Microsoft Corporation (MSFT)

Interest coverage

		Sep 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	113,323,000	107,980,000	103,622,000	97,016,000	91,279,000	87,053,000	84,577,000	86,788,000	85,779,000	84,754,000	81,930,000	77,798,000	73,448,000	67,598,000	63,186,000	59,017,000	55,627,000	54,784,000	52,484,000	48,802,000
Interest expense (ttm)	US$ in thousands	2,816,000	2,716,000	2,412,000	1,993,000	1,968,000	1,982,000	1,989,000	2,024,000	2,063,000	2,120,000	2,250,000	2,296,000	2,346,000	2,479,000	2,460,000	2,543,000	2,591,000	2,574,000	2,631,000	2,649,000
Interest coverage		40.24	39.76	42.96	48.68	46.38	43.92	42.52	42.88	41.58	39.98	36.41	33.88	31.31	27.27	25.69	23.21	21.47	21.28	19.95	18.42

September 30, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $113,323,000K ÷ $2,816,000K
= 40.24

Microsoft Corporation's interest coverage ratio has shown a generally improving trend over the past few years, indicating the company's ability to comfortably meet its interest obligations from its operating income. The interest coverage ratio has consistently remained above 20, which is considered a healthy level and indicative of a low risk of default on interest payments.

The ratio peaked at 48.68 in the quarter ending September 30, 2023, showing a strong ability to cover interest expenses nearly 49 times over with its operating income. This high interest coverage ratio suggests a strong financial position and profitability for Microsoft.

Overall, the consistently high and improving interest coverage ratio for Microsoft Corporation reflects its stable and profitable operations, suggesting a sound financial health and a reduced risk for lenders.