Mueller Water Products (MWA)
Interest coverage
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 115,500 | 133,900 | 129,500 | 118,700 | 120,700 |
| Interest expense | US$ in thousands | 21,500 | 18,400 | 17,600 | 23,800 | 26,600 |
| Interest coverage | 5.37 | 7.28 | 7.36 | 4.99 | 4.54 |
September 30, 2024 calculation
Interest coverage = EBIT ÷ Interest expense
= $115,500K ÷ $21,500K
= 5.37
The interest coverage ratio of Mueller Water Products has experienced variability over the analyzed period from September 30, 2020, to September 30, 2024. Initially, the ratio increased from 4.54 in 2020 to 4.99 in 2021, indicating an improvement in the company's ability to cover its interest expenses with earnings before interest and taxes (EBIT). The upward trend continued markedly into 2022, reaching a peak of 7.36, which suggests a significant strengthening in earnings relative to interest obligations.
However, in the subsequent period leading to 2023, the ratio remained relatively stable at 7.28, reflecting sustained ability to meet interest payments, albeit with a slight decrease from the peak observed in 2022. Moving into 2024, the ratio declined to 5.37, representing a notable reduction from the previous year's figure. Despite this decrease, the ratio remains well above the generally accepted threshold of 1.5 to 2, indicating that the company continues to generate sufficient EBIT to comfortably cover its interest expenses.
Overall, the trend depicts a period of growth in interest coverage capacity during 2021 and 2022, followed by a modest decline in 2024. Nevertheless, Mueller Water Products maintains a strong interest coverage position throughout the period, which suggests prudent financial management and an ability to service interest obligations even in the face of fluctuations.
Peer comparison
Sep 30, 2024