Neogen Corporation (NEOG)

Interest coverage

		Aug 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	25,716	40,963	43,128	28,952	22,750	23,273	22,810	42,935	58,618	60,846	70,243	77,019	74,169	73,858	71,127	70,154	67,523	66,309	67,905	67,879
Interest expense (ttm)	US$ in thousands	32,225	41,219	39,778	37,838	27,237	17,392	8,371	66	72	106	365	898	1,614	3,182	4,488	5,204	5,992	5,774	5,509	5,266
Interest coverage		0.80	0.99	1.08	0.77	0.84	1.34	2.72	650.53	814.14	574.02	192.45	85.77	45.95	23.21	15.85	13.48	11.27	11.48	12.33	12.89

August 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $25,716K ÷ $32,225K
= 0.80

The interest coverage ratio for Neogen Corporation has shown significant fluctuations over the past few quarters. In general, the interest coverage ratio measures the company's ability to pay its interest expenses on its outstanding debt. A higher interest coverage ratio indicates a healthier financial position as it suggests that the company is more capable of servicing its debt obligations.

Looking at the historical data provided, we can observe that Neogen's interest coverage ratio has varied widely, ranging from as low as 0.77 to as high as 814.14. The company experienced a sharp increase in its interest coverage ratio in the most recent quarters, showing a significant improvement in its ability to cover its interest expenses compared to earlier periods.

The substantial fluctuations in the interest coverage ratio could be attributed to various factors such as changes in operating income, interest expenses, or overall financial leverage. It is essential for stakeholders to closely monitor Neogen's interest coverage ratio over time to assess the company's financial health and its ability to meet its debt obligations.

Overall, the trend in Neogen Corporation's interest coverage ratio suggests that the company has worked on strengthening its financial position in recent periods, leading to a more favorable ability to cover its interest expenses.