Oracle Corporation (ORCL)
Interest coverage
| 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 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) (ttm) | US$ in thousands | 15,256,000 | 14,660,000 | 14,045,000 | 13,437,000 | 12,633,000 | 12,897,000 | 13,278,000 | 9,461,000 | 10,404,000 | 10,929,000 | 11,283,000 | 15,672,000 | 15,495,000 | 14,917,000 | 14,588,000 | 14,291,000 | 14,058,000 | 14,174,000 | 14,239,000 | 14,257,000 |
| Interest expense (ttm) | US$ in thousands | 3,514,000 | 3,591,000 | 3,623,000 | 3,591,000 | 3,506,000 | 3,255,000 | 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 | 1,994,000 | 1,940,000 | 1,993,000 | 2,047,000 |
| Interest coverage | 4.34 | 4.08 | 3.88 | 3.74 | 3.60 | 3.96 | 4.41 | 3.33 | 3.78 | 3.98 | 4.23 | 6.06 | 6.21 | 6.27 | 6.49 | 6.76 | 7.05 | 7.31 | 7.14 | 6.96 |
May 31, 2024 calculation
Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $15,256,000K ÷ $3,514,000K
= 4.34
Oracle Corporation's interest coverage ratio has shown fluctuations over the past few quarters, with values ranging from 3.33 to 7.31. The interest coverage ratio measures the company's ability to cover its interest expenses with operating profits. A higher ratio indicates a stronger ability to meet interest obligations.
The downward trend in the interest coverage ratio from May 2021 to May 2022 may raise concerns about Oracle's ability to cover interest expenses with operating profits. However, the ratio improved in the subsequent quarters, reaching a peak of 7.31 in August 2019, indicating a healthier financial position.
Overall, Oracle's interest coverage ratio has generally been above 3.0, which is considered the minimum acceptable level for most analysts. This suggests that the company has been able to comfortably cover its interest payments with operating profits over the analyzed periods. However, investors and creditors should continue to monitor the interest coverage ratio to ensure Oracle's financial health and ability to meet its debt obligations in the long term.
Peer comparison
May 31, 2024