Nordson Corporation (NDSN)
Interest coverage
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 674,844 | 671,692 | 599,667 | 333,649 | 478,249 |
| Interest expense | US$ in thousands | 59,505 | 22,413 | 25,491 | 32,160 | 47,145 |
| Interest coverage | 11.34 | 29.97 | 23.52 | 10.37 | 10.14 |
October 31, 2023 calculation
Interest coverage = EBIT ÷ Interest expense
= $674,844K ÷ $59,505K
= 11.34
The interest coverage ratio measures a company's ability to meet its interest obligations using its earnings before interest and taxes (EBIT). It is calculated by dividing EBIT by the interest expense. Nordson Corp.'s interest coverage has shown fluctuating patterns over the past five years.
In October 2023, the interest coverage ratio was 11.31, indicating that the company's EBIT was 11.31 times greater than its interest expense for that period. This suggests a moderate ability to cover interest payments from operating earnings.
This figure represents a decrease compared to the previous year, where the interest coverage ratio was significantly higher at 31.34, signaling a stronger ability to meet interest obligations. The steady decrease from 2022 to 2023 could raise concerns about the company's ability to comfortably cover interest expenses from its operating earnings.
It's important to note that though the interest coverage ratio has decreased from the prior year, it's still relatively strong, especially when compared to the ratios for 2021, 2020, and 2019, which were 24.13, 13.59, and 10.25, respectively. This indicates an improving trend in interest coverage over the long term.
Overall, while there has been a recent decline in Nordson Corp.'s interest coverage, the company still maintains a generally healthy ability to fulfill its interest obligations using its operating earnings. However, stakeholders should keep a close watch on this ratio to ensure that it continues to support the company's financial stability and growth.
Peer comparison
Oct 31, 2023