Paycom Soft (PAYC)

Interest coverage

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	631,816	591,436	584,596	566,310	441,923	444,683	418,726	430,871	392,114	292,905	233,341	182,483	126,676	147,548	165,088	169,493	185,955	210,619	227,088	252,973
Interest expense (ttm)	US$ in thousands	3,400	2,619	2,052	1,872	1,927	2,610	3,406	3,158	2,536	1,587	569	215	0	38	38	41	57	165	425	680
Interest coverage		185.83	225.83	284.89	302.52	229.33	170.38	122.94	136.44	154.62	184.57	410.09	848.76	—	3,882.84	4,344.42	4,133.98	3,262.37	1,276.48	534.32	372.02

December 31, 2024 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $631,816K ÷ $3,400K
= 185.83

Paycom Soft's interest coverage ratio, which measures the company's ability to meet its interest obligations from its operating income, shows a fluctuating trend over the years. The interest coverage ratio was exceptionally high in December 2021 at an impressive 3,262.37, indicating a strong ability to cover interest payments with operating income. However, the ratio experienced a significant decline in the following quarters, dropping to 154.62 by December 2022.

Subsequently, the interest coverage ratio continued to decrease, reaching its lowest point of 122.94 in June 2023. This downward trend raised concerns about Paycom Soft's ability to comfortably meet its interest obligations. However, there was a slight improvement in the ratio in the following quarters, with the ratio reaching 302.52 by March 2024.

Overall, the fluctuating trend in Paycom Soft's interest coverage ratio suggests varying levels of financial risk and efficiency in managing interest payments. Investors and creditors may closely monitor this ratio to assess the company's financial health and ability to service its debt obligations in the future.