McCormick & Company Incorporated (MKC)
Interest coverage
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 1,105,100 | 1,063,300 | 1,017,500 | 1,072,100 | 1,001,400 | 999,700 | 1,004,300 | 962,000 | 1,052,800 | 1,084,600 | 1,087,300 | 1,096,000 | 1,102,000 | 1,057,900 | 1,085,600 | 1,069,100 | 1,022,300 | 1,025,300 | 1,020,700 | 993,800 |
| Interest expense (ttm) | US$ in thousands | 207,900 | 208,200 | 199,900 | 185,100 | 166,600 | 149,100 | 138,000 | 134,000 | 135,900 | 136,600 | 135,700 | 135,300 | 134,100 | 135,600 | 141,700 | 149,500 | 157,500 | 165,200 | 170,600 | 174,000 |
| Interest coverage | 5.32 | 5.11 | 5.09 | 5.79 | 6.01 | 6.70 | 7.28 | 7.18 | 7.75 | 7.94 | 8.01 | 8.10 | 8.22 | 7.80 | 7.66 | 7.15 | 6.49 | 6.21 | 5.98 | 5.71 |
February 29, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $1,105,100K ÷ $207,900K
= 5.32
The interest coverage ratio measures McCormick & Company Incorporated's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates that the company is more capable of meeting its interest obligations.
Based on the data provided, McCormick & Company's interest coverage ratio has been consistently above 5. This trend suggests that the company has been generating sufficient operating income to cover its interest expenses comfortably. The interest coverage ratio has shown a slight fluctuation over the periods, ranging from 5.09 to 8.22.
The downward trend in the interest coverage ratio from a high of 8.22 to a low of 5.09 may indicate some variability in the company's ability to cover interest expenses during different periods. However, it is essential to note that even the lowest ratio of 5.09 still indicates a relatively strong ability to meet interest payments.
Overall, McCormick & Company's interest coverage ratio reflects a healthy financial position with a consistent ability to meet its interest obligations. The company's management should continue monitoring and ensuring the stability of the interest coverage ratio to support long-term financial health and sustainability.