Phibro Animal Health Corporation (PAHC)

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	53,315	72,747	85,018	80,186	70,125
Interest expense	US$ in thousands	1,040	18,676	12,691	13,718	14,613
Interest coverage		51.26	3.90	6.70	5.85	4.80

June 30, 2024 calculation

Interest coverage = EBIT ÷ Interest expense
= $53,315K ÷ $1,040K
= 51.26

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt using its operating income. Higher values of the interest coverage ratio indicate a stronger ability to meet interest obligations.

Looking at the historical trend for Phibro Animal Health Corporation, we observe fluctuations in the interest coverage ratio over the past five years. In the most recent fiscal period ending on June 30, 2024, the interest coverage ratio was exceptionally high at 51.26, indicating a strong capability to cover interest payments relative to previous years.

In contrast, the interest coverage ratio for the fiscal year ending on June 30, 2023, was notably lower at 3.90, signifying a potential strain in meeting interest obligations. However, this was followed by improvements in the subsequent years, with ratios of 6.70 in 2022, 5.85 in 2021, and 4.80 in 2020, suggesting varying degrees of financial stability in covering interest expenses during those periods.

Overall, the significant increase in the interest coverage ratio for the most recent year reflects a considerable enhancement in Phibro Animal Health Corporation's ability to service its debt and indicates a positive trend in the company's financial health concerning interest payment obligations.