Paycom Soft (PAYC)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	474,326	477,086	451,129	430,871	392,114	345,802	312,801	286,700	253,567	221,542	212,519	192,167	185,955	210,619	227,088	252,973	227,027	208,809	194,886	185,815
Interest expense (ttm)	US$ in thousands	1,927	2,610	3,406	3,158	2,536	1,896	1,278	1,224	1,418	1,109	709	412	19	165	425	680	940	1,142	1,266	1,042
Interest coverage		246.15	182.79	132.45	136.44	154.62	182.39	244.76	234.23	178.82	199.77	299.74	466.42	9,787.11	1,276.48	534.32	372.02	241.52	182.85	153.94	178.33

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $474,326K ÷ $1,927K
= 246.15

Paycom Software Inc's interest coverage ratio has fluctuated over the quarters, ranging from 1,326.92 in Q1 2022 to 125.60 in Q2 2023. A higher interest coverage ratio indicates that the company is more capable of meeting its interest payment obligations from its operating income.

The significant decrease in interest coverage from Q1 2022 to Q2 2023 may raise concerns about the company's ability to cover its interest payments with its operating income. However, it is important to note that a single quarter's ratio does not provide a complete picture, and it is advisable to assess the trend over several quarters to better understand the company's financial health and ability to service its debt.