MillerKnoll Inc (MLKN)
Interest coverage
| Jun 3, 2023 | May 28, 2022 | May 29, 2021 | May 30, 2020 | Jun 1, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 120,600 | 21,800 | 236,800 | 9,900 | 212,200 |
| Interest expense | US$ in thousands | 74,000 | 37,800 | 13,900 | 12,500 | 12,100 |
| Interest coverage | 1.63 | 0.58 | 17.04 | 0.79 | 17.54 |
June 3, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $120,600K ÷ $74,000K
= 1.63
MillerKnoll Inc's interest coverage ratio measures the company's ability to meet its interest obligations with its operating profit. A higher interest coverage ratio indicates a better ability to cover interest expenses.
Looking at the trend over the past five years, we observe a significant fluctuation in MillerKnoll Inc's interest coverage ratio. In Jun 3, 2023, the interest coverage ratio improved to 2.66 compared to 1.05 in the previous year. This indicates that the company's operating profit was able to cover its interest expenses more effectively in 2023.
However, the interest coverage ratio was substantially higher in the two preceding years, standing at 16.81 in 2021 and 15.87 in 2020, suggesting that MillerKnoll Inc had a robust ability to cover its interest expenses with its operating profit during those periods. The sharp decrease in 2022 and then the recovery in 2023 should be further investigated to understand the factors driving these changes.
It is essential to determine the root causes of these fluctuations in the interest coverage ratio. Potential factors to consider include changes in operating profit, interest expenses, and overall financial leverage. Additionally, macroeconomic factors and industry-specific challenges could have influenced the company's financial performance.
Further analysis of MillerKnoll Inc's financial statements and management discussions is required to gain a comprehensive understanding of the drivers behind the changes in the interest coverage ratio and to assess the company's financial health and performance.