McKesson Corporation (MCK)
Interest coverage
| Mar 31, 2025 | Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 3,056,000 | 4,306,000 | 4,172,000 | 4,699,000 | 4,614,000 | 4,375,000 | 4,733,000 | 4,893,000 | 4,878,000 | 4,557,000 | 3,358,000 | 2,546,000 | 2,106,000 | 2,497,000 | -5,037,000 | -4,761,000 | -4,776,000 | -4,671,000 | 3,043,000 | 1,374,000 |
| Interest expense (ttm) | US$ in thousands | 265,000 | 300,000 | 297,000 | 280,000 | 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 | 230,000 | 239,000 | 253,000 |
| Interest coverage | 11.53 | 14.35 | 14.05 | 16.78 | 18.31 | 17.43 | 18.49 | 19.57 | 19.67 | 21.50 | 18.25 | 14.63 | 11.83 | 13.35 | -25.06 | -23.11 | -22.01 | -20.31 | 12.73 | 5.43 |
March 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $3,056,000K ÷ $265,000K
= 11.53
The interest coverage ratio, which measures a company's ability to pay the interest on its outstanding debt, shows varied trends for McKesson Corporation over the reported periods.
The interest coverage ratio was 5.43 for June 30, 2020, indicating that McKesson was generating enough operating income to cover its interest expenses. This ratio improved significantly by September 30, 2020, to 12.73, implying an even stronger ability to cover interest payments.
However, there was a sharp decline in the interest coverage ratio by the end of December 31, 2020, and subsequent periods, with negative values indicating that operating income was not sufficient to cover interest expenses. This negative trend continued until September 30, 2021.
The company's interest coverage ratio improved significantly by December 31, 2021, standing at 13.35, showing a positive change in the ability to cover interest payments. This improvement continued through the following periods, with the ratio steadily increasing.
As of March 31, 2025, the interest coverage ratio was 11.53, which, although lower than the peak values observed, still indicates the company's ability to cover its interest obligations with operating income. It is essential for investors and stakeholders to monitor this ratio to ensure the company's financial health and ability to meet its debt obligations.
Peer comparison
Mar 31, 2025