Neogen Corporation (NEOG)

Interest coverage

		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	May 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	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	68,094
Interest expense (ttm)	US$ in thousands	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	4,683
Interest coverage		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	14.54

February 29, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $40,963K ÷ $41,219K
= 0.99

Neogen Corporation's interest coverage ratio has varied significantly over the past few periods. The interest coverage ratio is a measure of a company's ability to meet its interest obligations with its operating income. A higher ratio indicates better ability to cover interest expenses.

Looking at the data provided, we can see that the interest coverage ratio for Neogen Corporation fluctuated over the periods, ranging from 0.77 to 814.14. It is evident that there was a substantial increase in the interest coverage ratio in the earlier periods, with figures such as 650.53 and 814.14, indicating a strong ability to cover interest payments multiple times over with operating income.

However, the interest coverage ratio saw a significant decline in the later periods, with figures as low as 0.77 and 0.84. This downward trend in the interest coverage ratio could potentially signal a decrease in the company's ability to cover interest expenses with its operating income.

It is important for investors and stakeholders to closely monitor the interest coverage ratio of Neogen Corporation to assess its financial health and ability to meet debt obligations. A declining interest coverage ratio may raise concerns about the company's financial stability and its ability to service its debt in the long run.