Microsoft Corporation (MSFT)
Interest coverage
| Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 91,279,000 | 85,779,000 | 73,448,000 | 55,627,000 | 46,374,000 |
| Interest expense | US$ in thousands | 1,968,000 | 2,063,000 | 2,346,000 | 2,591,000 | 2,686,000 |
| Interest coverage | 46.38 | 41.58 | 31.31 | 21.47 | 17.27 |
June 30, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $91,279,000K ÷ $1,968,000K
= 46.38
The interest coverage ratio for Microsoft Corporation has exhibited a consistent upward trend over the past five years, reflecting the company's improving ability to cover its interest expenses. The ratio has increased from 15.99 in 2019 to 44.98 in 2023, indicating a substantial improvement in Microsoft's capacity to meet its interest obligations.
This trend suggests that Microsoft's earnings before interest and taxes (EBIT) have continued to outpace its interest expenses, highlighting the company's strong financial position and ability to generate sufficient profits to cover its interest costs. The consistent increase in the interest coverage ratio signifies a lower financial risk for Microsoft, as it indicates a greater buffer between the company's earnings and its interest expenses. Overall, the trend in Microsoft's interest coverage ratio reflects a positive financial performance and stability, providing investors and creditors with confidence in the company's ability to effectively service its debt obligations.
Peer comparison
Jun 30, 2023