Microsoft Corporation (MSFT)

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	110,722,000	91,279,000	85,779,000	73,448,000	55,627,000
Interest expense	US$ in thousands	2,935,000	1,968,000	2,063,000	2,346,000	2,591,000
Interest coverage		37.72	46.38	41.58	31.31	21.47

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $110,722,000K ÷ $2,935,000K
= 37.72

The interest coverage ratio for Microsoft Corporation has shown a steady improvement over the past few years. As of June 30, 2020, the interest coverage ratio was 21.47, indicating that the company generated 21.47 times more operating income than the interest expense. This ratio increased to 31.31 by June 30, 2021, and continued to rise to 41.58 by June 30, 2022, showing a strong ability to meet its interest obligations.

By June 30, 2023, the interest coverage ratio further improved to 46.38, reflecting a robust financial position and significant earnings relative to its interest expenses. However, there was a slight decrease in the interest coverage ratio to 37.72 by June 30, 2024, which may warrant further monitoring to ensure the company's ability to comfortably cover its interest payments.

Overall, the upward trend in Microsoft's interest coverage ratio indicates a healthy financial position and a strong ability to manage its debt obligations, with ample earnings to cover interest expenses.