Maximus Inc (MMS)

Interest coverage

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	488,499	294,794	325,898	408,530	289,121
Interest expense	US$ in thousands	82,440	84,138	45,965	14,744	2,059
Interest coverage		5.93	3.50	7.09	27.71	140.42

September 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $488,499K ÷ $82,440K
= 5.93

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates a healthier financial position, as it signifies that the company is generating sufficient operating income to cover its interest obligations.

Analyzing Maximus Inc's interest coverage over the past five years, we observe a fluctuation in the ratio. In September 2020, the interest coverage ratio was significantly high at 140.42, reflecting a robust ability to meet interest payments. Subsequently, the ratio decreased in the following years, reaching 27.71 in September 2021, 7.09 in September 2022, and 3.50 in September 2023, which indicates a decreasing trend and potential concerns regarding the company's ability to cover its interest expenses.

However, in September 2024, the interest coverage ratio improved to 5.93, showing a slight recovery compared to the previous year. While the ratio has not yet reached the levels seen in 2020, the upward trend suggests a positive development in Maximus Inc's financial position in terms of servicing its debt obligations.

Overall, it is essential for investors and stakeholders to monitor Maximus Inc's interest coverage ratio closely to ensure the company maintains a sustainable level of income relative to its interest expenses.