Micron Technology Inc (MU)
Interest coverage
| Aug 31, 2024 | Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Aug 31, 2022 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 1,802,000 | 1,304,000 | -5,270,000 | 9,764,000 | 9,760,000 |
| Interest expense | US$ in thousands | 562,000 | 225,000 | 388,000 | 189,000 | 189,000 |
| Interest coverage | 3.21 | 5.80 | -13.58 | 51.66 | 51.64 |
August 31, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $1,802,000K ÷ $562,000K
= 3.21
Interest coverage is a significant financial ratio that indicates a company's ability to meet its interest obligations through its operating earnings. Looking at Micron Technology Inc's interest coverage over the years, we can see fluctuations in the ratio. In August 2022, the interest coverage was 51.64, showing a strong ability to cover interest payments. This was maintained at a similar level in September 2022 at 51.66.
However, there was a notable decline in the interest coverage to -13.58 in August 2023, indicating that the company's operating earnings were insufficient to cover its interest expenses. This could be a cause for concern as a negative interest coverage implies financial distress.
In the subsequent years, there was some improvement in the interest coverage ratio, reaching 5.80 in August 2024 and then dropping to 3.21 by the end of the year. While these figures show some recovery compared to 2023, they are still significantly lower compared to the levels observed in 2022. It would be important for Micron Technology Inc to closely monitor and manage its interest coverage ratio to ensure sustainable financial health and stability.
Peer comparison
Aug 31, 2024