Oracle Corporation (ORCL)
Interest coverage
| May 31, 2025 | Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 12,807,000 | 17,523,000 | 16,866,000 | 16,211,000 | 15,441,000 | 14,834,000 | 14,209,000 | 13,601,000 | 12,798,000 | 13,071,000 | 13,453,000 | 9,596,000 | 10,548,000 | 11,073,000 | 11,431,000 | 15,862,000 | 15,676,000 | 14,964,000 | 14,617,000 | 14,323,000 |
| Interest expense (ttm) | US$ in thousands | 6,994,000 | 6,894,000 | 3,462,000 | 3,484,000 | 3,514,000 | 3,591,000 | 3,622,000 | 3,590,000 | 3,505,000 | 3,254,000 | 3,014,000 | 2,837,000 | 2,755,000 | 2,748,000 | 2,666,000 | 2,587,000 | 2,496,000 | 2,378,000 | 2,249,000 | 2,114,000 |
| Interest coverage | 1.83 | 2.54 | 4.87 | 4.65 | 4.39 | 4.13 | 3.92 | 3.79 | 3.65 | 4.02 | 4.46 | 3.38 | 3.83 | 4.03 | 4.29 | 6.13 | 6.28 | 6.29 | 6.50 | 6.78 |
May 31, 2025 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $12,807,000K ÷ $6,994,000K
= 1.83
The analysis of Oracle Corporation’s interest coverage ratios over the specified periods reveals a trend characterized by a general decline followed by stabilization and slight recovery.
Initially, as of August 31, 2020, the interest coverage ratio stood at 6.78, indicating a robust capacity to cover interest expenses. This ratio experienced a gradual decline over the subsequent periods, reaching a low of 3.38 on August 31, 2022. The decline suggests increasing pressure on Oracle’s ability to meet interest obligations relative to its earnings, possibly due to fluctuations in earnings or increases in interest expenses.
Notably, from November 30, 2022, the ratio increased again to 4.46, indicating a partial recovery in Oracle’s ability to service its interest commitments. This upward trend continued through the subsequent periods, reaching a peak of 4.87 on November 30, 2024. Such improvement could be attributed to higher earnings or lower interest expenses.
However, the latest data points indicate a concerning decline, with the ratio decreasing to 2.54 as of February 28, 2025. This sharp drop suggests that Oracle’s capacity to cover its interest payments with earnings has weakened significantly, approaching levels that may be considered riskier from a solvency perspective. The ratio below 3 typically indicates heightened concern about debt serviceability and could signal potential liquidity challenges if the trend persists.
Overall, the interest coverage ratio has demonstrated volatility, with periods of stabilization and notable declines. While initial ratios suggested strong coverage capability, recent figures point toward increased financial strain concerning interest obligations. Continuous monitoring is warranted to assess whether this downward trend persists, which could impact the company's creditworthiness and financial health.
Peer comparison
May 31, 2025