OSI Systems Inc (OSIS)

Interest coverage

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Earnings before interest and tax (EBIT)	US$ in thousands	189,061	135,279	121,749	115,371	104,887
Interest expense	US$ in thousands	27,847	20,041	8,962	16,731	18,765
Interest coverage		6.79	6.75	13.59	6.90	5.59

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $189,061K ÷ $27,847K
= 6.79

Interest coverage is a measure of a company's ability to pay its interest expenses on outstanding debt. It is calculated by dividing operating income by interest expenses. In the case of OSI Systems Inc, the interest coverage ratio has fluctuated over the past five years.

In the most recent fiscal year ending June 30, 2024, OSI Systems Inc had an interest coverage ratio of 6.79. This indicates that the company generated 6.79 times more operating income than the interest expenses it incurred during the year. The slight increase in interest coverage from the previous year suggests that the company's ability to cover its interest obligations improved slightly.

Looking back over the past five years, OSI Systems Inc experienced fluctuations in its interest coverage ratio. The highest interest coverage ratio was 13.59 in fiscal year 2022, indicating a strong ability to cover interest expenses. However, the ratios in the other years ranged from 5.59 to 6.90, which indicates relatively lower coverage levels compared to the peak in 2022.

Overall, the trend in OSI Systems Inc's interest coverage ratio shows some variability but generally indicates that the company has been able to consistently cover its interest expenses with its operating income. Investors and creditors typically view a higher interest coverage ratio as a positive indicator of financial health and ability to manage debt obligations.