates prior to that are negative, indicating that the company's operating income was not sufficient to cover its interest expenses during those periods. This may raise concerns about the company's ability to meet its debt obligations during those specific quarters.
Overall, McKesson Corporation's interest coverage has shown resilience and adequacy in recent quarters, but investors should monitor any signs of deterioration in future periods to ensure the company's financial health and ability to service its debt.
Peer comparison
Mar 31, 2024