Palo Alto Networks Inc (PANW)

Interest coverage

		Jul 31, 2024	Apr 30, 2024	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020	Oct 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	996,600	999,500	884,800	837,800	593,500	295,500	111,000	-54,300	-179,800	-264,900	-328,600	-343,900	-301,700	-257,800	-196,800	-149,600	-143,100	-119,800	-71,900	-7,200
Interest expense (ttm)	US$ in thousands	8,300	13,700	19,200	23,300	27,200	28,400	27,400	27,300	27,400	61,900	96,100	130,000	163,300	153,300	131,700	110,000	88,700	77,300	78,500	80,100
Interest coverage		120.07	72.96	46.08	35.96	21.82	10.40	4.05	-1.99	-6.56	-4.28	-3.42	-2.65	-1.85	-1.68	-1.49	-1.36	-1.61	-1.55	-0.92	-0.09

July 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $996,600K ÷ $8,300K
= 120.07

Interest coverage is a financial ratio that measures a company's ability to pay its interest expenses on outstanding debt. A higher interest coverage ratio indicates a company is more capable of meeting its interest obligations.

For Palo Alto Networks Inc, the interest coverage ratio has exhibited significant fluctuations over the past few years. The trend shows a generally improving position up to January 2024, with ratios ranging from 4.05 to 120.07. This indicates the company's robust ability to cover its interest expenses during this period.

However, from January 2022 to October 2022, the interest coverage ratio turned negative, which suggests that Palo Alto Networks Inc may have faced challenges in meeting its interest obligations with its earnings during this period. The ratios improved again from January 2023 onwards, although they remained below the levels seen in the earlier years.

Overall, while Palo Alto Networks Inc has demonstrated strong interest coverage in recent periods, the negative ratios in the past highlight the importance of monitoring the company's ability to generate sufficient earnings to cover its interest expenses. Investors and creditors should continue to closely monitor the company's financial performance to ensure its long-term financial health and stability.