Mercury Systems Inc (MRCY)
Interest coverage
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | -154,260 | -23,383 | 24,201 | 78,395 | 94,939 |
| Interest expense | US$ in thousands | 35,015 | 25,159 | 5,806 | 1,222 | 1,006 |
| Interest coverage | -4.41 | -0.93 | 4.17 | 64.15 | 94.37 |
June 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $-154,260K ÷ $35,015K
= -4.41
The interest coverage ratio for Mercury Systems Inc has shown significant fluctuations over the past five years. The ratio was negative in the most recent two years, indicating the company's operating profit was insufficient to cover its interest expenses. This could raise concerns about the company's ability to meet debt obligations using its current earnings.
In comparison, the interest coverage ratio was positive in the three preceding years, with particularly high figures in 2020 and 2021, suggesting a strong ability to pay interest expenses from operating income during those periods. The sharp decline in interest coverage ratio in recent years may signify a deterioration in the company's financial health and creditworthiness.
Overall, the negative trend in the interest coverage ratio raises red flags about Mercury Systems Inc's financial leverage and their capacity to cover interest costs with their operating profits. Additionally, it indicates a potential increase in financial risk and the need for the company to carefully manage its debt levels and improve profitability to enhance its interest coverage ratio.
Peer comparison
Jun 30, 2024